Progress of Eco-compensation
in China
LIU GUIHUAN
PhD and Associate Professor
Chinese Academy for Environmental Planning, MEP, P.R.C
Nov.2013
The OECD international Expert Workshop on Biodiversity Offsets
Content
1. Background of Eco-compensation Implementation
2. Concept of Eco-compensation Mechanism
3. Development Stages of Eco-compensation Policy
4. Key Fields of Eco-compensation in China
5. What we want to learn from OECD Countries
1. Background of Eco-
compensation Implementation
Effective management and protection means need to
be explored for biodiversity conservation
• Present situation and problems: China, is one of 12 countries with
the most abundant biodiversity in the world. China is actively
protecting biodiversity, however, it remains to be strengthened and
improved in aspects of financial support, supervision mechanism for
project implementation, and the public consciousness on
biodiversity protection etc.
• Lessons and recommendations: biodiversity conservation shall
focus on protection of habitats and even a wider range of ecosystem,
instead of some individual species only, which needs to explore new
means for biodiversity conservation.
Eco-compensation is a new approach to
biodiversity conservation
On Jun 4th, 2012, the first conference of China Biodiversity
Conservation Committee was chaired by then Vice Premier Li
Keqiang in Beijing, who addressed an important speech.
To strengthen biodiversity conservation, the reform must further be
deepened, and the system mechanism must be improved. In view of the
current situations, it is most important to establish eco-compensation
mechanism and integrate biodiversity conservation into the eco-
compensation policy, so that the corresponding economic
compensation and institutional supports could be provided through the
fiscal and taxation systems.
Ecosystem is an Important Carrier for Biodiversity
Conservation and Eco-compensation Mechanism
• Eco-compensation is a comprehensive way to protect overall
ecosystem on the basis of integration of conservation and
sustainable utilization of ecosystem services with pollution control.
It is an effective means to establish eco-compensation mechanism
for protection of ecosystem services function, including
biodiversity. Since all natural elements in the ecosystem, such as
river basin, forest and grassland, closely relate to each other, the
mutual influences among different regions are also very
significant, so they are important carriers to establish eco-
compensation mechanism.
2. Concept of Eco-compensation
Mechanism
Academic Views on Eco-compensation
Emphasis on compensation
to protector
Emphasis on two-way
compensation
Eco-compensation shall meet five
conditions: Firstly, it shall be a kind of
voluntary trading behavior; Secondly, the
trading object shall be clearly defined as
environmental services; Thirdly, the
environmental server shall be available;
Fourthly, the environment supplier shall
be available; Lastly, consumers have to
pay if and only if the service provider can
ensure provision of the environmental
services.
In view of cost of the behavior subject, eco-compensation is considered as increasing cost (or earnings) of behavior to damage (or protect) resources and environment through charging (or compensating) on such behavior, so as to encourage the subject reduce (or increase) the external diseconomy (or external economy) result from their behavior, and achieve the resources protection.
Policy definition of Eco-compensation
• Eco-compensation is a kind of institutional arrangement to regulate
the economic interest relationships among the ecological protector,
beneficiary and impairer by means of fiscal, tax and market according
to the ecosystem service value or ecological protection cost,
ecological destruction and development opportunity cost with
purpose of protecting the ecosystem function and promoting harmony
between human and nature.
• In China, eco-compensation is not only an environmental economic
means, but also a means to regulate the social development.
3. Development Stages of Eco-
compensation Policy in China
11
Overall Situation of Establishing Eco-compensation Mechanism in China
Inception
Promotion
The researches and practice on eco-compensation have been
began in China since mid-1980s, the concept of eco-
compensation is put forward by MEP.
Eco-compensation means:
--National eco-compensation policy
promoted by the relevant ministries and
commissions;
--Local eco-compensation policy
formed on the basis of local exploration
practices. Eco-compensation fields: •Eco-compensation in forests, river
basin, grassland, key ecological
function zone, and mineral resources
development, etc
First Stage: Inception (1985~1998)
Since mid-1980s, a number of laws on
resources and environment have been enacted,
which has provided a legal basis for eco-
compensation practices.
In 1990, the State Council promulgated
Regulation on Further Strengthening the
Environmental Protection, which stipulates
the environmental protection orientation of “the
developer must protect, impairer must restore
and user must compensate" and “the
exploitation and utilization shall be equally
valued with protection and appreciation”, initially
established eco-compensation policy.
