'The People's Republic of China has done a huge amount of work in the area of ecological compensation. Formalizing the system to attract private sector interest would further help protect the Chinese environment and offer a way forward for other countries in Asia and elsewhere looking to prevent environmental degradation,' said Klaus Gerhaeusser, Director General of ADB's East Asia Regional Department which produced the publication.

The publication, entitled Payments for Ecological Services and Eco-compensation: Practices and Innovations in the PRC, includes papers and speeches on the PRC's ongoing innovations in eco-compensation. The papers were presented during the International Conference on Payments for Ecological Services held in Ningxia Hui Autonomous Region, PRC, in late 2009.

The conference and the publication have directly contributed to national eco-compensation legislation, which is now being prepared and will be implemented as part of the PRC's 12th Five Year Plan for 2011-2015.

The PRC has been using a wide array of new policy and program innovations in eco-compensation. These primarily involve watershed services and many provide a framework for market-based approaches to environmental policy, and in particular so-called Payments for Ecological Services (PES).

PES schemes are increasingly popular internationally. PES schemes involve direct payments from beneficiaries of ecological services such as water consumers, to key providers and protectors of these services, such as land users to ensure and improve services.

A number of schemes featured in the publication are in use in six eastern provinces: Fujian, Guangdong, Hainan, Jiangsu, Liaoning, and Zhejiang, as well as in seven inland and western provinces: Anhui, Chongqing, Gansu, Jiangxi, Ningxia, Qinghai, and Shanxi.

The publication says these programs are encouraging, but that further work needs to be done to improve effectiveness and results. In particular, further work is needed on clarification of property rights in relation to ecological services, the development of legal and regulatory frameworks, and mechanisms for coordination among different regions and government departments.

Such work also provides many opportunities to encourage innovation and spur greater participation of the private sector and international organizations in conservation finance and environmental protection.