evidoria

← Back to browse

Good practice Imported

Zhejiang's Forest Ecological Benefit Compensation Fund — Provincial Payments for Public Welfare Forest

China · Hangzhou · See the China profile · See the Hangzhou profile

Evidence: Observational / pre–post Top 40% 47/100 · Ask Evidence Copilot about this practice

Since 2004, Zhejiang province has paid forest owners and collectives annual per-area compensation to maintain designated 'public welfare forests' for water and soil conservation — now covering 3 million+ hectares and over 2.5 million households from the provincial fiscal budget.

3.04 million hectares (~45% of provincial forest land)
Forest land covered
20.2 billion yuan
Cumulative disbursement
~2.55 million households
Forest-owning households reached
8 yuan/mu
Initial per-mu compensation rate, 2004 (2004)
~30-35 yuan/mu
Current provincial minimum compensation rate

Details

Maturity
Established
Promoter
Zhejiang Provincial Department of Finance & Provincial Forestry Bureau
Period
2001 pilot, province-wide since 2004-present
Keywords
forest ecological compensation, public welfare forest, provincial fiscal transfer, water and soil conservation

Context

Zhejiang piloted a provincial forest ecological compensation fund in 2001 and implemented it province-wide in 2004, one of China's earliest sub-national payment-for-ecosystem-services mechanisms, jointly administered by the Provincial Department of Finance and Provincial Forestry Bureau.

Activities

Forest land classified as 'public welfare forest' — managed for water conservation and soil retention rather than timber — is compensated annually on a per-mu basis from the provincial fiscal budget with central co-funding, with tiered rates for forest inside national parks, nature reserves and watershed-source counties.

Results

The per-mu compensation standard has been raised eleven times since 2004; the fund now covers roughly 3.04 million hectares (~45% of provincial forest land) and has cumulatively disbursed more than 20.2 billion yuan to an estimated 2.55 million forest-owning households. A 2024 peer-reviewed household-level study found the policy significantly reduced energy-poverty risk among participating communities.

Conclusions

National-level reviews note financing remains overwhelmingly (~87%) government fiscal transfers rather than market-based instruments, and payments are tied to forest classification and area rather than measured ecological performance, limiting the programme's ability to demonstrate additionality directly.

Implementation
Indicative cost
Very high (> €5M)
Time to results
Long (> 3 years)
Staffing & skills
Zhejiang Provincial Department of Finance, Provincial Forestry Bureau

Conditions for success

  • Tiered compensation rates giving higher payments to ecologically sensitive areas
  • Compensation standard raised eleven times to keep pace with costs

Common failure modes

  • ~87% financing remains government fiscal transfers rather than market-based instruments
  • Payments tied to forest classification/area rather than measured ecological performance

Do you run this practice? Claim it — verified implementers get a public contact pathway and can propose corrections.

Data sources

Where this practice's information was retrieved from, and when.

Similar practices you may find useful