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Policies, Markets and the Economics of Watershed Services – Experiences and Lessons from China

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Policies, Markets and the Economics of Watershed Services – Experiences and Lessons from China Policies, markets and the economics Michael T Bennett of watershed Forest Trends & services – The Katoomba Group / experiences and Visiting Scholar, Peking U. lessons from China International Conference on Watershed Management, Chiang Mai, Thailand March 10‐11, 2011 PRESENTATION OUTLINE I. Local‐level Innovations in Watershed Management in the PRC. II. Key Drivers III. Important Parallel Trends IV. Closing Observations Water Use Rights Trading Schemes Watershed “Eco‐compensation” Schemes Watershed “Eco‐compensation” Schemes Fujian Province Min River Watershed Jin River Watershed Jiulong River Watershed Fujian Province, Min, Jin and Jiulong Rivers A B C Watershed “Eco‐compensation” Schemes Liaoning Province Cross-District Watershed Ecocompensation Liaoning Cross‐Border Pollution Control ABC Watershed “Eco‐compensation” Schemes Beijing-Hebei Miyun Reservoir Upper Watershed Ecocompensation Watershed “Eco‐compensation” Schemes Hebei Province Beijing Municipality A Miyun B Reservoir Water Use Rights Trading Water Use Rights Trading Zhejiang Province Yiwu-Dongyang Water Use Rights Transfer WaterWater Use Rights Use Trading Rights Trading Gansu Province Zhangke Water Use Rights Transfer Jingyuan No. 2 Electric Power Company Water Use Rights Transfer Common Characteristics • Contracts, at different scales, between “Providers” & “Beneficiaries” …. Irrigation Districts Power Plants Municipal & County Municipal & County Governments Governments Provincial Provincial Governments Governments Common Characteristics • Initiated and Developed by Regional & Local Governments & Actors. • Mechanisms of payments or penalties based on Service Provision, Land-use Changes or Investment in Watershed Infrastructure/Facilities (as proxies for service provision) • Involve ongoing negotiations, with evolving frameworks of cooperation concerning… - Equity, Rights & Responsibilities - Costs & Benefits - Monitoring & Verification Payments for Watershed Services in the PRC Source: The State of Watershed Payments: An Emerging Marketplace. Ecosystem Marketplace, 2010. Payments for Watershed Services in the PRC Source: The State of Watershed Payments: An Emerging Marketplace. Ecosystem Marketplace, 2010. Key Drivers: Resource Bottlenecks • China ranks 5th in total freshwater resources, but… ‐ per‐capita resources are < 1/3 world average ‐ < 1/10 world average in North China. • 400 of 640 major cities face water shortages, and > 700 million people lack access to safe water. • Of 84,958 miles of waterways monitored in 2006, 41.7% was unsuitable for drinking, with 21.8% “highly polluted”. Key Drivers: Increased financial capacity. Key Drivers: Regional differences. Parallel Trends: Forest Eco‐compensation Parallel Trends: Carbon Markets CARBON MARKETS • China is the top destination for the Kyoto Protocol’s Clean Development Mechanism (CDM) ‐ 22% of all registered CDM projects globally ‐ 73% of the CDM credits transacted in 2007 ‐ ~725 million tons of carbon dioxide equivalent ‐ “Destination of choice” (World Bank, 2008) • Voluntary Carbon Markets ‐ Recently announced Panda Standard (http://www.pandastandard.org/) ‐ China Green Carbon Foundation Parallel Trends: Environmental Exchanges BeijingBeijing Environmental Environmental TianjinTianjin ExchangeExchange Emissions (late 2008) Emissions (late 2008) RightsRights HebeiHebei ExchangeExchange Shanghai EnvironmentalEnvironmental (mid-2008)(mid-2008)Shanghai Environmental EnergyEnergy Environmental Energy ExchangeExchange Energy Exchange (2010)(2010) Exchange (late 2008) GuiyangGuiyang (late 2008) EnvironmentalEnvironmental JiaxingJiaxing City City EnergyEnergy EmissionsEmissions Quota Quota ExchangeExchange ReservesReserves (2010)(2010) TradingTrading Center Center (2007)(2007) KunmingKunming GuangzhouGuangzhou EnvironmentalEnvironmental EnvironmentalEnvironmental EnergyEnergy Exchange Exchange ResourcesResources Exchange Exchange (2010)(2010) (2009?)(2009?) Parallel Trends: Eco‐Agriculture, Eco‐Labelling ECO‐CERTIFICATION & ECO‐AGRICULTURE • Green and Organic Food Labels • Government Green Procurement Policy • Promotion of Rural Biogas Development • Promotion of Conservation Tillage • Local subsidies for Green/Organic Agriculture Final Thoughts: Getting from A to B ? A B Reports Reports THANK YOU! Michael T Bennett, Forest Trends mbennett@forest‐trends.org.
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