Paying for nature

Beijing’s strategy for clean water during the Olympics? Pay rural farmers to “grow” it. Katherine Ellison explores China’s new hope for conserving the precious natural resources it has left.

Combine global warming with an already dry climate and a growing population, and you’ve got the nightmare haunting Beijing: the risk that the capital may run out of water, perhaps just in time for this year’s “green Olympics.” 

Drinking supplies are so precarious in this northern city of 15 million that officials are spending tens of billions of dollars to import water from southern rivers. Less publicised, however, is an innovative scheme in which Beijing pays residents of neighboring Hebei province to “grow” water as if it were an agricultural crop.

The plan is one of several strategic investments in nature that puts China at the forefront of a new way of thinking about environmental conservation. Until recently, most of the world left the care of nature in the hands of philanthropists. Yet in the face of abundant evidence that this approach has failed – including a warming climate, depleted soils and vanishing pollinators [pdf] – scientists and activists have switched to urging governments and businesses to pay people to care for the watersheds, flood plains and other landscapes on which we all depend. Healthy, forested watersheds, for instance, help filter drinking water and prevent soil erosion into rivers. Undeveloped flood plains protect nearby human settlements.

Necessity – in the form of some of the world’s worst environmental crises – has made China a leader in this new way of viewing nature. Throughout the country, land-use planners have embarked on bold and costly experiments to preserve hard-working “natural assets.” The results are already yielding lessons for the rest of the world.

Water for Beijing

“We’re spending a huge amount of money,” Xiaoping Wang, a high-ranking official at Beijing’s Parks and Forestry Department, said of the Hebei agreement, in which the Beijing municipal government essentially pays to increase water conservation in the neighboring province.

As part of the deal, two Hebei prefectures will switch from traditional farming to water-saving crops, meaning less rice, more corn and potatoes. Farmers will also plant and tend trees on their property and reduce pesticide use to help cut back on the sediment and pollution entering rivers that feed the capital’s two main reservoirs. In return, among other things, Beijing will provide some US$16 million in direct yearly payments to farmers for water stewardship, according to the amount of land they own; subsidise Hebei farmers’ chickens, eggs, and milk; and build two new highways for products from Hebei to reach the capital’s lucrative market more easily.

The plan highlights China’s awareness of how millions of individual decisions by landowners can affect human life-support systems, such as drinking water from rivers and lakes. Over the past few years, Beijing has moved many industrial factories out of its watershed, leaving the farmers as the main threat to water quality. Laws exist, of course, to punish polluters, but with sticks having generally proven ineffective, Chinese planners are willing to try carrots.

It is a tactic increasing in popularity throughout the world, as growing populations tax fragile environmental resources. More often than not, environmental benefits are delivered by one place to another, with poor people living in the rural source areas and richer people as urban recipients. Accordingly, many big environmental groups and multilateral lenders are focusing on conservation projects geared toward converting land-managers, like the Hebei farmers, into conscientious – and compensated – stewards.

Conserving natural assets

The Beijing-Hebei pact is one of several ways that China has embraced this concept. Others promise to be even more dramatic. For instance, the latest Five-Year Plan, for 2006-2010, involves mapping the entire country in terms of conservation priorities. According to the Plan, no development will be allowed on “ecological function zones” , which include forested watersheds, which purify drinking supplies through the filtering action of roots, and support flood control by limiting soil erosion.

In hopes of preventing the kinds of catastrophic floods that killed thousands of Chinese along the Yangtze River in 1998, China has banned logging on approximately 30 million hectares of land. It is also requiring farmers to switch from growing crops to tending forests on some 60 million hectares of so-called “sloping lands.”  However, compensation budgets aren’t intended to last forever, and an open question remains regarding how these farmers-turned-foresters will earn their incomes once they run out.


In the past eight years, China has spent more than US$17.4 billion on its Sloping Land Conversion Program, according to the State Forestry Administration. But the programme has had serious drawbacks, according to a 2005 report to the International Institute for Environment and Development, which revealed serious problems with the targeting of funds. Struggling to improve their results, China’s leaders increasingly have been working with US scientists and environmental NGOs who offer up-to-date techniques to identify and conserve natural assets. Last September, for instance, several Chinese government-affiliated scientists met with a team from the Natural Capital Project – a year-old partnership between Stanford University, The Nature Conservancy and WWF. The project has developed mapping and modeling software to pinpoint landscapes where conservation makes the most sense, a tool that has great potential to help the Chinese government fine-tune its concept of preserving “ecological function zones.”

“We’ve been doing only the simplest of evaluations so far, so these tools could be very useful for us,” said Wang Yukuan, a member of the Chinese Academy of Sciences.

Pay as you go

The idea of paying farmers to help protect the environment has gained popularity in China as it has won support from NGOs with deep pockets over the past decade. In the restored antique town of Lijiang, for instance, in the Himalayan foothills of Yunnan province, He Yi, a young scientist with Conservation International, has been lobbying local officials to support a plan to help preserve local water supplies. The World Bank has contributed US$20,000 for initial research.

Lijiang is famous for its clear, clean water. Bright orange koi flash in the narrow canals that line the cobble-stoned streets of its Old Town, which is listed among the United Nation’s World Heritage Sites, as tourists – some 4 million a year – wander through a maze of shops selling jade, silver, weavings and tea.

As elsewhere in China, however, Lijiang’s water supplies are under pressure. Urban development encircling the Old Town is fast increasing, as are the flocks of tourists visiting each year. Local officials have recently turned to nearby Lashi Lake to supplement a pond in the Old Town, which has long been its sole water source. But farm pollution has made that lake’s water all but unusable, despite the fact that the area around the lake is at least nominally a nature reserve.

“We’d like to make Lijiang a positive example for the rest of China,” says He Yi. His idea is to substantially increase the fees paid by tourists visiting the area, and use the money to pay farmers to try out less-polluting practices.

Lashi Lake farmers already receive small monthly payments to reward them for not killing the exotic birds that spend winters in the reserve, and often eat some of their crops. In interviews, they showed little understanding of the dynamics of agricultural pollution, but all appreciated the promise of subsidies. As one farm worker said: “The more, the better!”

What do you think: Is China taking the right approach? Can paying for “ecosystem services” be sustainable over the long-term?


Katherine Ellison is the co-author of “The New Economy of Nature: The Quest to Make Conservation Profitable,” and a consulting writer with Stanford’s Natural Capital Project. She traveled to China with scientists from the project last September.

Homepage photo by Natmandu