Course:CONS200/2021/An Overview of Payment for Ecosystem Services in China: Policies and Implications

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A graph explains the Payments for Ecosystem Service (PES).

Background and Development

Birds can provide regulating services when pollinating flowers.

The development of PES in China corresponds to a specific economic and social background. Since the reform and opening-up policy, rapid economic development has lifted hundreds of millions of people out of poverty. However, this development is extremely uneven. At present, China is still in the stage of unbalanced economic growth and modernization between the eastern coastal areas and the far western areas. In this stage, a large amount of natural resources in the western region are allocated to the eastern coastal region, while the value of ecosystem services provided by the western region is neglected. For example, the West-to-East gas transmission project. "Western gas" refers to the natural gas produced in Xinjiang, Qinghai, Sichuan, Chongqing and Ordos (four major natural gas zones in China). "East transportation" mainly refers to transporting the natural gas from the above areas to the Yangtze River Delta. Construction started in 2002, and gas was officially delivered to Shanghai and other places in 2004[1]. At the same time, the large-scale exploitation of natural resources has not well protected the environment in the west, leading to gradual deterioration of the western environment. And the gap between the rich and the poor in the east and the west continues to widen. PES was first introduced to China to solve serious environmental problems and the imbalance of economic development between the east and the west, which also reflects the strong demand for sustainable development and environmental protection.

The development of PES in China began with a number of large-scale, long-term PES programs implemented by the central government to ensure river basin protection, biodiversity conservation, and natural landscape conservation.The most common examples are the Returning Farmlands to Forests Project, the Natural Forest Protection Project and the Three North Shelterbelt System Project. Along with the implementation of these programs, the Chinese government began to develop and implement new PES pilot programs.The scale of these plans is relatively small, such as Miyun Reservoir Watersheds Ecological Compensation Project, Guanting Reservoir Watersheds Ecological Compensation Project, Zhejiang Province Dongtou County Water Resources Protection Area PES and so on. PES is an effective way to internalize the environmental externalities generated by economic activities[2].

Policies and implication

In China, the term Payment for Ecosystem Services is more seen and equivalent to ecological compensation.


The eco compensation policy is administered under the guidance of scientific development, with the purpose of protecting the ecological environment and promoting the harmonious development between man and nature. The core of this system aims to assign ecological environment protection responsibilities and clarify the interests of all parties concerned. Efforts should be made by all relative parties to establish and improve the standard system of ecological compensation in key areas. Provincial and territories’ administration should explore the methods to solve the key problems of ecological compensation, learn from the experience at home and abroad, and gain experience in practice, so as to comprehensively establish the ecological compensation mechanism and provide methods, technology, and practice support to improve the policy.[3]

Basic principle

The basis and core issue of establishing the ecological compensation mechanism is to:[3]

  1. distinguish the environmental protection responsibilities of various stakeholders.
  2. evaluate the ecological environment costs of resources development, engineering construction and other activities.
  3. establish the calculation method system of ecological compensation standards.

Based on actual circumstance of each projects, The environmental protection departments at all levels shall:[3]

  1. actively carry out relevant research, distinguish environmental protection responsibilities of the projecting areas in all aspects.
  2. put forward the requirements for ecological protection and restoration for each area.
  3. specify the subjects, objects, and standard calculation method of ecological compensation.
  4. strengthen the environmental monitoring, inspection, and supervision ability.
  5. scientifically evaluate the actual effect of the existing ecological protection and construction investment to provide support for the establishment and implementation of ecological compensation policies and systems in other areas.

It is necessary to clarify the subject of ecological compensation responsibility and determine the object and scope of ecological compensation. The exploiters and users of environment and natural resources should bear the external cost of environmental damage, fulfill the responsibility of environmental restoration, compensate the relevant losses, and pay the cost of occupying the environmental capacity; the beneficiaries of ecological protection have the responsibility to pay the appropriate compensation to the ecological protectors.[3]

Ecological compensation involves the adjustment of multiple interested parties. It is necessary to widely investigate the situation of various stakeholders, reasonably analyze the rights and obligations of ecological protection, scientifically assess the direct and indirect costs of maintaining ecosystem functions, study and formulate reasonable ecological compensation standards, procedures, and supervision mechanisms, so as to ensure the unity of responsibilities, rights and interests of stakeholders, and achieve the goal of compensation. Under certain circumstances, necessary punishment is required.[3]

