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Supporting Environmental Management in China

A conference to discuss and disseminate this work is being planned for Beijing in Fall, 2006. Material for this event will be posted on this site in the coming months.

The World Bank has been undertaking an extensive program of environmental assistance in China for many years now. This work includes lending and analytical initiatives in many different environment sectors and further details are available on other World Bank web pages.The information presented here reflects the mainly TFESSD-supported China Mainstreaming Environmentally Sustainable Development program, which is composed of a range of analytical studies. At present only a few have been fully completed, but during 2005 and 2006 more of the final reprots will be released - and posted on this site.

anchor-link Completed Studies
anchor-link Ongoing and Forthcoming Studies

Completed Studies

A number of analytical studies of China's environment have been completed these include;

blue arrow Clear Water, Blue Skies; China 2020, China (23mb pdf)
blue arrow China, Air, Land, and Water; Environmental Priorities for a new Millennium (1.1mb pdf)
blue arrow China Country Assistance Strategy (2003 - 2005)
blue arrow China Clean Development Mechanism (CDM)

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Ongoing and Forthcoming Studies

The ongoing work program includes a wide range of studies that are being implemented by teams of Chinese specialists and international experst. A brief overview of this work program is provided below, and final reports will be posted here in the coming months.

anchor-link Environmental Administration Study
anchor-link Evaluation of Environmental Costs & Health Risks
anchor-link Strategic Environmental Assessment (SEA)
anchor-link Water Pollution Management
anchor-link Poverty Environment Nexus Work in China
anchor-link China CDM Study
anchor-link Green National Accounting
anchor-link National Climate Change Program
anchor-link Policies and Laws for Promoting Development of Circular Economy
anchor-link Persistent Organic Pollutants (POPs)

Environmental Administration Study

Impact: After submission to SEPA the report underwent a consultation process with an inter-ministerial review panel, before being passed on to the State Council of China. The report’s recommendation to strengthen governmental human resources for Environmental Administration, principally with SEPA, was then adopted. Given that most other ministries are being downsized, an increase in staffing levels within SEPA represents a strong endorsement of the findings and is an example of the extend to which the Chinese government is ready to take on board combined internal and external advice.

Background: Environmental Management in China has become increasingly complex as socioeconomic changes, such as rapid GDP growth and urban migration, have lead to new and urgent environmental challenges. Environmental Administration, which is largely dealt with by the State Environment Protection Administration (SEPA) is complicated by the ongoing institutional change and the size of the country. Yet many of the country’s natural resources and environmental services are already under great pressure and China’s need for effective environmental administration is becoming ever more important.

Objectives: This study is designed to assess the relative importance of the environment and set out recommendations for administrative reform necessary to ensure sustainable economic growth. The study looks at how China’s government has set up its institutions to deal with emerging environmental challenges, how new institutions are being created, and the role of SEPA with respect to other government agencies.

Findings: SEPA has achieved many successes, but these gains are being offset by setbacks in areas where it does not have the authority or resources to act, and the overall result has been a deterioration of the environment. Environment managers are faced with an increasingly diverse array of challenges, e.g. new pollution patterns and rapidly increasing pressures on natural resources (page 3), which have greatly increased the environmental protection agenda. The findings of this work indicate that, while SEPA can and should play a critical role in addressing these challenges, it is not possible for one institution to successfully manage this challenge alone, and only a greatly expanded and strengthened coordination framework between local and central level institutions will be able to cope with this challenging agenda.

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Evaluation of Environmental Costs & Health Risks

Impacts: This work has created an increased understanding and awareness, both in China and in the international community, about the costs of environmental degradation in China. Assessments will be made and disseminated annually at national and regional levels, and will have a positive impact on resource allocation to environmental management programs. Findings will be used in Green National Accounting study.

Background: In ‘China 2020 - Clear Water Blue Skies’ report (1997) the World Bank
estimated the cost of air and water pollution to be between 3.5 and 8 percent of GDP. This work contributed greatly to the general awareness of environmental cost estimation and the recognition that environmental deterioration has significant economic implications. These findings were taken very seriously, and in 2001, the Chinese government requested that the World Bank collaborate with a number of research institutes to develop an environmental cost model using methodologies specific for the China context.

Objectives: The aim of this work is to increase the awareness of the economic impacts of air and water pollution in China, including the effects on human health, agricultural crops, forest, materials and water shortage. The overall objective is to provide policy-relevant information to decision makers, and enable the Chinese government make optimal resource allocations for environmental protection. This work includes an in-depth review of international ECM studies and development and application of new methodologies (and  software) for annual estimations of water and air pollution impact in China at both central and local levels.

