Several recent events in China have focused attention on the important role played by forests in the conservation of ecosystems. In 1997, the Yellow River stopped flowing for a total of 267 days, a historical high, causing great economic losses to industry and agriculture in the Shandong Province downstream. In 1998, major floods in the Yangtze River caused great loss of life and resulted in tremendous economic damage. In the aftermath of that event, people began to focus on the seriously damaged natural forest resources in the upper and middle reaches of the Yangtze River.

In response, the Chinese government instituted a logging ban and launched the Natural Forest Protection Program and the Sloping Land Conversion Program. The Chinese government has committed US$20 billion over 13 years in food and fiscal subsidies for these programs, most of it with domestic funds. This is by far the world's largest experiment in forest conservation covering to and affecting 1.2 million forest workers and many millions more farmers.

The current programs and financial commitment of the government are a reflection of the government's strong commitment to the ecological restoration of western China, while at the same time addressing the complex social income and employment implications for forest-dependent households.

The China Council for International Cooperation on Environment and Development (CCICED) sponsored a group of international and national experts to look at this giant "experiment" drawing on worldwide experiences and involving local surveys of 1400 households in 10 provinces as well as forest enterprises to obtain reactions of the potential beneficiaries of these programs. The Western China Forest and Grasslands Taskforce, co-chaired by Professor Shen Guofang, vice president of the Chinese Academy of Engineering and Dr. Uma Lele, senior advisor of the World Bank, released the findings of its work yesterday in Beijing.

"CCICED is a unique forum to bring Chinese and international experience to bear on key policy issues, and the World Bank is pleased to be a partner," said Ian Johnson, the World Bank Vice President for Environmentally and Socially Sustainable Development.

The Taskforce work was carried out by a number of Chinese institutions and involved many international and national experts. The report - Implementing the Natural Forest Protection Program and the Sloping Land Conversion Program: Lessons and Policy Recommendations - found that the blanket application of the current logging ban is not the best way to achieve conservation with development. It needs a more fine-tuned location-specific approach. Although there has been significant reduction of exploitation in vast areas of natural forests and hundreds of thousands of hectares of sloping land have been planted with trees and grasses, there have been huge unintended, adverse socioeconomic impacts on both local households and forest enterprises.

In the case of the NFPP in particular, the impacts on local livelihoods are extensive and, in many cases, severe. Even the state-owned forestry enterprises and their staff, which have received the bulk of the compensation provided by the Government, are experiencing crisis-level impacts in many areas. Perhaps most importantly, the logging ban was arbitrarily extended in many areas of the country to collective forests, which had undergone the tenure reforms since the early 1980s introducing tenure insecurity.

The SLCP which requires conversion of sloping agriculture land back to forest and grasslands is leading to distortion of local markets and put downward pressure on prices, The SLCP which requires conversion of sloping agriculture land back to forest and grasslands is leading to distortion of local markets and put downward pressure on prices therefore decreasing incomes for farmers who are not involved in SLCP and still rely on crop production. In the short term, some local economies might suffer setbacks due to the downsizing of agriculture and its induced decline of agricultural input supply and agricultural product processing industries.

"There are no 'silver bullets' to achieving forest conservation. It is hard work, requires considerable political will, substantial resources, smart institutions, pilot approaches and willingness to learn from experience. China is at the forefront of tackling this challenge," said Dr. Uma Lele.

Given these lessons, the report recommended the following actions to fine tune the policy so as to improve the contributions of the NFPP and the SLCP to government goals of restoring forests and grasslands and improving rural livelihoods:

NFPP

Remove the ban on logging from collectively-owned forests where appropriate ensuring clarity and predictability in tenure security;

Develop an exit strategy to move from the logging ban on state-owned forests to sustainable management of the forests;

Develop a detailed forest land use plan which ensures protection of old growth natural forests; and

In the interim, compensate collective forest holders for losses caused by the ban and increase the level of compensation to those impacted by the logging ban on state-owned forests.

SLCP

Develop a strategy to engage other sector agencies in reducing sedimentation from engineering works;

With the active participation of local officials and representatives of stakeholders, improve the targeting and implementation of the program by adopting specific environmental targeting criteria and more market-based mechanisms such as bidding;

Develop a "sustainability" strategy to continue the positive benefits of the program following the end of the subsidies. This 'sustainability' strategy would include an aggressive piloting and advancement of alternative funding sources for these payments for ecosystem services, including a redesigned Ecosystem Compensation Fund and promotion of new markets and payment schemes for carbon sequestration and

Build capacity at all levels for more decentralized flexible, multi-sectoral approaches to policy, planning, implementation, monitoring and evaluation in the affected provinces.

The full report will be available on the website of the World Bank Office Beijing at: http://www.worldbank.org.cn/English/home.asp

(china.org.cn November 25, 2002)