Chapter 14 - Conservation and Sustainable Use of Natural Resources


14.1 Natural resources are an important material basis for a stable national economy and social development. They can be divided into two categories: the exhaustible, such as minerals, and the inexhaustible, such as forests and grasslands. With industrialization and urbanization, mankind's great demand for natural resources and their large scale exploitation and consumption has resulted in the weakening, deterioration and exhaustion of these resources. One difficult task faced by all countries is to guarantee the lasting utilization of natural resources at the lowest possible environmental cost while still assuring economic and social development. China with its large population and poor economic foundation is engaged in a process of increased urbanization and industrialization. Its natural resources are relatively inadequate and the per capita Gross National Product (GNP) is still lagging behind that of most of the world. The traditional mode of resource consuming development and the current inefficient economy are severely threatening the lasting utilization of natural resources. Therefore, the strategy of choice is to attain economic development at a rate above the world's average while sustaining a continuous increase in growth at relatively low resource and social costs. This is a strategic alternative for sustainable development with Chinese characteristics.

14.2 At the present time China is confronted with tough challenges with respect to the sustainable use and conservation of important natural resources. These challenges involve two aspects. Firstly, the per capita resources of China is relatively insignificant. In 1989 the per capita fresh water, cultivated land, forest and grassland of China comprised 28.1%, 32.3%, 14.3% and 32.3% of the world's average, respectively, while the per capita resources figures and ecological quality are still declining or deteriorating. Secondly, the increasing shortage of natural resources, inter alia the shortage of water resources in North China, nationwide shortage of cultivated land and soil degeneration, resulted from the surging population and more-than-adequate dependence of economic development on resources, will become an important constraint to the sustainable, rapid and healthy development of society and economy of China. It is estimated that more than three hundred cities are water-deficient with a total daily water shortage amounting to over 16 million metric tonnes. Shortage of irrigational water has resulted in a yearly reduction of crops output of over 2.5 million tonnes, thus exerting serious impact on industrial production, agriculture and people's daily life. In this respect the sustainable use of water resources is the most pressing problem among those concerning the conservation and sustainable use of all natural resources.

14.3 The primary problems pending, with respect to the utilization and protection of natural resources in China are:

  • (a) Lack of effective mechanisms for the comprehensive management of resources as well as for incorporating the accounting for natural resources into the national economic accounting system, while concurrently, the traditional mode of natural resource management and its legislative system are facing the challenge of the market-oriented economy;

    (b) Economic development which is traditionally unduly dependent upon the sole input of resources and energy, and is accompanied by massive extravagance of resources and outflow of pollutants without consideration for the relation between the excessive exploitation and use of resources and deterioration of natural environment;

    (c) Distribution of the natural resources by means of administrative intervention which seriously hinders the effective allocation of resources, the establishment of a resource property system and the creation of a resource market;

    (d) An irrational resource pricing methodology contributing to severely misrepresenting the market price of resources, which has resulted in devaluing resources, depressing prices of resources and the excessive expansion of the demand for resources;

    (e) Lack of an effective mechanism for analyzing the natural resource policy as well as the supporting information for decision making, inter alia a lack of multisectoral analysis of policy and sharing of information which can provoke divergence in policy goals between and among various departments and can lead to a negative impact;

    (f) Lack of coordinated and consistent management mechanism and organization has resulted in a decentralized system for resources management.

14.4 To ensure that the limited natural resources will satisfy the demand of sustained high speed economic development, China's policies are:

  • (a) To protect and make economical and appropriate use of resources;

    (b) To be engaged in both discovering new resources and in using existing natural resources economically. China must depend on technological progress to tap its resource potential, make full use of the market economy and economic means to achieve effective resources distribution, and insist on efficiency in the utilization of resources and resource intensive economic development;

    (c) To implement the development and protection of resources in conjunction with economic construction in order to illustrate the principle of integrating economic and social effects with environmental benefits for the protection and sustainable utilization of natural resources.

14.5 This chapter is concerned with five types of natural resources: land, forest, water, minerals and grassland. The general objectives of this chapter are to realize the mode and channel for conservation and sustainable utilization of natural resources, such as to summarize the existing problems in China's exploitation, utilization and protection of the six major natural resources, and to present the project areas for protection and rational use of six major resources.

14.6 Some of the issues are also discussed in other chapters due to the broad nature of natural resource protection. The prevention of soil erosion, flood prevention and management, marine life protection, the exploitation of oil and marine power resources, water usage development in the rural areas, and the lasting utilization of rural land resources are examined, respectively, in Chapters 4, 11, 13, 15, 16 and 17. The implementation of projects in these chapters together with related programme areas listed in Chapters 6,7,8 and 10 will aid in the realization of the projects and goals presented in this chapter.

