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

Agriculture, natural resources and rural development / Agricultural policy, institutional and capacity development - Forestry - Irrigation - Land-based natural resources management - Water-based natural resources management

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.

Improved legislation for environmental management and sustainable development in the PRC

National eco-compensation legislation in the PRC is developed.

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.

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

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.