China, People's Republic of: Study on Eco-Compensation Regulations

Sovereign Project | 44501-001

Summary

The TA will contribute to improved environmental management and sustainable development in the PRC by adding value to the overall eco-compensation policy development process. The impact of the TA is improved legislation for environmental management and sustainable development in the PRC. The TA will support the government in achieving its broader objectives of attaining an ecological civilization, and support the government in meeting its targets of having the highest legislation in place for issues related to eco-compensation. The outcome is that national eco-compensation legislation in the PRC is developed.

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Project Name Study on Eco-Compensation Regulations
Project Number 44501-001
Country China, People's Republic of
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7699-PRC: Study on Eco-compensation Regulations
Technical Assistance Special Fund US$ 500,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector Agriculture, natural resources and rural development - Agricultural policy, institutional and capacity development - Forestry - Irrigation - Land-based natural resources management - Water-based natural resources management
Gender Equity and Mainstreaming No gender elements
Description The TA will contribute to improved environmental management and sustainable development in the PRC by adding value to the overall eco-compensation policy development process. The impact of the TA is improved legislation for environmental management and sustainable development in the PRC. The TA will support the government in achieving its broader objectives of attaining an ecological civilization, and support the government in meeting its targets of having the highest legislation in place for issues related to eco-compensation. The outcome is that national eco-compensation legislation in the PRC is developed.
Project Rationale and Linkage to Country/Regional Strategy

Natural systems like forests, wetlands, and watersheds provide a wide variety of goods and services, and contribute to human well-being and poverty reduction. Many of these services are provided indirectly, i.e., with no direct link between the service provider and the consumer of the service, perhaps due to the spatial separation between the environmental services providers (often landowners or resource managers in the upper watershed) and the users of the same environmental services (beneficiaries such as consumers of potable water, or industries or agriculture located downstream). Therefore, the market for these services is often not present and the ecosystem managers have little economic incentive to improve environmental management. As a result, in most places, environmental services are undersupplied, therefore fewer or inferior quality services are made available than desirable.

The government recently emphasized the need to revisit the legal and institutional mechanisms for environment protection. In 2008, the Decision of the Central Committee of the Communist Party of China on Several Significant Issues in Promoting Rural Reform and Development adopted in the Third Plenary Session of the 17th Communist Party of China Central Committee stressed the need for an incentive mechanism to facilitate the protection of such natural resources as arable lands, water areas, forests, grasslands, wetlands, and agricultural species resources.

The improved regulatory framework resulting from this TA will contribute to enhancing environmental sustainability. The national eco-compensation legislative framework aims to set principles that will help clarify rights and responsibilities over ecosystem services and natural resources, resolving equity issues, and improving strategic environmental planning. This effort will stimulate innovation in environmental policy, including the development of more incentive-based management regimes, and greater adoption of and innovation in market-based instruments.

Impact Improved legislation for environmental management and sustainable development in the PRC
Project Outcome
Description of Outcome National eco-compensation legislation in the PRC is developed.
Progress Toward Outcome

The TA supported delegations from the NDRC's Department of Western Region Development on two separate study tours. The international study tours were used to gather information that oriented further research into legislative provisions and arrangements for government financial investments and transfer payments, horizontal intra-ecological labeling systems. The international consultant also separately completed a review on international approaches in legislating PES and implacations for PRC.

Thematic studies on nine eco-compensation focal areas were completed. The TA consultants and NDRC officials prepared "Opinions on Establishing and Improving Eco-compensation Mechanism (OEIEM)" for submission to the State Council. The OEIEM is expected to provide the basis for the PRC Government's policy framewokr and institutional arrangements for eco-compensation. On the basis of the thematic studies and the information compiled from the study tours, the TA consultants proposed the Eco-compensation Legislative Framework and an initial draft of the Eco-compensation Regulations.

Based on the request by NDRC, the TA consultants, produced an academic publication titled "Developing Eco-compensation Regulations in China: the Way Forward". This is the first academic publication in China that comprehensively and systematically discusses eco-compensation legislation and practice.

A separate ADB knowledge product synthesizing the work of the TA and key lessons learnt for a wider audience has been prepared and is currently undergoing peer review, and is anticipated to be published in Q1 2015.

