1) China faces major conservation challenges at home and abroad related to managing nature reserves, regulating enterprises, and mitigating resource extraction impacts. 2) An integrated policy approach is proposed to address these challenges through tools like conservation incentive agreements, payments for ecosystem services, environmental impact assessments, and corporate social responsibility standards. 3) Pilot projects in countries like Laos aim to demonstrate how coordinated use of these policy instruments can enhance conservation, community development, and governance of Chinese overseas investment in sectors like hydropower and forestry.

1. Integrated Policy Solutions to
China’s Conservation Challenges
Douglas Whitehead
Global Environmental Institute
douglas@geichina.org

2. Major Conservation Challenges in China
• Management of nature
reserves
• Public and Civil Society
Participation
• Regulating environmental
behavior by enterprises
– At the local level
– Overseas
• Mitigating impacts of
resource extraction on
climate and biodiversity
– timber, mining, energy…

3. Challenge: China’s Nature Reserves
•15% of China’s overall
land area
•Activities, resource
extraction from
enterprises at the buffer
zone pose threat to
biodiversity in the
nature reserve
• Problems in the funding structure make managing the
reserves difficult
• Improving policy environment for civil society
• Challenge 1: how to enhance management of the nature
reserve without affecting community livelihoods and
enterprise activities?

4. Fengtongzhai Nature Reserve
• Significance
– Baoxing County, Ya’an
Prefecture, Sichuan
Province
– First record of Giant
Pandas
– Other biodiversity
• Challenges
– Unitary Funding and
Administration
Structure
– Encroachment by
communities at buffer
zone (see red areas on
map)

5. Conservation Incentive Agreements in
Baoxing
• Conservation Concession Agreement
– Pioneered by CI (Guyana, Peru)
– Land use concession, signed
between protection org. and
local communities
– Mechanism for allocating funding
for conservation activities
• GEI: Conservation Incentive
Agreements
– 2 Agreements signed in April 2007
• Nature Reserve (1,771 hec.)
• Farmers’ Cooperative
– CNY100,000 P&D fund with Baoxing Rural Credit Union
– Combines CCA with additional community development for CIA

6. CIA-Community Development
• Livelihood Programs
– Rabbit rearing
– Honey production
• Energy: Biogas (10m3, floating
drum)
– Reducing firewood
collection and combustion
– Reduction of emissions
(23 million tons annually)
– Waste management
• Other Energy Solutions
– Biochar?
• Disaster Mitigation
• Enhancing Local Capacity
– Biogas maintenance teams
– Luyuan Farmer’s Cooperative

7. CIA Model

8. Incorporating PES into Project Model
• Hydropower in Baoxing
– 7 stations within the
nature reserve, total
output 577,000KW
– Incl. Huaneng Hydro-
electric, Sichuan Power
– Damage to biodiversity
• PES—Payments for
Ecosystem Services
– Funds for ecosystem ser-
vices (e.g. protection, clean
water)
– Hydropower PES payments
contribute to protection and
community development
• Policy Suggestion on CIA-PES
– SFA and NPC’s Environment
and Resources Protection
Commission

9. CIA-PES: Refined Model
PES
Enterprises
Conservation Actions
By communities
PES
Conservation
Rights Cons. & Develop.
Benefits provided Fund
Economic activities
Conservation Agreement
Between
Conservation Agreement
Nature Reserve & GEI
Between GEI & Communities
CIA

10. Challenge: The “Go Out Strategy”
• Since early 2000s, guided by
inst. like Exim bank
• US$40.65 of outbound
Direct Investment Overseas
• Sectors: Timber,
Hydropower, Plantations,
Mining, Oil & Natural Gas
• Regions: SE Asia, Africa,
Latin America
• China working to maintain
Image as responsible super-
power
• Challenge: How to ensure
best environmental impact
overseas?

11. China’s FDI
Overall
Source: OECD
By sector By Region (hydro) Source: GEI

12. Environmental Impact
Merowe Dam, Sudan:
China Int’l Water and Electric
Sedimentation, evaporation,
resettlement
Oil, Gabon
Sinopec
Threat to 67,000 hectares
in Loango National Park
Nam Ngum 5, Laos
Sinohydro
Potential flooding damage on
forests, communities
(under-construction)

13. Governing China’s Enterprises
• Domestic
– 2002 Environmental Impact Assessment Law
(NPC), among many
– Market based instruments (DPS, EPBs, tax
incentives, green credit, green insurance)
• Foreign
– 2007 Nine Principles on Encouraging and
Standardizing Foreign
Investment
(State Council)
– 2007 Guidelines on Sustainable Management
of Overseas
Forests by Chinese Enterprises
(SFA, SEPA)
– 2008 Guide on Sustainable Overseas Silviculture by Chinese Enterprises
(SFA, with GEI)
– 2009 Guide on Sustainable Overseas Forest Management and Utilization by
Chinese Enterprises
(SFA, MOFCOM, with GEI)
– 2009 Guidelines on Environmental Conduct by Overseas Chinese Enterprises
(MEP, MOFCOM, with GEI)

14. Source: OECD

15. Challenges in Governance
• Improved legislative and enforcement capacity of
local (host country) governments
• Coordination between government departments
• Increased participation by civil society
• Assistance to local communities
• More systematic, market-based incentive
mechanisms
• Incentives for complying with laws

16. A Solution: Integrated Policy Package
• Policies: CCA, PES, EIA, CSR, REDD(?)
– EIA: incorporated into legislative process of host
countries
– PES: Ecological services quantified, payments
contributed through fund
– CCA: Allocates how PES payments would go towards
conservation; land use concessions
– CSR: Voluntary tool, mounting domestic pressure
– REDD: “carbon credits” for reduced deforestation
• Advantages:
– Designed to address multiple stakeholders
– Community Development benefits
– Enhances civil society participation

17. Model 1:
Government-
NGO-
Enterprise
Model
Model 2:
Guarantee Fund for
Community
Development and
Environmental
Protection

18. Pilot: Lao PDR
• Project:
– Lao China Cooperation
Center (WREA, NLMA)
– Sustainable (market)
management of Land
and Natural Resources
– Incorporating PES into legislation
• Demonstration
– Sinohydro—Nam Ngum 5
– Enterprise buy-in for
community development
– Renewable Energy (biogas)

19. REDD in IPP
• Concerns about REDD
– Lack of agreement on
fossil fuels in Copenhagen
– Limited to tropical forests
– What about indigenous
communities?
– Cannot be implemented
effectively w/o strong
governance
– Philosophical problem:
co-benefits?
• How can IPP help?
– Community participation through EIA, PES, CCA ???
– Improved bilateral governance
– Combines multiple market-based incentives

20. Benefits of an Integrated-Policy
Approach
• Pilot project policy advocacy
• Enhances relationship between
enterprises and local communities
• Greater role for Chinese civil
society in China’s international
cooperation
• Alleviates many of the concerns
regarding REDD
• Ideal balance between conservation
and development