PD 295/04 

Creating and sustaining a market for environmental services from China's tropical forests

China

There is growing awareness of the many services forests provide, such as watershed protection, biodiversity conservation, and carbon storage. However, how to internalize this external economy through market mechanism to partially achieve its economic value and hence to strengthen the capacity of sustainable forest management, is an issue worthy of making innovation for all countries. Development of various ecosystem services market and market-based capacity of developing ecosystem service are being dedicated by the world. The proposed project aims to secure, sustain and advance the contribution to the economy of China made by the environmental services of the tropical forest (particularly secondary forest and degraded forestland) using a market system to facilitate exchange of these services and ensuring that their valuation in commercial and national accounts is sound.

Objective

The proposed project has two specific objectives:

  1. To propose an optimal marketing model for environmental services of (tropical) forest in China;
  2. To start the marketing process of China’s (tropical) forest environmental services.

Outputs

Based on these two objectives, 7 outputs will be produced, mainly including:

  1. Background report on marketing for environmental services of (tropical) forest in China;
  2. Website with English and Chinese languages presenting timely the up-to-date information on the proposed project and the relevant topics;
  3. The first (experimental) agency of market trading of environmental services of (tropical) forest in China;
  4. Two real deals of trading of environmental services of China’s (tropical) forest.

After completion of the project, a policy framework of marketing for forest environmental service will be proposed in China, providing a platform for exchange of environmental services, and hence starting the marketing process of forest environmental services (not only limited to tropical forest). The main feature of this project is the investigations related to marketing for environmental services of tropical forest and the development of intermediary agency for market trading of environmental services.

Implementing agency  

Chinese Academy of Forestry (CAF)

Budget  

Total: USD 266'163.-
Swiss contribution: USD 20’000.-

Planned duration   30 months
Starting date   January 2006
Status   completed
Topics   Environmental service functions and economic valuation
Contact   jgasana(a)intercooperation.ch

 

Final report

ITTO 2009: Final report summary, 2p.

 

Progress report

November 2008

In their November 2008 session, the Committees on Forest Industry and on Economic Information and Market Intelligence were informed that since the previous report submitted to the Committees at the Forty-first Session in November 2007, further progress has been achieved in the implementation of the project. To date, 18 of the 23 project activities have been completed, resulting in the realization of 4 of the 7 project outputs namely

  • Output 1.1 - Report on investigation of international experiences of marketing for forest environmental services (FES), Output 1.2 - Investigation on domestic cases and demand-supply analysis of FES,
  • Output 1.3 - Consultation meeting of national and international specialists on marketing environmental services of China's tropical forests, and
  • Output 1.5 - A website on project established.
  • Output 1.4 - Overall report on investigation on marketing for environmental services of tropical forests in China, two activities have been completed while the third, activity 1.4.3 - revision, translation, publishing and submission of overall report, has attained 95% progress in implementation.
  • Output 2.1 - Establishment of the first experimental agency in China for market trading of tropical forest environment services, two of its activities have been completed. The remaining two activities, namely activity 2.1.3 - establishment of the agency and activity 2.1.4 - initial market development, have only achieved 50% progress in implementation, largely due to the time taken for governmental procedures relating to the administrative examination and approval of the agency.
  • Output 2.2 - Experiments on market trading of environmental services of tropical forests in China, two of the three activities have been completed, with the remaining activity 2.2.3 - submission of report on case studies of two real deals, having attained 95% progress in implementation. In view of the foregoing, the duration for the implementation of the project has been extended to 31 December 2008 without additional ITTO funding.

The implementing agency has so far submitted 6 project progress reports on schedule. The reports of the first and second annual financial audit of the project for the period ending 31 December 2006 and 31 December 2007 had also been submitted on time. Three monitoring missions and meetings of the Project Technical Meeting had been conducted and all ITTO funds had been disbursed to the implementing agency.

November 2007

Since the reporting of November 2006, further progress has been achieved in the implementation of the project. To-date, three project outputs have been realized following the completion of relevant project activities. These are:

  • Report on investigation of international experiences in marketing of forest environmental services (FES).
  • Investigation on domestic cases and demand-supply analysis of FES.
  • Consultation meeting of specialists in marketing environmental services of China’s tropical forests.

For the fourth Output “Overall report on investigations on marketing for environmental services of tropical forests in China”, two activities namely, the “draft of the overall report” and the” joint revision of the draft of the overall report by relevant parties”, have been completed while the progress in the implementation of the remaining activity, “revision, translation, publishing and submission of the overall report has reached 50%.” Likewise for the fifth Output “Establishment of the project website”, the design and establishment of the website has been completed while progress in the implementation of activity “maintenance of the website” has reached 60%.

With the satisfactory progress in the implementation and realization of the foregoing activities and outputs respectively, the project is on course towards achieving its Specific Objective 1 “To propose an optional marketing model for environmental services of tropical forests in China”. The implementing agency has begun to focus on the implementation and realization of activities and outputs related to its Specific Objective 2, “To start the marketing process of China’s tropical forest environmental services”.

For the Output “Establishment of the first experimental agency in China for market trading of tropical FES”, the progress in the implementation of activity “formulation of plans and constitution for the establishment of the agency has reached 95%”, while the implementation of the remaining activities, namely the mobilization of specialists to work for the agency, “Establishment of the agency” and activity, “Initial market development” is about to begin. Similarly, for Output “ Experiments on market trading of environmental services of tropical forests in China”, the progress in the implementation of the activity “facilitating one deal of international or domestic market trading of carbon storage service of China’s tropical forests” and activity “ facilitating one deal of market trading of water conservation (or alternatively, landscape) services” has reached 30%. The remaining activity, “ submission of the report on the case studies of the two real deals”, is scheduled for implementation in 2008.