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Payments for Ecological Services and Eco-Compensation: Practices and Innovations in the People's Republic of China

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Payments for Ecological Services and Eco-Compensation: Practices and Innovations in the People's Republic of China Payments for Ecological Services and Eco-Compensation Practices and Innovations in the People’s Republic of China National Development and Reform Commission Payments for Ecological Services and Eco-Compensation Practices and Innovations in the People’s Republic of China Proceedings from the International Conference on Payments for Ecological Services Ningxia Hui Autonomous Region, People’s Republic of China 6–7 September 2009 Edited by Qingfeng Zhang, Michael T. Bennett, Kunhamboo Kannan, Leshan Jin National Development and Reform Commission © 2010 Asian Development Bank All rights reserved. Published in 2010. Printed in the People’s Republic of China. ISBN 978-92-9092-209-4 Publication Stock No. RPT102878 Zhang, Qingfeng et al. Payments for ecological services and eco-compensation: Practices and innovations in the People’s Republic of China. Mandaluyong City, Philippines: Asian Development Bank, 2010. 1. Ecosystem services. 2. Payments. 3. Eco-compensation. I. Asian Development Bank. The views expressed in this report are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB), its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. Note: In this report, “$” refers to US dollars. Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines Tel +63 2 632 4444 Fax +63 2 636 2444 www.adb.org For orders, please contact: Department of External Relations Fax +63 2 636 2648 [email protected] Contents Foreword v Acknowledgments vii Executive Summary viii Introduction 1 The People’s Republic of China’s Evolving Eco-Compensation Framework: Background and Select Provincial Case Studies 6 Group 1: Eastern Provinces 13 Case Study 1: Fujian 13 Case Study 2: Guangdong 15 Case Study 3: Hainan 17 Case Study 4: Jiangsu 18 Case Study 5: Liaoning 20 Case Study 6: Zhejiang 22 Group 2: Inland and Western Provinces 24 Case Study 7: Anhui 24 Case Study 8: Chongqing 26 Case Study 9: Gansu 27 Case Study 10: Jiangxi 28 Case Study 11: Ningxia 30 Case Study 12: Qinghai 32 Case Study 13: Shanxi 34 Issues and Options in the People’s Republic of China: Views on the Payments for Ecological Services from Chinese Policy Makers and Experts 36 Conference Speech 1: Vice Chairman, National Development and Reform Commission 38 Conference Speech 2: Director General, Department of Nature and Ecological Protection, Ministry of Environmental Protection 41 iii iv Contents Conference Speech 3: Vice Governor, Ningxia Hui Autonomous Region 44 Conference Paper 1: Eco-Compensation in the Environmental Policy Tool Kit 47 Conference Paper 2: Reflections on the Development of Eco-Compensation Mechanisms in the People’s Republic of China 58 Conference Paper 3: A Framework Design of River Basin Ecological Compensation Policy and Its Mechanism for the People’s Republic of China 65 Conference Paper 4: Intergovernmental Fiscal Relationships for Eco-Compensation in the People’s Republic of China 74 Conference Paper 5: Estimation of Rates for River Basin Eco-Compensation 83 Conference Paper 6: Economic Impacts of Eco-Compensation: A Framework for Quantitative Simulation 92 International Experiences in Markets for Ecosystem Services and the Asian Development Bank’s Perspectives 99 Keynote Speech: Klaus Gerhaeusser, Director General, Asian Development Bank 101 Conference Paper 1: Promoting Payments for Ecological Services Approach in the People’s Republic of China 104 Conference Paper 2: Payments for Ecological Services: Future Prospects for the Asian Development Bank Operations in the People’s Republic of China 118 Conference Paper 3: Payments for Ecological Services in the Greater Mekong Subregion 130 Conference Paper 4: Buyer, Regulator, and Enabler—The Government’s Role in Ecosystem Services Markets 149 Conference Paper 5: Payments for Ecological Services: An Australian Perspective 165 Conference Paper 6: A Policy Maker’s Guide to Designing Payments for Ecological Services 179 Toward a More Effective Eco-Compensation Policy Framework 193 Foreword Over the past 30 years, the People’s Republic of China (PRC) has transformed itself from a closed agrarian economy to a global industrial and economic powerhouse. The rapid economic growth and transformation has lifted hundreds of millions of people out of poverty. However, this success has been achieved at an enormous cost to the environment. Rapid industrialization and urbanization have been accompanied by accelerated exploitation of natural resources and massive