China puts the eco back in economy

[Peikko 1,575]

Amid all the doom and gloom during the past week about the global loss of biodiversity, there have been a couple of potentially positive steps forward by the usual villain of the piece: China. For the first time, the government in Beijing has put a hefty value on its forest ecosystems and began drafting new regulations that would oblige rich urban coastal regions to pay compensation fees to unspoiled inland areas that provide carbon sequestration and other environmental services.

These steps suggest China is moving in tandem with United Nation recommendations that environmental costs should be factored into the global economy.

A degree of scepticism is warranted. China has some of the world's most enlightened environmental laws and policies, but all too often they are ignored by local officials and businessmen who won't let anything get in the way of making a fast yuan.

But a marriage of the environment and the economy might provide a new set of financial incentives for maintaining eco-systems that would otherwise be seen merely as obstacles to development.

Serious money is involved. The State Forestry Administration estimated last week that forest ecosystems contribute 10 trillion yuan, or about a third of China's gross domestic product.

This figure - which takes into account carbon sequestration, water conservation, biodiversity protection and biomass production – suggests the administration is seeking not just a new set of values, but a new role for itself now that the nation's forests are logged out and 2,000 species reportedly threatened with extinction.

More intriguing still are reports that the government is drafting an ecological compensation scheme, which would expand and strengthen existing measures such as payment for wildlife reserves, environmental levies imposed on mines, compensation from upstream river polluters to downstream users and economic redistribution schemes that aim to close the income gap between manufacturing hubs on the east coast and rural hinterland.

Depending on how it is written and enforced, this could be either a boon or a menace to the environment. Set the value of conservation high and establish an effective mechanism for compensation transfers and this policy could help to correct the market's failure to protect the commons and recognise the long-term value of biodiversity.

On the other hand, if the price of nature is set too low and regulation is too weak - both currently the case – then this policy could accelerate the unsustainable extraction of resources.

The ministry of environmental protection – arguably the most idealistic but weakest branch of the government - has a tough task ahead in calculating regional ecological accounts.

But, at the very least, such an eco-accounting ought to stimulate a new way of thinking about environmental values.

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[mawilson 2,133]

China is still the worst polluter on the planet.