Study on the Comprehensive Eco-Compensation Mechanism

Client: Asian Development Bank

Duration: 2019-present

Location: Chongqing City, PRC

Contract Value: USD 379,970

Catalogue: Environment

Project Description

Eco-compensation is a package of different mechanism, such as financial subsidies, project assistance, constructive policies, and other measures, to adjust the relative benefits and costs of ecological services provision among stakeholders. However, the financial transfer among the central, provincial, and local levels was often overlapped in China. Multi-channel arrangement of compensation funds, lack of effective coordination system, and ineffective evaluation methods of ecological compensation make it difficult to improve the efficiency of fund utilization. According to the 13th Five-Year Plan, it prioritizes the ecology and green development in the Yangtze River Economic Belt (YREB) and emphasizes the importance of the robust ecological protection and compensation mechanism. Recently, Chongqing developed and piloted numerous eco-compensation projects and approaches as an incentive for ecological conservation and environmental protection, especially in response to the ecological protection priorities of the YREB. Therefore, ADB provided this TA to develop the national and provincial policy and legislative framework for eco-compensation and was instrumental in facilitating the necessary policy and legal reforms.

Services Provided by NAREE

Preparation of a policy study on improving the effectiveness of eco-compensation – NAREE reviewes the Chongqing Municipal Government’s (CMG’s) existing policies and programs, as well as international- and domestic-level eco-compensation or environmental fiscal and/or incentive instruments that could be integrated into CMG’s eco-compensation programs. Based on the desk review, NAREE provided recommendations on improving the coordination and effectiveness of CMG’s eco-compensation policies and programs in the Chongqing Municipality, and thereby also contributing to the improvement of the national-level eco-compensation policies and programs.

Establishment of an implementation plan for a comprehensive eco-compensation mechanism – After the selection of three pilot counties through discussions with relevant departments, NAREEconducts review of existing eco-compensation policies, projects, and programs in each of the three selected pilot counties, and identifies respective policy or institutional barriers for improving the efficiency of eco-compensation mechanisms under a comprehensive eco-compensation approach. The gross ecosystem product method of environmental accounting is chosen to pilot test monitoring and assessment mechanism of the impacts of eco-compensation programs.

Dissemination of knowledge product – By summarizing experience and lessons from selected county pilot case studies, NAREE prepares a knowledge product which captures and summarizes the experience and lessons from the county pilot case studie. The dissemination supports the capacity building efforts for strengthening the design and application of comprehensive eco-compensation mechanisms in other counties and provinces. These experiences complement other policy mechanisms to achieve the targeted environmental objectives for the Chongqing Municipality and the broader YREB.