Better ways of ecological compensation: Integration of environmental governance with regional development

Through logical argument, illustration, and analysis of questionnaire results conducted in Loess Plateau, China, this paper argues that environmental governance should be integrated with regional development to realize the long-term goals of both sustained ecological improvement and lasting economic development. The paper suggests that when an ecological restoration program is implemented with an obvious positive externality improving local environment with benefits for the whole regional society and even outside the region, and where the boundary of the benefits provided is unclear and total benefits are un-measurable as some beneficiaries are unidentifiable it is the government's responsibility to work out a feasible and operable environmental governance policy for ecological compensation that effectively and efficiently offsets externalities. The preliminary conclusions of the paper are as follows: 1) When the positive externality from a large ecological program, such as the Sloping Land Conversion Program (SLCP) in Loess Plateau, China, extends to other regions and its ecological benefits can not be clearly measured and calculated across these regions, the Ecological Compensation (EC, or Payments for Environmental Services, PES, to offset the externality) paid by the government to the participants who undergo economic losses due to program's implementation, should be sufficient to cover all the opportunity costs of the participants. 2) The present EC standard for SLCP should be revised to not only consider the local people's present livelihood, but also to consider the local region's long-term socioeconomic development. 3) It is suggested the EC payment standard should include 2 main parts: payment for farmer's direct losses and payment to farmers to resettle down their livelihoods. The latter payment may consist of an initial payment to encourage farmers to adopt a new production mode and a fee to support farmers while they receive vocational training or employment guidance. 4) The current EC payment standard for SLCP in Loess Plateau region from the government, though judged by the participants of SLCP as “passably fair”, has not paid much attention to the issue of transferring farmers' surplus labor, which can be particularly encouraged by providing them with better local infrastructure and increasing the efficiency of rural production. Greater emphasis on transfer of surplus labor may increase the efficiency of EC. There is room to re-orientate EC policy and speed up the transfer of farmers' surplus labor, such as by facilitating transformation of rural production methods and promoting sustainable local socioeconomic development.