Full Episode: Eco-compensation - strategy and challenges

China's 14th Five-Year Plan commences the country's long-range, 15-year roadmap to 2035, when China intends to become, basically, a fully modernized, socialist country that is "prosperous, strong, democratic, cultural advanced, harmonious and beautiful".

But a country cannot claim to be "beautiful" if its air, water and soil is severely polluted. No amount of economic development is worth the cost of environmental degradation.

Sustainable, green development is an absolute requirement for China to achieve its national goals. There is a natural tension - and sometimes an inevitable conflict - between macro-economic development, even personal income security, and protecting the environmental.

One of China's innovative strategies to prioritize ecological development is eco-compensation. What is eco-compensation? How does it work? Who are the parties? Who pays for it? For how long? How to make it sustainable?

Eco-Compensation is innovative policy to protect the environment. The challenge is to make the system of payments sustainable. One key is to enhance the role of market, perhaps something like a carbon market, where, say, eco-compensation projects with revenue potential and government funding can be bid for and traded, attracting entrepreneurs who see opportunity to make money from eco-friendly businesses. 

The Chinese government has always lauded a clean environment, but when actual enterprises polluted, there were often obstacles in making them stop: local officials were more concerned about GDP growth to bolster careers, and corruption and bribery could divert or halt enforcement.

In a sense, eco-compensation and bribery are opposites: bribery pays to continue polluting; eco-compensation pays to stop polluting. Officials and executives are learning that the costs of polluting finally far outweigh the benefits: fines will be punitive and painful, and careers can be put in jeopardy. Many government programs are now promoting green development, including eco-compensation. But more specific targets should be set.

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