Findings: Significant improvements in our understanding of the economic impact from various types of pollution have been achieved. These include estimates for the cost of water shortages that can reach 1-3 percent of GDP in water scarce regions, and the impact of indoor air pollution which is 1-2 percent of GDP in some areas. Health mortality is found to be much higher in China than in the Western world, death rates from chronic respiratory disease and respiratory infections in children are 4 and 44 times more likely in China.

At the strategic level water related health issues were found to be more important than previously thought, and water pollution has major implications for water scarcity in many areas. Pollution costs associated with indoor air pollution are significant, while the impact on agricultural output seems limited.

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Strategic Environmental Assessment (SEA)

Impacts: Provision of a detailed overview of the performance of the Great Western Development Strategy (GWDS) since its launch in 1999, using SEA methodologies. The SEA process has improved the capacity of GWDS decision making bodies (central / local authorities and stakeholders) to apply and interpret environmental assessments, e.g. SEA capacity building (training events) was targeted at local Environment Protection Bureau managers in order to enhance their understanding of and capacity to undertake SEAs. Improved level of coordination between government bodies. Increased understanding of environmental threats affecting the GWDS leading to a more effective and sustainable outcome. Key inputs into 11th five year planning process on further development of GWDS.

Background: China’s western provinces have not followed the same development path as the
country’s coastal regions and only account for 68 percent of GDP per capita. As such, China’s GWDS is designed to close the economic gap that has emerged. It is an ambitious project to stimulate more rapid development by encouraging, i) key infrastructure development, ii) environmental protection (slope and watershed protection with forestation and terracing), iii) expansion of local industry, iv) science, technology and education, and v) more foreign investment. This region, which accounts for almost three quarters of China’s land mass and one quarter of its population, is faced with many natural, social and economic constraints, such as widespread land degradation and desertification.

Objectives: To facilitate an environmentally sound development pattern in the region, and address the lack of expertise in modern approaches to environmental planning and management. Specific objectives include, i) guidance on developing more effective SEA procedures for incorporating environmental concerns into the planning process, ii) capacity building, and iii) support the GWDS process.

Findings: The work has included an ongoing series of stakeholder meetings and continuous dialogue with different groups on GWDS implementation issues. Detailed environmental assessments have been undertaken on sites of particular environmental sensitivity, along with recommendations to mitigate the impacts of proposed activities. The project has also assessed recent progress in the application of SEA methodologies in China, highlighting existing strengths (e.g. political will, legal mandate, administrative framework, technical know how) and weaknesses (e.g. implementation, public participation, and SEA methodologies / procedures). The project found that significant progress is being made in the GWDS, but the environmental objectives remain unclear. The study makes a wide range of recommendations addressing all aspects of the development strategy (e.g., from infrastructure projects to tourism development), which are being considered in the development of China’s 11th five year plan.

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Water Pollution Management

Impacts: Improved collaboration has been achieved between State Environmental Protection Authority and Ministry of Water Resources, and their local level counterparts. Considerable water resource inputs into the development of China’s 11th 5-year plan. Recommendations for more diversified water pollution control mechanisms and improved coordination between environmental and water resource agencies at central and local levels. Improved understanding of Water Pollution Management issues with international experience, and an increased level of appreciation for water pollution challenges. Inputs to National Geographic feature article ‘China’s Growing Pains’ (March 2004), which put China’s water pollution challenges in the international media.

Background: While the country’s economy and standard of living continues to grow at impressive rates, the quality and availability of China’s water resources is dwindling.

Objectives: To provide a clearer understanding of institutional and policy requirements for effective Water Pollution Control, including an assessment of water resources, pollution control systems, lessons from international experience, and a menu of policy recommendations.

Findings: Water supply and demand are not well aligned in China, e.g. the south is water abundant while the north experiences water scarcity. Problems in the North are likely to intensify as population growth and urbanization generate ever larger levels of water demand. The problem is exasperated by the degraded state of many water bodies; e.g., 47 percent of river water in 2002 was in the worst two water quality categories, and pollution is most serious in rivers that pass through cities and largetowns. Pollution sources include industries (of various sizes, such as paper and food), untreatedwastewater, and agriculture (fertilizer, pesticidesand livestock). The present water and pollution control system is highly complex and characterized by outmoded structures and approaches, making itinefficient and ill-suited to existing and emerging problems. Furthermore, the system has demonstrated some resistance to change, and, in spite of significant efforts, it has been difficult to move from a command and control based approach to a more diversified framework that includes economic, voluntary and public participation.

