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Developing Future Ecosystem Service Payments In China

Lessons Learned from International Experience

By Sara J. Scherr, Michael T. Bennett, Molly Loughney, Kerstin Canby - Ecoagriculture Partners, Peking University College of Environmental Sciences, Forest Trends, Forest Trends, PROFOR
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Across the world, the growing scarcity of ecosystem services has led to a flurry of conservation innovations over the past decade in the form of payment schemes and nascent markets for these services. The global economic value of ecosystem services is estimated in the trillions of dollars, though actual payments for protecting these services are developing unevenly around the globe. The most developed markets and payment systems are located in North America and Europe, dominated by multi-billion-dollar public agri-environmental payments and public and private conservation easements. In developing countries, several billion dollars are spent on watershed payments. While Latin America has experimented extensively with diverse types of systems, developments in Asia and in Africa have lagged behind, although there is a large pipeline of projects ready to be initiated by international development banks and funds.
Against this global backdrop, the Chinese government has made extraordinary efforts in driving some of the largest public payment schemes for ecosystem services in the world. Over RMB 50 billion has already been spent on the Sloping Land Conversion Program, and 7.2 million ha of cropland enrolled. The government also spends RMB 2 billion annually on the Forest Ecosystem Compensation Fund, which currently covers 26 million ha of forest area across 11 provinces in China. Given concerns about the effectiveness and financial sustainability of these efforts, policy circles are abuzz with debate on how to improve these programs as well as how to explore and develop other market-based tools and regulatory innovations to better address China’s environmental and development challenges.

To inform this growing debate, this report was produced by Forest Trends at the request of the CCICED Eco-compensation Taskforce, to summarize the global experience in payments for ecosystem services (PES) and the lessons it has provided that are of particular relevance to China. These lessons, which are outlined in this paper, focus on how to move from the theoretical valuation of ecosystem service benefits to the actual creation of markets with real, in-hand financial payments between users and producers of ecosystem services.