On the basis of fulfilling the responsibility of environmental protection, the stakeholders of regional or watershed ecological environment protection should strengthen the cooperation of ecological protection and environmental governance, and actively strengthen the division of labor and cooperation in the field of economic activities, jointly strive to improve the quality of regional and watershed ecological environment, broaden the development space, and promote regional sustainable development.[3]

The government should play the guiding role in the process of establishing the ecological compensation mechanism and regulating the market. Local governments should study and improve the investment mechanism of public finance in ecological protection in combination with the relevant national policies to address the local situation. At the same time, the legislature needs to study and formulate policies and regulations to improve and regulate the main body of the market-oriented economy, strengthen the pressure and power of cherishing the environment and resources, and guide the establishment of diversified financing channels and markets as the mode of operation of the system.[3]


The establishment of PES is an important measure to implement scientific development. PES protects the environment and promotes harmony between man and nature. According to the value of ecosystem services, the cost of ecological protection and the opportunity cost of development, it comprehensively uses authorities and markets to adjust the interest relationship between the parties concerned in ecological protection and construction. The establishment and improvement of PES is to promote the transformation of environmental protection from administrative measures to comprehensive use of legal, economical, technical and administrative means. PES promotes the sustainable use of resources, accelerates the construction of an environment-friendly society, and realizes the harmonious development of different regions and different interest groups.[3]

Results (the changes by PES) and Examples

PES has developed into a top-down, government-led process in China, and has gradually evolved from centralized large-scale projects to decentralized small-scale projects. Ecosystem protection and promotion of economic development in poverty-stricken areas are the two major goals of PES. The development of PES in China began with some large-scale, long-term PES plans, which were implemented by the central government to guarantee that watershed protection, biodiversity protection, and natural landscape protection will succeed. The most common examples in China are the Conversion of Cropland to Forest Project, Natural Forest Protection Project and Three North Shelterbelt System Project Along with the implementation of these plans, local governments in China began to formulate and implement new pilot PES programs. The scale of these local governments' pilot PES programs is relatively small such as Miyun Reservoir Watershed Ecological Compensation Project, Guanting Reservoir Watershed Ecological Compensation Project, Jiulong River and Minjiang river PES projects, Beijing-Tianjin Sandstorm Source Control Project, PES Plan in Lashihai Watershed, etc. PES is an effective way to internalize the negative environmental externalities generated by economic activities. PES was first introduced to China to solve serious environmental problems and the imbalance of economic development between the east and the west, and it also reflects the strong demand for sustainable development and environmental protection in China[2].

Three typical programs will be introduced as examples in detail, which are the Conversion of Cropland to Forest Project, Jiulong River and Minjiang river PES projects and  Beijing-Tianjin Sandstorm Source Control Project.

Example 1 of PES program: Conversion of Cropland to Forest Project

Farmers of Fengning city collectively participate in the project of returning farmland to forest.

In 1998, the floods in the Yangtze River valley of China brought great losses and disasters to the disaster-stricken areas. The huge ecological disaster has seriously affected the economic development of the affected areas. These disasters caused by ecological destruction make people pay attention to the importance of protecting ecological basins, and begin to focus on environmental governance in the Yangtze River and the Yellow River Basin forest protection. Therefore, the project of returning farmland to forest was put forward to fundamentally control the environmental problems such as soil erosion. In

2002, the Conversion of Cropland to Forest Project was launched nationwide. Under this background, Fengning City of Hebei Province began to implement the project [4].

Present situation of the project of returning farmland to forest in Hebei province.

The Conversion of Cropland to Forest Project in Fengning City is subsidized by the government and implemented by Hebei Province. The main purpose is to expand the forestry area, improve climate conditions, and increase water resources. At the beginning of the 21st century, the national policy of returning farmland to forest was to subsidize 1,500kg grain per hectare and 300 yuan in cash per hectare. In 2007, the State Council issued "Notice about perfecting the policy of returning farmland to forest" ([2007] no. 25). The notice stipulates that after the current grain and living allowance subsidies for returning farmland to forests expire, the central government will provide an annual cash subsidy of 1,050 yuan and a living allowance of 300 yuan per hectare to solve the living difficulties and long-term livelihood problems of farmers who have returned farmland to forests, and consolidate the achievements made in the conversion of farmland to forests[5].

