Policy makers of People’s Republic of China have been experimenting with new approaches to environmental management, resulting in a wide range of policy and program innovations, many under the broad heading of “eco-compensation.” Many of these incorporate, or provide a framework for, market-based approaches to environmental policy, and in particular for payments for ecological services (PES). However, In comparison to PES, the Chinese term “eco-compensation” is broader, encompassing PES-like policies as well as a range of other policies and programs types, both with and without market-based elements. In particular, the PRC’s experience highlights an important point often implicitly overlooked in the international discourse on ecosystem service markets and PES: the central role of the public sector.
In this context, the paper discusses the public sector’s role in PES internationally that evolves in three distinct ways:
• Government as buyer of ecosystem services (a strategy to replace or complement government regulation);
• Government as regulator, mobilizing private demand for ecosystem services through environmental compliance rules, or setting or setting up cap-and-trade systems; and
• Government as enabler, facilitating the growth of private voluntary transactions.
The paper details these different roles, provides some key examples, and discusses what insights international experience and trends have for the PRC, as it continues to modify and refine the government’s role in conservation and environmental policy.