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Markets for Ecosystem Services in China

Exploring China's Market-Based Environmental Policies

Forest Trends | June 21, 2010


Policymakers in China have become increasingly interested in developing new approaches for environmental policy to address the country's multiplying conservation challenges and resource constraints in face of break-neck economic growth. This has led China's central and local governments in recent years to rapidly expand the range of policy and program innovations, many under the broad heading of "eco-compensation," that are laying the groundwork for the development of ecosystem services markets. Already, the government is driving some of the largest public payment schemes for ecosystem services in the world, and has more than US$90 billion in existing or planned schemes and market-based programs. Local governments in China have also been important contributors to this process, rapidly adapting centrally designed "eco-compensation" programs to their own needs, creating "hybrids"—programs that weave together and draw upon multiple central and provincial policies and funding sources—and creating their own distinct initiatives that often feed back into central government policy development. The result has been a highly diverse mosaic of initiatives and public programs that incorporate payments or market-based concepts into national, provincial and municipal levels. Almost all are being primarily developed and funded domestically, with relatively little involvement of international expertise or funding. The range of programs is broad, covering watershed ecosystem services, carbon, timber, landscape amenities, biodiversity conservation and anti-desertification services. An increasing number of initiatives aim to protect watershed services and resolve conflicts over the rights and access to water resources.

China has also actively embraced the Clean Development Mechanism (CDM) of the Kyoto Protocol as well as voluntary carbon markets as means to finance a transition to renewable, cleaner and more efficient energy systems, and as a result is host to 22 percent of registered Clean Development Mechanism (CDM) projects worldwide (Capoor & Ambrosi, 2008). Other programs Include China's green and organic food certification system, the central government's green procurement program and green product label certification system, promotion of energy efficiency, central and local government subsidies and fees regarding the impacts of development and infrastructural projects on soil erosion and watersheds, as well as continuing experimentation with air and water pollution emissions trading. On-going interest in improving the effectiveness, efficiency and financial sustainability of these efforts has meant that policy circles have been abuzz with debate on how to improve these programs as well as how to explore and develop other market-based tools and regulatory innovations to better address China's environmental and development challenges. This report documents a vast array of eco-compensation programs and market-based environmental policy instruments that are already in existence in China today, many of which are relatively unknown internationally or even within China across different regions and sectors.

Download: Markets for Ecosystem Services in China (PDF, 1.88 M)

Read More: Agriculture, Conservation, Development, Economy, Environment, Finance, Innovation, Science, China, Asia

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