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Markets for Ecosystem Services in China

An Exploration of China's "Eco-Compensation" and Other Market-Based Environmental Policies

By Michael T. Bennett
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This report documents recent policy innovations for the conservation and management of ecosystem services in China. Policymakers have become increasingly interested in developing new approaches to address China’s multiplying conservation challenges and resource constraints in face of break-neck economic growth. This has led China’s central and local governments to rapidly expand the range of policy and program innovations, many under the broad heading of eco-compensation, that are laying the groundwork for the development of ecosystem services markets. In particular, local governments have been important contributors to this process, rapidly adapting centrally designed eco-compensation programs to their own needs, creating hybrids — programs that weave together and draw upon multiple central and provincial policies and funding sources — and creating their own distinct initiatives that often feed back into central government policy development. While not an exhaustive account of all payments (PES) and markets (MES) for ecosystem services in China, it provides an overview of a range of policy innovations for watershed ecosystem services, carbon markets, forest conservation, improving landscape amenities, biodiversity conservation and anti-desertification. The results of this report suggest that there are tremendous opportunities to draw lessons from the significant degree of local innovation that is occurring and to connect innovations from around the globe to inform developments in China.