Ec
o-c
om
pe
ns
ati
on
wa
s
pre
lim
inary
rece
ived
att
en
tio
n
Second Stage: Development (1999~2005)
A series of major ecological projects were launched, such as the
returning farmland to forest, natural forest protection, and nature
reserve, which promoted rapid development of eco-compensation in
China.
The CPC Central Committee and the State Council put forward definite
requirements on establishing eco-compensation mechanism, for
example:
In Dec 2005, Decision of the State Council on Implementing the
Scientific Outlook on Development and Strengthening
Environmental Protection was issued to stipulate that "Eco-
compensation policy shall be improved and eco-compensation
mechanism shall be established as soon as possible. This Decision
became a programmatic document to guide the coordinated economic,
social and environmental development in China during the period of
“the 11th Five-year Plan”.
Eco
log
ical co
mp
en
sati
on
go
t
fast
develo
pm
en
t
Third Stage: Wide Promotion (2006~)
Since 2006, a number of relevant suggestions and proposals have
been put forward by NPC representatives and CPPCC members
during the annual "two sessions"; the government work report also
attaches great importance on it; even “the 11th Five-year" and the
"the 12th Five-year" National Plan, the key works of the State
Council all clearly proposed to establish a new eco-compensation
mechanism.
Some ministries, such as MEP, MOF, NDRC and MWR are actively
brewing to develop eco-compensation policy, and carry out the pilot
eco-compensation in river basin.
Some regions also began boldly exploring the eco-compensation
mechanism, and conducting pilot eco-compensation mechanism in
some river basin, some provinces have already established their
eco-compensation mechanism in the province-wide river basin.
Co
mp
reh
en
siv
e p
rom
oti
on
of
eco
-co
mp
en
sati
on
4. Key Fields of Eco-
compensation in China
Key Fields of Eco-compensation Policy Issued Nationwide
Eco-compensation policies enacted in China are mainly concentrated in such fields as river basin,
forest, grassland, key ecological function zone, and mineral resources development.
River basin
Forest
Grassland Key
ecological zone
Mineral resources
development
About 40 files involving over 20 provinces
which have issued their eco-compensation
policies for river basin, mainly based on
local spontaneous exploration
About 20 files
involving over 10
provinces; state
promotes and local
government carries
out the pilots
State promotes
State promotes and local
government explores
the state promotes it in
form of transfer payment
for key ecological
function zones
Biodiversity Conservation Derived from Various Fields
• There is not any eco-compensation system specific to biodiversity
conservation in China, most of them are based on other eco-
compensation.
• Most of eco-compensation is to achieve biodiversity conservation in
form of project.
• These projects have big investment scale and are supported by the
Government, which not only improve the worsening ecological
environment in China, but also guide the local residents to transfer
their life style. So they relieve the environmental pressure, protect
the biodiversity to a certain extent, and promote the biodiversity-
friendly development.
5. What we want to learn
from OECD and other
Countries
Why to Offset
Who offsets whom
How much to offset
How to offset
Where fund comes from
How does it work
The fundamental purpose of eco-compensation is to improve the
ecological environment, and its ultimate goal is to keep
sustainable ecosystem service function.
The ecological beneficiary and impairer shall compensate the
protector and party who reduce ecological damage.
Direct input, development opportunity loss, extension input,
and input for restoration
The governmental and market compensation, as two major eco-
compensation modes in China, form a foundation to build eco-
compensation mechanism at different levels in China.
Financial transfer payment, special fund and market mechanism
Evaluation on the ecological, economic and
social benefits of eco-compensation
Ke
y lin
ks
Key links of Offsets & Compensation?
What we want to learn
How to narrow the objectives. The objectives of eco-compensation policy shall be
designed definite, simple and measurable, stressing on balance between biodiversity
conservation and social harmony, so as to realize win-win situation, and avoid
phenomenon of “applying one policy to all conditions";
How to unify the mythologies of evaluation on biodiversity. It’s difficult to find out a
very scientific and satisfactory to every stakeholder.
How to enhance Public Participation. Strengthen public education and public
participation to ensure that the stakeholders can be supported;
How to balance the relationship between government and market. Transfer the
Government from sole purchaser of ecosystem services to a supporter, establish and
maintain the environment and market to encourage individuals to participate in, and
explore a mechanism combining government compensation and market
compensation;
How to monitor and evaluate the effect. Pay attention to assessment on eco-
compensation effect, evaluate funds utilization, define the priorities on basis of such
evaluation, effectively use the limited compensation funds, and improve its utilization
efficiency.
Thanks for
Your Attention!
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