World Bank praises China’s environmental efforts but says new development strategy needed

The report points to three areas of success: broad-based and absolute reduction in industrial air and water pollutant emissions during the second half of the 1990s (see related story); the reversal of deforestation through massive investments in reforestation and afforestation (see related story); and the reversal of secondary salinisation in irrigation areas through major programs of both control and prevention. “These achievements are arguably unprecedented in any country at China’s state of economic development,” said Yukon Huang, Country Director for China. “Yet, the battle is not even close to being won – environmental challenges are likely to get far greater and more complex over the next 10 years and the government will have to re-orient its approach if it wants to make further progress.”

The report, prepared by a World Bank team, reviews the state of the environment, assesses the effectiveness of the government’s environmental protection work over the last 10 years, and makes recommendations on how to address the new challenges which will face the country over the next 5 to 10 years. Overall, the report urges the need for environmental strategy to become more proactive, as the current approach focuses mainly on remedying the adverse environmental effects of other, generally previous, development decisions. In the future, more emphasis should be placed on avoiding or minimising the adverse environmental effects of development policy in the first place, the report says. In addition, the concept of environmentally sustainable development has to be firmly embedded in all relevant aspects of planning and development.

The Bank’s report provides a wide range of suggestions on how the government can do this with particular emphasis on the key institutions responsible for environmentally sustainable development, and the policy and regulatory framework within which they operate. The team also reviewed many of the government’s very large environmental investment programmes (see related story and related story) and found many opportunities to improve the effectiveness of environmental investment.

For all areas of policy making, a powerful mechanism needs to be established to coordinate the work of different agencies, reduce overlaps and contradictions, maximise synergies and resolve disputes, such as re-establishing the State Environmental Protection Commission, which was dissolved in 1998. Government agencies need to adjust their policies to fully incorporate environmental sustainability into their development objectives and increase support for sustainable development strategies. An independent National Parks Service should also be established to manage nature reserves of national and global significance and to provide the lead and set standards for counterpart institutions at provincial levels. In addition, new and separate river basin management institutions need to be created, with a governance structure that makes adequate provision for effective participation of provincial governments in their decision-making processes.

On environmental institutions, the capabilities of the state’s Environmental Protection Bureaux (EPB) need to be extended, with greater technical capacity and resources at the county and town levels and more supervision and oversight by higher levels to counter growing localism. The legal system needs to be strengthened, especially by developing a strong body of environmental law backed up by an impartial judiciary to interpret the laws and adjudicate legal and regulatory disputes. Public participation in environmental decision-making should also be promoted, the report says, with emphasis on extending the constituency beyond wealthier urban areas in the east.

The report pinpoints various options open to China to improve its environmental management and protection, including:

• strengthening the implementation of existing regulatory procedures to realise their full potential, including focusing regulatory efforts on priority polluters and priority areas, continuing to adjust pollution levy fees to increase their incentive value, and continuing to reform the fiscal/budgetary system for EPBs;
• the development of new regulatory tools to deal with emerging pollution management issues, giving consideration to adopting a permitting system under which all significant point sources of pollution must secure a permit to operate and must pay an administrative fee to cover its costs. In addition, a schedule of graduated and increasingly punitive fines for breach of permit conditions would also be required; and
• other instruments which should include continued price reform for environmental improvement, strengthening focus on the poverty/land degradation connection, and re-orienting natural resources development policies.

Apart from increasing overall environmental expenditure, the system of investment can also be further improved, with EPBs focusing on the priority issues of pollution management and control. The effectiveness of investments in ecological construction and conservation needs to be improved by placing more emphasis on addressing the underlying social and economic causes of land degradation and less on treating the symptoms. More money should also be given to ameliorate urban environmental infrastructure, utilising new sources of public capital, such as floating municipal bonds or through increasing private sector participation. The effectiveness of environmental programmes can also be improved by spending more time and resources on feasibility studies, paying more attention to cost effectiveness, reducing emphasis on investments in monetary terms and increasing investments in human capital and avoiding the temptation to broaden the agenda before priority problems are solved, the report concludes.

Meanwhile, the US Embassy in Beijing has stated that “there is good reason to believe that the reported energy efficiency gains have been greatly exaggerated,” – apparently discrediting any World Bank praise. It says that Chinese official statistics are “notoriously unreliable and subject to political manipulation at all levels” and that “one must therefore view Chinese energy statistics with an appropriate degree of scepticism”.

The Embassy disputes that greenhouse gas emissions from the world’s second largest polluter have even fallen at all. Although the Central Government has ordered tens of thousands of small, inefficient, highly polluting coal mines and power plants to shut down over the past five years, in many cases localities have kept them open. In Shanxi Province, where 25-30% of China’s coal is produced, it says, roughly half comes from small township and village mines, often tucked away in remote areas beyond the gaze of regulators.

At a recent energy conference in Beijing, a Chinese expert from a government-affiliated institute announced that new estimates would soon be released revising coal consumption for 1999 upward by 100 million tons, thus striking off more than half of the reported decline in China’s energy use. In addition, vehicle traffic in Chinese cities has been doubling roughly every five years, the embassy says.