Implementation Progress
Description of Project Outputs

National drafting team trained, and a review on international approaches in eco-compensation and PES legislation prepared

Detailed technical (thematic) study reports on nine focal areas (legislative framework, wetlands, forests, regional approaches, river basin, resource exploitation, marine, collection of ecological compensating tax, and modeling of economic impacts) of eco-compensation

First draft of national eco-compensation legislation for the PRC

A knowledge product on lessons from the development of eco-compensation legislation

Status of Implementation Progress (Outputs, Activities, and Issues)

Completed in 2013

Thematic studies on nine eco-compensation focal areas were completed. These included studies on (i) legislative framework for eco-compensation, (ii) wetland eco-compensation; (iii) forest ecological benefit compensation, (iv) inter-regional eco-compensation approaches, (v) river basin eco-compensation, (vi) compensation for exploitation and utilization of mineral resources, (vii) marine eco-compensation, (viii) collection of ecological compensation tax, and (ix) modeling work in eco-compensation design and evaluation.

Study framework already presented at the inception workshop.

In the second half of 2011, the TA consultants and NDRC officials prepared "Opinions on Establishing and Improving Eco-compensation Mechanism (OEIEM)" for submission to the State Council. The OEIEM is expected to provide the basis for the PRC Government's policy framework and institutional arrangements for eco-compensation. On the basis of the thematic studies and the information compiled under Output 1, the TA consultants proposed the Eco-compensation Legislative Framework and an initial draft of the Eco-compensation Regulations.

Based on the request by NDRC, as recorded in the interim review mission MOU, the TA consultants produced an academic publication titled "Developing Eco-compensation Regulations in China: the Way Forward", published by the Peking University Press. This is the first academic publication in China that comprehensively and systematically discusses eco-compensation legislation and practice. A separate ADB knowledge product synthesizing the work of the TA and key lessons learnt for a wider audience has been prepared and is currently undergoing peer review, and is anticipated to be published in Q1 2015.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design The initial project concept was prepared by NDRC and listed as a standby in the 2010 Country Program. A reconnaissance mission was fielded in Sep 2010 and discussions were held with NDRC in order to clarify scope and specific outputs of the TA. One particular concern was the potential overlap between this TA and another TA (TA 7217-PRC ) that is currently under implementation with Ministry of Environment Protection (MEP). This was clarified with NDRC and MEP during the mission. MEP now participates and provides input into the high level multi-sector committee established by this NDRC led process. To ensure broader participation and input from other agencies and civil society organizations, the proposed TA was also presented and discussed at the PES conference organized in Ya'an, Sichuan Province on 23-24 October 2010.
During Project Implementation NRDC will provide in-kind contributions of counterpart staff time; support domestic field-trip expenses; cofinance the cost of the international workshops and/or conferences; and provide the logistical support, printing costs, office space, consultants' internet and other basic office facility usage.
Business Opportunities
Consulting Services The TA will be implemented over 24 months, tentatively scheduled from March 2011 to February 2013. Ten individual consultants--nine national consultants (team leader, deputy team leader, and seven other thematic experts) and one international consultant, will be engaged to conduct studies that contribute to the drafting of the eco-compensation legislation. An estimated 62.5 person-months of consulting services will comprise the services of an international expert for 3.5 person-months and nine individual national experts for 59 person-months. ADB will engage the consultants following its Guidelines on the Use of Consultants (2010, as amended from time to time). The outline terms of reference for the consultants are in Appendix 3 of the TA Report.
Procurement The individual consultant selection modality will be used because studies related to eco-compensation legislation comprise a highly specialized subject; thus identifying an available firm with sufficient expertise to implement this study would be difficult. In addition, separate responsibilities are required to produce the nine thematic reports. A proposed outline for the thematic study report is provided in Appendix 4 of the TA Report.
Responsible ADB Officer Alvin Lopez
Responsible ADB Department East Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, EARD
Executing Agencies
National Development and Reform CommissionNo. 8 South Yuetan St.
Beijing 100824
China
Timetable
Concept Clearance 29 Oct 2010
Fact Finding 29 Oct 2010 to 11 Nov 2010
MRM -
Approval 10 Dec 2010
Last Review Mission -
Last PDS Update 25 Sep 2014

TA 7699-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Dec 2010 10 Jan 2011 10 Jan 2011 28 Feb 2013 30 Nov 2014 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
500,000.00 0.00 100,000.00 0.00 0.00 0.00 600,000.00 10 Dec 2010 437,137.06

Safeguard Documents

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Evaluation Documents

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