14.7 The programme areas in the present chapter are:



A. Establishing the Natural Resource Management System Based on the Market Mechanisms and Government Macroeconomic Control

Basis for action

14.8 China has formulated and promulgated many laws and regulations aimed at the rational utilization and protection of natural resources. However, very serious problems exist related to the degeneration of natural resources and environmental deterioration. With the continuation of economic reform and the emergence of multitudinous small enterprises and other economic agents which have never existed before, the enforcement of these laws and regulations poses a severe challenge to the market economy. To implement the required sustainable development, the government which is likely to reinforce and amend existing regulations, will take advantage of the economic policy including market incentive means to make the market mechanism play a prominent role in the transformation of ideas and methods for utilization of natural resources.

14.9 In China the natural resources predominantly belong to the state. Confusion between the ownership and the rights for the exploitation and handling of resources and lack of clear guidelines defining the economic relations between the central government, the local government and various economic entities have resulted in the irrational allocation of natural resources and low efficiency in the exploitation and utilization of resources. With the deepening of economic reform and development of the market economy, the state has provided private enterprises access to the exploitation of natural resources through a responsibility system or other means. Establishing a natural resource management system based on the market mechanisms in conjunction with the adjustment by the government is being accelerated.


14.10 The main objective of this programme area is to improve the natural resources management system. The specific objectives are:

  • (a) To identify the roles to be played by the central government, enterprises and individuals with respect to the ownership, obligations and rights over the use and handling of natural resources;

    (b) To introduce a market mechanism for the use and allocation of natural resources which would follow the economic principle "the user pays" to facilitate the effective exploitation of resources in favour of the environment;

    (c) To define and improve the role of planning at the national and regional, as well as trans- sectoral levels in the utilization and protection of resources geared to meet the objectives of economic development and current measures of economic reform;

    (d) To rectify the existing laws and management system concerning the management and protection of natural resources, following the principle of reinforcing the market economy;

    (e) To use economic measures and to a greater extent the market incentives as important supplements to legislation in order to assure the macroeconomic adjustment being undertaken by the government for regulating the market and for rectifying the gyration of pricing policies.


14.11 The activities for reinforcing the basic role of the market mechanism in the natural resource management are:

  • (a) To establish and improve a system of property rights for natural resources which requires the separation of ownership from the rights on exploitation, repayable use and transfer of resources;

    (b) To develop and establish effective and comprehensive planning and management methods for those organizations or institutions responsible for the management of natural resources;

    (c) To adjust the existing economic measures and financial incentives including the resource taxes and subsidies for compensation to ecological environment to meet the objectives of sustainable development;

    (d) To encourage the development of a new market eligible for the sustainable and effective utilization of natural resources to facilitate the development of the sustainable resource industry;

    (e) To encourage, study and adopt techniques for risk assessment, resource pricing and exploitation which are favourable to the environment;

    (f) To carry out market economy incentives for more efficient control over the natural resources along with measures assuring an equitable distribution of resources for the whole society;

    (g) To establish a system for continuous monitoring of natural resources by the government and social groups, in order to encourage public participation in the activities aimed at the sustainable development of natural resources;

    (h) To establish sectoral and regional mechanisms for the planning and distribution of natural resources, inter alia a medium and long term mechanism for the distribution of resources;

    (i) The government will develop and implement a family contracting and responsibility system in the areas of exploitation and protection of the natural resources other than agriculture for encouraging family creativity and income generation;

    (j) To set up a mechanism for the coordination or elimination of discrepancies arising during the implementation of some policies related to the utilization of natural resources.

14.12 The activities of the government in the area of macroeconomic adjustment are:

  • (a) To establish a natural resource management system which is suited to the market economy;

    (b) To organize comprehensive investigation, exploration, planning and utilization of natural resources, and to carry out unified planning including the Five-Year Plan and the medium and long-term plans for the management of important resources depending on their scarcity, and the policies governing their use;

    (c) To establish a physical account and an account based on the magnitude of value for a variety of natural resources in order to support the creation of an integrated valuing and accounting system (see the programme area D of Chapter 4) to supplement or improve the existing economic accounting system;

    (d) To allow the exchange of licensing agreements and responsibility for exploitation of resources under the direction or control of the central government except those scarce resources which should be kept under special control;

    (e) To gradually abolish those pricing policies which are unfavourable to the sustainable utilization of natural resources and rational use of environmental resources, such as the policy which provides subsidies for deforestation, which are at a level much lower than their production costs, non-repayable exploitation of mineral resources and subsidies to the prices for water and energy;

    (f) To formulate and implement as fast as possible the Act for Comprehensive Utilization of Resources and its enacting terms to bring the comprehensive exploitation and utilization of natural resources into line with the legislative system.

