Joining Forces to Promote the Value of Nature in China

The Paulson Institute is deepening its cooperation with China’s National Development and Reform Commission (NDRC) with an innovative new project on environmental conservation.

The three-year collaboration project, as laid out in a recently signed agreement between NDRC, Chinese Academy of Sciences, and the Paulson Institute, aims to create and improve the mechanisms for recognizing the value of ecosystem services, which are the vital services that nature provides to human life. These mechanisms range from public finance tools to market instruments and private philanthropy. Public financing could include ecological compensation (payment to compensate for missed economic opportunities and growth due to stricter environmental protection requirements) and financial transfers to areas designated by the government as critical to ecological security. Market mechanisms could include impact investing, water funds, and environmental credit trading.

This collaboration will identify international best practices on integrating the value of ecosystem services into policy making and commercial decision-making. It will also lay a foundation for China to establish more effective conservation financing mechanisms, develop guidelines for creating ecological conservation funds, strengthen the capacity and management skills of conservation officials, build public awareness of the importance of ecosystem services, and broaden funding sources.

This project will also contribute to the implementation of China’s “Main Function Area Plan.” The plan, a nationwide land use blueprint, specifies the functions of various areas (from areas of intensive development to areas that prohibit development), the general direction of development, and the constraints on development. Many areas where development is restricted often struggle with issues of poverty. Reconciling ecological conservation with local economic growth and livelihood has become a major challenge as China pursues its goal of building a “moderately well-off society.” This collaborative project will help explore a new path that financially rewards ecological conservation and values ecosystem services while alleviating poverty.

Under this collaboration, the Institute and Stanford University will conduct international cases studies and capacity building activities. The Chinese Academy of Sciences (CAS) will lead the research on the Chinese side and coordinate with other Chinese research institutions. CAS will develop a feasibility report that draws on the best practices captured in the international case studies in order to best suit China’s circumstances. This report will inform the NDRC’s efforts to establish mechanisms for realizing the value of ecosystem services and creating ecological conservation funds.

The Institute has also been working closely with the NDRC to help establish China’s national park system, a productive partnership launched in 2015.