Generally poor horizontal and vertical coordination, overlapping responsibilities, and a lack of clarity in the roles and responsibilities of different agencies have led to conflict and misunderstandings between institutions. Regulation is incomplete and overly complicated, especially with respect to implementation and enforcement tasks. Policies emphasize government as opposed to the private sector and economic instruments are under-represented. The study suggests that priority setting should start with the establishment of a long-term strategy, to address i) structural adjustment, ii) promote municipal wastewater treatment and recycling, iii) agricultural pollution, iv) minimum flow requirements in key river basins, and v) the protection of drinking water sources.

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Poverty Environment Nexus

Impacts: Surveys on community investments captured new information and have led to significant awareness-raising among government officials about investment effectiveness of these investments and the impacts of recent reforms and policy changes at the local level. The project initiated dialogue on establishing integrated approaches, including both poverty alleviation and environment protection as part of rural development. Development of a four-stage checklist for environmental screening of village-level poverty reduction projects.

Background: In order to sustain the impressive rates of poverty reduction that have been achieved over the last 25 years, the Chinese government will have to reach out to the remaining poor who are concentrated in less accessible areas and are dependent on fragile environmental resources with limited opportunities. Despite political recognition of poverty - environment relationships, few successful examples of how to address this linkage have been generated in practice. Lack of practical guidance and low levels of understanding about development and environment linkages has led to unintended results. For example, the establishment of nature reserves has often failed to include measures to mitigate potential negative livelihoods impacts, generating conflict between protection agencies and local communities. Furthermore, poor communication and coordination among local stakeholders has prevented an integrated approach to poverty alleviation and environmental protection.

Upstream: Integrated Poverty Alleviation Planning

Objectives: This study set out to assess community-level investment projects in order to, i) understand the nature of these investments, ii) analyze how community projects address poverty alleviation and/or environmental protection, and iii) understand the likely impact of recent policy changes on community investment.

Findings: The survey covered many aspects of poverty-environment linkages and showed that although substantive environmental investments have been made in poor communities (higher than expected) the long term sustainability of these investments is unclear. A data set was compiled (from a survey of 2,500 villages) on the investments and it was found that 9,138 investment projects had been made in the sampled villages between 1997 and 2003. The majority (87 percent) focused on provision of public goods, e.g., roads and bridges, grain for green, irrigation, school construction, and drinking water. Funding came from central (53 percent) and local (47 percent) sources, though poorer inland areas received relatively more support from the former.

Investments were spread across all provinces, but the majority of the environment-oriented spending has occurred in poorer areas with relatively high levels of state funding. Village level officials, while not government representatives, were found to be key political and economic actors shaping the development of rural areas. The relationships between villagers and local level officials in communities were also found to be important as many rural development tasks are co-managed and co-funded. However, there has been a change in the way grassroots bodies carry out their tasks, e.g. tax reforms village elections, and the village decision making processes is changing. Although the study showed that targeted environmental projects have been part of the local investment activities, their impact has been below expectations. These investment projects appear to have only a limited scope for integrating poverty and environment objectives, in spite of the strong linkages that exist.

Downstream: New Approach Adapted for Rural Development

Objectives: This component, which is linked with Poverty Environment Nexus (PEN) work in Cambodia, Lao PDR and Vietnam, has designed and promoted the use of guidelines for poverty and environment projects in China. It has been set up to test actual poverty-environment planning at local levels, particularly villages.

Findings: Results from Sichuan province have highlighted the most pressing environmental
problems affecting agriculture and development in poor villages. The study has integrated environmental challenges into actual guidelines for poverty reduction. Findings show that the following environmental challenges have to be addressed in rural development programs; i) land overuse and degradation, ii) water and soil erosion; iii) habitat degradation, e.g. forests and biodiversity loss; iii) natural disaster impacts; iv) land pollution from agricultural chemicals; v) serious water pollution and water shortages, vi) management of unwanted mulching film, and vii) domestic waste management.

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China Clean Development Mechanism (CDM) Study

Impacts: The project process significantly increased CDM capacity among many policy makers, many of whom are now developing the National Climate Change Strategy, and in developing specific CDM projects, such as the first PCF-funded projects in China. Chinese authorities are now working to make the project development and implementation process more transparent, in order to fully capitalize on their CDM potential. CDM projects established as part of this work have become reference cases for the energy sector, and are leading to widespread replication. Follow-up work is already being undertaken with the World Bank providing technical assistance through the Carbon Finance Assist program (page 15). A wide range of CDM stakeholders came together, e.g. local project planners, policy makers, implementers, and local level regulators, to improve project cycle management. The study launch coincided with the Chinese launch of CDM legislation and generated significant interest from many stakeholders (e.g. the report has now been requested over 70,000 times).