increases in discharge of pollutants. One of the key reasons for environmental degradation is that the valuable services provided by natural ecosystems are not properly priced in the market system. Currently, economic instruments that attempt to create such markets or promote sustainable management of natural resources are not fully in place, leading to an unequal distribution of ecological and economic benefits between protectors and beneficiaries. As a result, natural ecosystems continue to be degraded or lost at an alarming rate. Indeed, many have argued that the failure of society to compensate for conserving the environmental services is a key contributory factor to the rapid and environmentally damaging changes in the ecosystem that are taking place in the PRC, in particular, and the world, in general. Payments for ecological services (PES) have thus become increasingly important policy instruments internationally to create incentives for sustainable ecosystem service provision, address livelihood issues for the rural poor, and provide sustainable financing for protected areas. Related to this, policy makers in the PRC have been experimenting with new approaches to environmental management, resulting in a wide array of policy and program innovations under the broad heading of eco-compensation. These proceedings are collection of papers presented at the International Conference on Payments for Ecological Services, which was held in Ningxia Hui Autonomous Region on 6–7 September 2009. This conference was jointly hosted by the PRC National Development and Reform Commission, the Ministry of Environmental Protection, the Government of Ningxia Hui Autonomous Region, and the Asian Development Bank (ADB). In attendance were some 500 provincial and central government representatives from more than 14 provinces and 7 central ministries, and a number of international experts. The conference concluded that international experience in PES programs and other market- based environmental policy instruments have great potential to inform the PRC’s developing eco-compensation policy framework on the creation of an enabling environment for private sector participation. It was also highlighted that the PRC is gaining a wealth of experience on eco-compensation to inform both domestic and international experience in the evolving role of government in protecting and ensuring the provision of ecosystem services. These proceedings also discuss the evolution of eco-compensation policy within the PRC’s environmental regulatory framework, summarize important developments in the PRC and internationally, provide policy recommendations, and suggest possible next steps. ADB’s Strategy 2020: The Long-term Strategic Framework of the Asian Development Bank (2008–2020), focuses its support on three distinct but complementary development agendas of the region: inclusive economic growth, environmentally sustainable growth, and regional integration. Supporting PES scheme in the PRC will significantly contribute to all three of these strategic agendas. v vi Foreword The findings, as summarized in the proceedings, offer a good basis for further strategic policy dialogues between the PRC, ADB, and other development partners on instituting PES schemes. Such a policy dialogue between the PRC’s ministries and development partners should continue and become a regular event for instituting PES. As indicated in the proceedings, the current and future policy dialogues will map out ways of designing effective PES schemes in the PRC and generating a preliminary framework that will guide ADB financing to better serve the PRC’s PES scheme development. Klaus Gerhaeusser Qin Yucai Director General Director General East Asia Department Western Regions Development Department Asian Development Bank National Development and Reform Commission People’s Republic of China Acknowledgments These conference proceedings were prepared from the successful conclusion of the International Conference on Payments for Ecological Services, held in Ningxia Hui Autonomous Region on 6–7 September 2009. The Asian Development Bank’s (ADB) East Asia Department Director General, Klaus Gerhaeusser, led the international team of experts and speakers at the conference, while ADB’s Director for Agriculture, Environment, and Natural Resources Division of the East Asia Department, Kunhamboo Kannan, provided the inspiration and support for the preparation of this conference. ADB’s Principal Water Resources Management Specialist, Qingfeng Zhang, designed the conference program and edited these proceedings, along with Michael T. Bennett, Kunhamboo Kannan, and Leshan Jin. ADB’s Principal Climate Change Specialist David
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