The Conversion of Cropland to Forest Project involves a total of 60,000 rural households in 299 administrative villages in 26 townships, with 430 million yuan of direct subsidies from the government. Since the implementation of this project in 2007, Fengning has completed a total of 23,700 hm2 of farmland afforestation, barren hills and wasteland afforestation of 33,600 hm2. The county's 57,300 hm2 of barren hills have been covered with green[6].

Example 2 of PES program: Jiulong River and Minjiang river PES projects

The Jiulong River and Minjiang river PES projects.

The Jiulong River and Minjiang river PES projects in Fujian province are the first two of six pilot projects for ecological compensation in China. The Jiulong River PES project receives financial support of RMB 280,000 per year, while the Minjiang river PES project receives financial support of RMB 350,000 per year from the government. Through cooperation and coordination between relevant local governments, the water quality of the two rivers has significantly improved. The water qualification rate for class Ⅰ-III of Jiulong river’s drainage basin has increased from 84.3% in 2004 to 89.5% in 2006. And the water qualification rate for class Ⅰ-III of minjiang river’s basin has increased from 83.0% in 2004 to 95.6% in 2006[2].

Example 3 of PES program:Beijing-Tianjin Sandstorm Source Control Project

In the spring of 2000, a series of sandstorms or floating dust weather occurred in North China. The high frequency, wide range and great intensity are rare since the founding of the People's Republic of China. The government attaches great importance to this and has decided to launch an emergency sandstorm control project in Beijing and Tianjin. The Beijing-Tianjin Sandstorm Source Control Project is a control measure for land desertification in the surrounding areas of Beijing and Tianjin. It is in order to strengthen soil, prevent sand and reduce the sandstorm weather. The Beijing-Tianjin Sandstorm Source Control Project was launched as a pilot project in June 2000 and fully launched in 2001. In March 2002, the State Council approved the project construction plan, and the project was fully implemented. The project is mainly based on the construction of forest vegetation[7].

The Beijing-Tianjin Sandstorm Source Control Project.

Hebei Province implemented the project in two cities which are Chengde and Zhangjiakou. Project funding is divided into two parts: one is national funds, and the other is local governments supporting. As of the end of 2012, the government had issued a total of 6.31 billion yuan in engineering construction investment and local governments issued 410 million yuan on  supporting project construction.

By 2010, through the protection of existing vegetation, artificial afforestation, returning farmland to forest and grassland management, the desertification land in the project area has been basically controlled. Moreover, the ecological environment has been obviously improved, the sandstorm weather and sandstorm weather have been significantly reduced, and the expansion trend of the desertification land has been curbed on the whole. By the end of 2012, China had completed 2.326 million hectares of forestry construction and 980,000 hectares of grassland management and construction. 12,503 water source projects and 18,563 water-saving irrigation projects have been completed. The soil and water erosion situation continues to weaken[4].

Implications for future use

PES in China does not only help protect the environment, but also has an inseparable relationship with poverty alleviation since PES provide jobs to the people who live in the rural areas that they are the provider of ecosystem services to other people, therefore, they can receive payment from the PES plan[8], and this helps the development for the rural areas in the future. Although PES helps to do with conservation in China and brings some benefits to society, there are still some challenges behind the process of making this topic a mainstream in environmental protection, and those challenges might cause some problems in the long term, which will decrease the efficiency of PES in the future[9]. In order to keep sustainability in the Payment for Ecosystem Service in the long term, the programs need to be effective in the ecology and economy, and also need to be equal to all participants [10].


As mentioned above, economic efficiency is an important criterion that ensures the program becomes sustainable in the long term[10]. However, scientists find out that there are still rooms to make the program become more efficient in the economy[10][11]. In addition, there might be an overlapping payment from the government to the farmers, which if the land has species that can fit two different PES schemes, the farmer can get paid from both of them. This overlap makes the cost become huge, and waste some money that could be used to increase the size of PES in China[9].