Background: The Clean Development Mechanism (CDM) allows developed countries to earn Certified Emissions Reduction credits, which count toward Kyoto commitments, by investing in clean technologies that reduce carbon emissions in developing countries. The Mechanism, which promotes the use of low carbon technologies and has fostered new carbon markets, is an opportunity for China to attract significant investment. However, the CDM is a new process, and presents a complex challenge for government and private sector stakeholders.

Objectives: The China CDM Study is designed as a reference tool for all stakeholders. It sets the foundations upon which the Government can develop policies and an overall strategy to maximize CDM benefits, and provides a detailed description of the mechanism with case studies in the power generation sector to serve as a template for the development of other CDM initiatives.

Findings: China has a substantial CDM potential, around 21.6 MtC by 2010, which would account for around 50 percent of the global CDM market and generate $0.26 billion. Its power sector, which was identified as the area of greatest CDM potential, is dominated by coal-fired power plants with very limited application of advanced technologies. The sector is presently undergoing an institutional reform, with ‘un-bundling’ of power generation and transmission, and privatization of assets. This change may present a significant opportunity for CDM, e.g., the removal of subsidies for renewable energy will increase the likelihood that renewables will qualify for CDM projects (i.e. as additional). However, there are many constraints, not least of which is the need for significant capacity building in CDM opportunities and requirements at all levels. In the course of identifying primary CDM projects the study found that local level authorities are not aware of CDM opportunities, and essential data for project evaluation is difficult to obtain.

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Green National Accounting

In order to ensure that their ambitious economic growth targets are met in a sustainable manner the Chinese government is interested in Green National Accounting. A foundation for developing such a system has been established with World Bank studies, such as the estimation of genuine national savings for YanTai and SanMing, and an environmental cost model (page 8). This project will develop a framework for establishing a green national accounting system in China, including a framework to estimate (air and water) pollution costs, develop China-specific estimation methodologies for China, and calculate the adjusted national accounts. The impact of this work will be enhanced with extensive  training of local government officials, guidelines for regional green accounting, and a national white paper on the topic. Once complete, this work will provide the Chinese government with the tools to measure the sustainability of ongoing economic expansion, and a clearer picture of how to achieve a ‘better off’ society.

National Climate Change Program

Climate change mitigation and adaptation is a highly complex topic and the GoC has indicated its interest in developing a Climate Change Strategy to provide an overview of the current and planned initiatives. Such a strategy should play a key role in climate change policy development. Presently most climate change activities have been focused at the national level, but given China’s size, it is essential to integrate climate change considerations into the local sustainable development considerations. This project, therefore, includes national and provincial components: the former will promote a wider understanding of climate change impacts and adaptation strategies, and the latter will focus on delivering international best practice, awareness raising and providing policy recommendations to  local stakeholders, as well as collecting feedback and recommendations for integrating climate concerns with local sustainable development strategies.

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Policies and Laws for Promoting Development of Circular Economy

Decoupling economic growth from natural resource depletion and environmental degradation has been acknowledged as a key element in China’s development plans, and will be essential if China is to simultaneously achieve rapid economic growth and environmental improvements. However, current production and consumption patterns, which are characterized by high input, mass consumption, and heavy pollution, are not resource efficient. A circular economy addresses production and consumption issues by turning wastes into recycled inputs following the ‘Reduce, Reuse, Recycle’ principle. The government is currently concluding pilot projects that cycle material and energy, within enterprises, between enterprises, and at the regional level. The objective of this initiative is to provide recommendations for promoting a circular economy for, i) energy efficiency, ii) re-use and recycling, and iii) sustainable production and consumption patterns. Case studies and comparative analysis between international best practice and local situations, including analysis of legal systems, will be used to develop recommendations for implementing the circular economy.

Persistent Organic Pollutants (POPs)

The environmental impact of POPs, toxic chemicals that become more concentrated along the food chain, is more serious than had been anticipated and there is an urgent need to develop policies to ensure appropriate treatment of these chemicals. The World Bank is providing analytical and operational support to deepen the understanding of POPs development (e.g. potential health impacts). Support for policies include an evaluation of the effects of exposure to POPs, the development of a PCB inventory, methodology, and strategy on PCB reduction in China. Best practice and lessons are being generated with two large demonstration projects for POPs phase-out – focusing on the management of PCBs and the use of alternative chemicals for termite control. 

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More information (links go to the Environment and China Country websites respectively):
  The World Bank's environment program in China
  Clean Development Mechanism in China 
  The Global Environment Facility and China
  The Montreal Protocol and China

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