Payments for Environmental Services

Transcription

1 Payments for Environmental Services Solution to China s Drinking Water Problem? Berkeley Institute for the Environment November 2006 Adam Langton Goldman School of Public Policy, 2007

2 China s Drinking Water Conditions. Roughly a quarter China s population (300M) consumes unsafe water, according to China s Ministry of Water Resources. As of 2001, only 6 of China s 27 largest cities meet state drinking water standards. Growing Need: demand from urban users grew at a rate of 7.3% annually between 1980 and Overexploitation of groundwater resources (Shanghai & Beijing) Health impacts: Hep A, diarrheal diseases, dysentry, liver cancer, stomach cancer.

3 are Related to China s River Quality 38.1% of China s rivers are polluted, according to 2004 study of 1300 rivers. 75% of the water flowing through China s urban areas is polluted. River pollution contribute to groundwater pollution (90% of groundwater sources are now polluted). Creates greater infrastructure expenses. Water Quality in China's Seven Major River Basins Grade V+ 41% Source: China Environmental Yearbook, 2003 Grade IV or V 30% Grade I, II, III 29%

4 Sources of Pollution 50% from non-point sources (nutrient runoff, pesticides, livestock waste). mainly rural sources. 50% from point sources (industrial and municipal waste, leaching of solid waste). mainly urban sources.

5 China s National Strategy National drinking water standards enacted in June Adds 70 new bacteria and chemicals to list of water quality measures. Estimated Cost? $6 billion (USD) for new water treatment centers and other infrastructure. Numerous national programs, $ s for treatment and enforcement (10 th 5 Year plan = $2.1 billion for treatment plans and infrastructure)

6 Uneven Progress Progress on largest rivers, little focus on small rivers/tributaries. Some national solutions fail to take hold at the local level.

7 What is Payment for Environmental Services? Establishes a market for watershed management practices (land use water quality link) Downstream beneficiaries support the cost of upstream watershed management. Improves downstream water conditions by providing incentives for upstream users to internalize downstream costs.

8 Ecological Services Impact Water Quality Forests filter out pollutants, neutralize chemicals, and reduce salinity of rainwater entering waterways. Watershed ecological elements reduce sediment loads in water ways by reducing erosion.

9 How Does PES Works? Internalizes a positive externality Improves outcomes at lowest cost by pricing benefits and allowing upstream users to use most efficient management tools Provides upstream economic development benefits.

10 PES in New York EPA s 1996 water regulations set new standards for NYC. NYC water users pay for environmental services in Catskill and Delaware watersheds. Upstream farmers received compensation for a variety of environmental services Source: Pagiola, 2003

11 PES in New York Supported by 9% user fee on NYC water users. Supports several conservation programs: easements, reduced development rights, and other eco-friendly practices. Avoided infrastructure costs would have doubled the cost of water for NYC users. Operating expenses: $1.5B USD over 10 years. Avoided $4-6B in infrastructure and $ M in ongoing expenses.

12 Environmental payments support watershed management in Kulekhani watershed basin. Sediment loads threatened hydropower dams. Payments from Kulekhani dam to upstream communities for watershed management. Compensation in the form of development assistance (medical services, education resources, etc.) PES in Nepal

13 PES in the Philippines Many PES arrangements in local watersheds. Mindanao Geothermal plant success in improving water quality by supporting upstream forest management practices. Payments through government to local watershed management boards results in some inefficiencies. Large watershed boards slows process.

14 Best Practices for a PES system Direct link between stewards and beneficiaries Clearly articulated environmental goals and annual performance measures Local upstream community participation. Managing boards with stakeholder representation. Detailed negotiations and long-term agreements. Involvement from state/national government.

15 Limitations of PES Model Aimed at non-point pollution sources Ineffective at reducing point source pollution, like industrial waste or sewage. What exactly are the benefits and how are they quantified for compensation? Potential for high transaction costs Too many upstream and downstream users

16 PES in China: Will it work? Not a cure-all, but could help improve water conditions in Western China and may reduce some treatment costs. Examples: Shanghai and Chongqing. Political and geographical obstacles.

17 PES in Shanghai Trade and industrial center at the mouth of the Yangtze. Most local sources are polluted, forcing Shanghai to use distant sources on Huangpu River. Strong local interest, investment in environmental issues New goal: by 2010, clean water city-wide. Source:

18 PES in Shanghai Source: Yangtze: Too complex, too many stakeholders, too much point source pollution. Huangpu: Little watershed management City Plan announced re-forestation plans, agricultural pesticide controls.

19 PES in Chongqing 4 th largest city in China (30+ million in metro area). 25% of local rivers are grade V or worse. Water quality fell in 2005 from grade II to grade III. Fails on 80 of the 100 chemical measures of the 2005 regulations. Struggles to end upstream industrial pollution.

20 PES in Chongqing Less Upstream industry than other cities. Strategically located to benefit from upstream management Could generate improvements to local rivers. Collaborate with Three Gorges Dam? Some regulatory methods have failed. Source:

21 Implementation Challenges in China Local/regional solution as a complement to national programs. More research needed to quantify benefits of upstream watershed management. Political obstacles (decentralized political power, economic focus). Upstream economic development benefits might be biggest selling point.