Furthermore, due to economic development in China, large-scale migration of many people from rural areas to cities has caused the instability of the PES plan because the stewards live far away from the natural resources that they need to take care of, yet still receive the payment from the PES[9].

Moreover, some problems have arisen through the inconsistency of management departments and lack of cooperation in the government system. This is because the management of an ecosystem service involves many different departments, such as forestry, environment, and water conservancy, and the lack of a communication platform between these departments leads to the inconsistent management and existence of loopholes[12].


In the future application of PES in China, people need to consider the ways of solving those challenges in order to improve the efficiency of PES and make PES sustainable.

First, the cost-efficient is very important in achieving the goal of sustainable development in the payment for ecosystem programs. In the study of China’s Grain-to-Green project, the researchers find out that the flat payment that has been used for this program is not the best way[11]. The discriminative payment is more efficient than flat payment since the payments are different depending on the opportunity cost[11]. By changing the method of payment, the efficiency of investment in the PES can be improved and make the PES program become more sustainable. Also, making a system that organizes all different PES schemes can increase the economic efficiency that it helps to reduce the overlapping of payments, which would save money for other PES schemes[9].

Second, we can establish some supervision departments to monitor if the ecosystem services are still being provided to ensure the efficiency in ecology.

Third, previous studies showed that the cooperation of sectoral platform can improve environmental governance[12], therefore, we need to improve the management of PES by the cooperation and coordination of departments, build platforms for it, and display the information of PES schemes to the public[8][12].


Please use the Wikipedia reference style. Provide a citation for every sentence, statement, thought, or bit of data not your own, giving the author, year, AND page.

For dictionary references for English-language terms, I strongly recommend you use the Oxford English Dictionary. You can reference foreign-language sources but please also provide translations into English in the reference list.

  1. Wu, H. (2003). Introduction to West-East Natural Gas Pipeline Project (Part 1) (Doctoral Dissertation)
  2. 2.0 2.1 2.2 Wei, L. (2012). Payment for ecosystem services in China: Practical Experiences and Institutional Barriers. Doc In.
  3. 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 State Environmental Protection Administration. (2007). Guiding Opinions on the Pilot Program of Ecological Compensation. Retrieved from
  4. 4.0 4.1 Cheng, Y. (2015). Research on Ecological Compensation in the Upstream Area of Miyun Reservoir. (Doctoral dissertation, Beijing Forestry University).
  5. The State Council. (2007-08-09). Notice about perfecting the policy of returning farmland to forest.
  6. Yanzhao City Network. (2013-11–07). Hebei FengNing returning farmland to forest project.
  7. Forestry Bureau. (2007-06-15).   Beijing-Tianjin Sandstorm Source Control Project.
  8. 8.0 8.1 Zhen, L., & Zhang, H. (2011). Payment for Ecosystem Services in China: An Overview. Living Reviews in Landscape Research, 5.
  9. 9.0 9.1 9.2 9.3 Pan, X., Xu, L., Yang, Z., & Yu, B. (2017). Payments for ecosystem services in china: Policy, practice, and progress. Journal of Cleaner Production, 158, 200–208.
  10. 10.0 10.1 10.2 Yang, W., & Lu, Q. (2018). Integrated evaluation of payments for ecosystem services programs in China: a systematic review. Ecosystem Health and Sustainability, 4(3), 73–84.
  11. 11.0 11.1 11.2 CHEN, X. I. A. O. D. O. N. G., LUPI, F. R. A. N. K., VIÑA, A. N. D. R. É. S., HE, G. U. A. N. G. M. I. N. G., & LIU, J. I. A. N. G. U. O. (2010). Using Cost-Effective Targeting to Enhance the Efficiency of Conservation Investments in Payments for Ecosystem Services. Conservation Biology, 24(6), 1469–1478.
  12. 12.0 12.1 12.2 Wei, L. (2012, May). Payment for ecosystem services in China: Practical Experiences and Institutional Barriers. Doc In.

Seekiefer (Pinus halepensis) 9months-fromtop.jpg
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