14.13 The activities for upgrading the collection of data and information are:

  • (a) To establish an information system related to the management, protection and rational utilization of natural resources, under the direction of the government and in collaboration with the international organizations, enterprises and research institutions;

    (b) To strengthen the analysis, collection and systematic evaluation of materials concerning the environmental, economic, social and legislative aspects of the natural resources at the global, regional, national and local levels;

    (c) To set up a mechanism for the coordination and sharing, between the relevant departments, of existing data and information for natural resource management in order to reinforce the capability of the state in data collection, processing and evaluation;

    (d) To provide in a simple and clear way to people from all walks of life the appropriate techniques and economic information suited for activities of policy making concerning the exploitation of resources;

    (e) To support and encourage the building of low cost local data and information systems applicable to natural resources.

14.14 International and regional cooperation. The Chinese government and its relevant departments with the support of the regional and international organizations, are poised to reinforce at the appropriate level, regional cooperation and exchange of materials concerning the management and protection of natural resources. The specific activities are:

  • (a) To establish a stable relationship with the relevant agencies under the United Nations (UNESCO, FAO, UNEP, UNDP, WMO and WHO);

    (b) To set up plans for materials exchange and personnel training and cooperation with the related countries and non-governmental organizations;

    (c) To study the possibility of establishing a relationship in research and development with the related countries and non-governmental organizations for joint investigation of methods and systems for management of natural resources.

B. Implementing the Sustainable Development Impact Assessment System in the Decision-making for Natural Resource Management

Basis for action

14.15 The sustainable development of natural resources requires not only the determination and implementation of an optimal policy based on a wide range of information, and the efficient operation and management of natural resources in an integrated and sustained way, but also dictates the creation of a policy analysis mechanism which is capable of evaluating and adjusting the current or future policies to determine the positive or negative influence of these policies on the overall sustainable development of China. Sustainable Development Impact Assessments (SDIA) can partially integrate the cost- effectiveness analyses to assist policy-makers in evaluating their policy options and the impact of relevant policies on the utilization of other kinds of natural resources or other economic policies.

14.16 Sustainable development is a dynamic process and necessitates continual adjustments to cope with changes in the economy and environment. The adoption of the SDIA will lead to the emergence of an important mechanism, through which fruitful policies will emerge in place of those characterized as having negative effects.

14.17 In the past, China has evaluated the environmental impact of resource exploitation projects, but has not integrated these evaluations into the relevant policies and programmes of the national economy. The implementation of the SDIA for natural resources can facilitate the socioeconomic development of a region or the whole nation and aid in more readily embracing the strategy of sustainable development.


14.18 The main objectives are to incrementally introduce the SDIA while formulating the related policies, plans and development projects for natural resource management, to disseminate and implement the SDIA in the form of legislation, and by means of the SDIA to conduct planning and cost-effectiveness analysis of the policy for protection and management of natural resources.


14.19 The chief management and research activities on sustainable development impact are:

  • (a) To design and adopt a system of sustainable development indices including the method for their determination, and to develop a SDIA model and a computer system;

    (b) To develop guidelines for SDIA and management programmes dealing with the evaluation of policies, programmes and exploitation activities for important natural resources;

    (c) To incrementally adopt the SDIA in coordination with formulating the policy options and programmes at national, regional and local levels;

    (d) To conduct the SDIA with respect to the existing subsidy policies, such as subsidies for coal, water resources, pesticides, chemical fertilizers and energy;

    (e) To draft a technical directory for application of the SDIA to the cost-effectiveness analysis of policies relating to the economic sectors and natural resource areas;

    (f) To improve the existing system of environmental impact evaluation and cost-effectiveness analysis and to explore the feasibility of their integration into the SDIA.

14.20 The capacity building activities are:

  • (a) To conduct training for all officials responsible for the implementation of the SDIA in the methods of multi-sectoral management of natural resources as well as the fundamentals of integrated management for various branches;

    (b) To conduct training of the policy makers to assist them in using these measures in the process of drafting policy.

14.21 International cooperation and assistance should include:

  • (a) Gaining support from the relevant agencies of the United Nations such as UNEP and UNDP, and the World Bank as well as non-governmental organizations, including their assistance in establishing the related organizations;

    (b) The cooperation and exchange of achievements in the previously described research activities with the international organizations and related countries to facilitate the overseas training of technical personnel;

    (c) The introduction to China and adoption of the overseas research achievements and experience in the relevant areas and concurrently the dissemination of the China's expertise and methodology to other developing countries.]


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