In developing and emerging countries, rapid urbanization at an unprecedented pace and degradation of ecosystem services at an alarming rate have caused many regions, especially those in environmentally sensitive areas (ESAs), to encounter the “regional development dilemma” (RDD), in which regions can hardly divert their current development pattern to achieve a transition to sustainability. The main research focus of this study is to introduce—by means of a case study—a payments for ecosystem service (PES) scheme as a policy instrument that incorporates an ecosystem services (ES)-based baseline for payments and a spatial-targeting-based allocation plan to address that dilemma and to bridge, as well as achieve, sustainable development goals simultaneously at a regional scale. The water source areas of the Middle Route Project in the South-to-North Water Diversion Project in China were used as the case study. Land Use/Land Cover Change (LUCC) of this area between 2002 and 2010 was detected by adopting remote sensing and spatial analysis technologies. The ecosystem services value (ESV) variation was then estimated and the eco-compensation plan was determined through comprehensively applying equivalent weighting factors of the ecosystem service of terrestrial ecosystems in China and the adjustment coefficient of the ecosystem service based on the notion of willingness to pay for ecosystem services. Results show that rapid urbanization has substantial impacts on the spatial dynamics and quality of ecosystems in the research area. From 2002 to 2010, the total ESV declined by CNY 6 billion. Therefore, the baseline eco-compensation from the benefit zone to the research area was CNY 1.1 billion under the assumption of commensurability. Responsibility ought to be shared by Henan and Hebei provinces, and Beijing and Tianjin, with payment of CNY 422.3, 388.5, 110.9, and 133 million, respectively. We drafted the allocation plan of eco-compensation based on the spatial pattern of ESV variation, and suggested policy tools tailored for subregions in the research area defined by LUCC change categories. Such an integrated study can lead to a more comprehensive understanding of regional PES schemes and provide a set of policy instruments with upgraded spatial-targeting and better cost-efficiency, particularly as blueprints for regional governments in developing and emerging countries that aim at leveraging regional sustainability through bridging and achieving SDGs.
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