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China: Eco-Compensation for Watershed Services in the People’s Republic of China (#422)

With one of the lowest per capita freshwater resources in the world, China have been investing in and seeking new ideas and methods for improving both supply side and demand side management of water resources. This has included numerous experiments in “eco-compensation”. These experiences demonstrate that eco-compensation should be considered as a potential tool for Integrated River Basin Management to address financing shortfalls, identify management pitfalls, and convince key stakeholders to participate.

Description

Annual per capita freshwater resources in China are among the lowest in the world and effective water resources are further reduced by pollution. According to the country’s Macro Strategic Research Report on the Environment (2011), a large proportion of people in China do not have access to safe drinking water.

In the face of these challenges, the central and the provincial governments have been investing in and seeking new ideas and methods for improving both supply side and demand side management of water resources. This has included numerous experiments in “eco-compensation”, which shares characteristics with payments for ecological services.

In 2010, the Government completed a national function-based land zoning plan to serve as the basis for a more comprehensive system of environmental planning and management. This involves also reforms to the public sector fiscal system to better apportion funding for environmental management and target key ecological function zones.

A revision and evaluation of the performance of local officials is also required in order to place greater emphasis on environmental and sustainable development targets. Eco-compensation is to serve as a key component of this system.

Action taken

The National Development and Reform Commission (NDRC) have taken a number of important steps toward developing the Eco-Compensation Ordinance. The work has been developed in three phases:

The establishment of a steering committee, working groups, and an expert consultative committee for the development of the draft ordinance.
Survey work and solicitation of public and expert input. The draft ordinance working group was divided into seven research groups to conduct surveys in 13 provinces, with high-quality research reports produced at the end of each survey. The NDRC has also been eliciting both public and expert feedback on the draft ordinance. It established a page on its website to elicit online public feedback, and has been hosting annual international conferences, with the support of the Asian Development Bank (ADB).
Develop the draft ordinance and key policy documents involving the development of a core framework for the Eco-Compensation Ordinance and the drafting of a preparatory policy document entitled Several Opinions Regarding Establishing and Refining Eco-Compensation Mechanisms. This document is a critical, formal step for the establishment of a national ordinance. To date, the document has gone through three central government revisions and two formal reviews from the State Council, and has received significant feedback and suggestions from the country’s 31 provinces, municipalities, and autonomous regions in three separate symposia.

Lessons learned

Consider eco-compensation as a potential tool for Integrated River Basin Management (IRBM) to address financing shortfalls, identify management pitfalls, and convince key stakeholders to participate in water source protection.
Balance between creating a strong regulatory framework to ensure compliance, while also allowing for flexibility in how outcomes are achieved so as to allow for and catalyse local-level innovation and adaptation of central policies to fit local needs and constraints. Also productive, future discussions on the development of an eco-compensation regulatory framework should focus on principles and desired outcomes rather than operational details.
Take account of the scale of actors and include all levels of potential buyers and providers of ecological services, from central government to individual land users, within a common framework.

Page last edited: 7/30/2013