On 12 September 2021, the General Offices of the Communist Party of China Central Committee and the State Council jointly released the “Guideline on Deepening Reform of Eco-compensation Mechanism for China”. Key points in the document are as follows:
- Overall goal: According to the document, by 2025, an ecological compensation mechanism that is aligned with the economic and social development should be basically built up. The classified compensation system targeting ecological elements such as rivers, natural forests and wetlands, and the comprehensive compensation system that features fiscal support will be improved. In the meantime, a market-oriented and diversified compensation scheme will be formed with the whole society more actively participating in ecological protection. By 2035, the country will form an ecological compensation mechanism that meets the requirements of ecological civilization in the new era, according to the document.
- Improving classification based on compensation system: Classification-based compensation of various ecosystems should prioritize water and biological resources. River, natural forest, wetlands and grassland ecosystems should be the focus of the compensation mechanism. Compensation measures targeted at soil erosion, forest destruction, grassland degradation and desertification should be improved. Agri-ecological compensation based on green ecology should also be improved.
- As key focus of national ecological security, establish an integrated compensation mechanism: Vertical compensation schemes should focus on key ecological regions and projects such as the Tibetan plateau, South-North water diversion, and improve the cost calculation of ecological factors in big projects. By assisting rural residents’ migration into urban areas by financial rewards, accomplish compensating migrants which should result in an orderly migration of people from highly stressed ecological regions to the less stressed ones. A horizontal compensation scheme should initiate cross provincial and cross ecological regions compensation measures to cover broad areas.
- Market-based and diversified compensation system: According to the document, the country will accelerate the building of a national market for trading energy use rights and carbon emission rights, which is to involve voluntary emission reduction projects on greenhouse gases in the fields of forestry, renewable energy and methane utilization. Water rights and water pricing mechanisms should encourage saving water and preventing water pollution. According to the document, financial markets will play an essential role in achieving many of the targets mentioned. Diverse other alternatives should also be considered.