Eco-Compensation in China: Mediating Water Demands on the Xin’an River

Abstract

China has included environmental objectives in their national planning for decades. However, these objectives are often superseded by economic development goals and other local interests. As a result, environmental degradation has occurred across the nation leading to a greater understanding and sense of urgency in rehabilitating the environment and the important ecological services provided. One measure China has taken is using market-based evaluation tools to develop a concept of ecological compensation (eco-compensation) to create financial incentives to fund environmental efforts and remove negative externalities on environments and peoples. This case will look at the transboundary eco-compensation agreement allowing Anhui Province to continue its industrial growth while also improving the quality of the Xin?an River supplying drinking water to Zhejiang Province.