A New Frontier for Environmental Protection and Sustainable Development in China

A New Avenue for Funding Conservation Efforts

Across China, authorities are exploring the potential of carbon sinks generated through water loss and soil erosion control as a means to broaden funding avenues for conservation endeavors. This innovative approach holds promise for enhancing environmental protection and promoting sustainable development.

In November 2023, a groundbreaking transaction took place in Qujing, Yunnan province, where an entrepreneur and four local enterprises collectively acquired 115,600 metric tons of carbon sinks from a water and soil conservation project. This marked the first instance in China where an individual purchased carbon sinks generated through such efforts.

The water and soil conservation strategies implemented in the Gaojiancao area, spanning almost 31.2 square kilometers, involve practices such as afforestation and the transformation of hillside slopes into terraces. These initiatives not only prevent or reduce soil erosion but also promote healthy vegetation, leading to enhanced carbon sequestration through photosynthesis and the storage of carbon in plant biomass.

In early 2023, China's central authorities unveiled a guideline vowing to include carbon sinks generated in water and soil erosion control into the China Certified Emissions Reductions Program. This national voluntary mechanism allows participants to earn and trade carbon credits that can be used to offset carbon emissions.

While relevant methodologies for calculating such carbon sinks are still under development, the trading of these sinks is currently guided by the Tanpuhui mechanism. This mechanism encourages the general public and micro, small and medium-sized enterprises to embrace green, low-carbon approaches through incentives derived from the proceeds of selling carbon credits.

Several successful transactions have already taken place, demonstrating the potential of this approach. In September 2023, roughly 151,000 metric tons of carbon sinks generated in water and soil erosion control in Yan'an, Shaanxi province, were sold to three local companies for over 5.4 million yuan.

The country's first transaction for a carbon sink generated by water loss and soil erosion control occurred in December 2023 in the basin of Luodi River in Changting county, Fujian province. A 100,000-ton carbon sink was traded for 1.8 million yuan.

These transactions highlight the potential of carbon-sink trading to transform environmental benefits stemming from water loss and soil erosion control into economic value. This can then be reinvested in conservation efforts, expanding funding channels and encouraging increased participation in the crucial work of protecting our environment.