When Beijing officials took a closer look at the economic costs of environmental damage in China, they were surprised to learn that such degradation was lowering the country’s overall GDP anywhere from 3 to 10 percent annually.
That realization spurred action, and now China is the world’s leading practitioner of what is called the payment-for-ecosystems-services program – which essentially pays people to do what is good for the environment. For instance, China pays farmers to reforest their land, hoping to slow soil erosion and the loss of valuable top soil due to poor agricultural practices. As a result of this one practice, Chinese officials, between 2000 and 2010, managed to increase the amount of forested land at the rate of 1.6 percent each year, a pace roughly three times faster than any other country in the world. Beijing is also paying watchdogs to make sure the paid project actually happens.
Meanwhile, local governments have used the payment approach to protect water sources. For instance, in some areas, local governments have passed laws that require anyone polluting a river upstream to compensate all those who suffer economic or health losses from that pollution downstream.
China’s program uses a software tool that measures overall costs of, say, cutting down a forest, including such secondary effects as erosion, additional risks of flooding, loss of carbon absorption area and so on. With that information, Chinese officials are making economic decisions, and that model, which was actually developed at Stanford’s Natural Capital Project, is now being tried in Ecuador, Colombia, Mexico and Costa Rica.
(New Scientist, 6/16/12)