China: Integrating Forest Development with Biodiversity Conservation and Carbon Reduction

Challenge

China has long been a forest-poor country. Though its forest cover increased from 13 percent in the 1980s to 18.2 percent by 2005 thanks to an extensive plantations program, the hectare per capita of 0.13 remained significantly below the world average of 0.6.  With rapid economic growth, China’s forests came under intense pressure due to the growing demand for timber and pulpwood. The logging ban introduced by the government in 1998 further aggravated the wood shortage. This challenge was more acute in Guangxi, where combined with weak forest resources protection  resulted in a threat to its unique biodiversity including one of the largest and most important representatives of karst ecosystem in the world.

In the context of climate change, forests play an important role in absorbing and storing greenhouse gases. China committed to increase its forest cover by 40 million ha and forest stock volume by 1.3 billion m³ between 2005 and 2012 to achieve the set target of  reducing its carbon dioxide emissions per unit of gross domestic product (GDP) by 40 to 45 percent.

Approach/Solution

Designed to be forward looking and innovative, the project introduced a sector-wide, integrated and comprehensive approach to sustainable forest management and biodiversity conservation by providing support to three key areas of sustainable forest management including: 1) timber production； 2) ecological environment protection； and 3) biodiversity conservation.

At the same time, the project emphasized institutional capacity building to ensure long-term sustainability. It also tapped the resources of the Global Environment Facility (GEF) to promote innovative biodiversity conservation approaches, and incorporated the BioCarbon Fund to pilot the world’s first Clean Development Mechanism (CDM) afforestation and reforestation operation, which was registered by the United Nations.  

The objective of the project was to relieve pressure on forest resources, increase forest production capacity, and step up efforts to conserve watersheds and biodiversity to strengthen the environmental functions of forests and mitigate climate change.

Results

The project was an example of a “triple win” combining a World Bank loan, GEF funding and carbon finance to achieve more sustainable timber production, rural poverty reduction, natural resources conservation, and carbon sequestration. Some specific results achieved between 2006 and 2012 include:

• 214,000 ha of timber plantations were established with production capacity of 32.7 million m³, reducing the pressure on nature forests. 
• 18,000 ha of multiple-function protection forests were established, and closure of 109,580 ha of degraded watershed and karst areas for natural regeneration resulted in 12 percent increase in vegetation cover.
• In the two carbon finance operations, 9,860 ha of multiple-purpose forests were planted in degraded lands； 167,700 tons of carbon dioxide was sequestered； and so far US$ 636,868 have been earned from selling the Certified Emission Reductions (CER) and distributed to the farmers and forest farms.
• 118,020 households earned additional income from employment in tree planting and from higher productivity plantations. In addition, 101,500 households benefited through watershed reforestation, carbon trade pilots and grants provided to communities around nature reserves to develop alternative livelihoods. 
• The populations of key indicator species and areas of limestone forests in the five targeted nature reserves remained stable or were increasing.  For example, the number of Francoisi leaf monkeys in Nong Gang Nature Reserve increased from 66  to 98.
• 164 new species identified through cave biodiversity surveys, making Guangxi a new Global Hotspot for cave biodiversity.

Bank Contribution

The World Bank provided a loan of US$100 million as well as its global experience and innovative approaches such as the CDM reforestation and community engagement in biodiversity conservation. The Global Environment Facility (GEF) provided a grant of US$5.25 million with focus on improving management of five nature reserves and conservation of the globally significant biodiversity in Guangxi. Payments from the Certified Emission Reduction Credits from the BioCarbon Fund were not intended to directly finance the project investment. However, the revenue stream from the sale of CERs enabled the carbon sequestered by the trees to serve as a “virtual cash crop” to local communities to engage them in sustainable forest resources management. 

Partners

Guangxi Government made a strong commitment to the project implementation. A project leading group was set up at the provincial level with the vice governor in charge of forestry as its head. It ensured timely delivery of counterpart funds, sound organizational engagement and strong support of technical services, which guaranteed the successful implementation of the project. Firm commitments and strong support to the project were also reflected in the government’s decision to increase its counterpart funding contribution rather than reducing the scope of the project in the face of a depreciating US dollar and rising labor and input costs. It also put great efforts into overcoming the difficulties caused by the devastating snowstorms in 2008 and prolonged drought in 2010 by providing funds and technical assistance to replant damaged areas. 

Moving Forward

After project completion, local farmers, communities and forest farms assumed responsibility for the management of the plantations. Project activities were integrated into the county governments’ forest management system and became their operational routine. For watershed management, the provincial government has put in place an annual grant of 75 RMB/ha/year  for ecological forests’ management to ensure the continuity of the program. Access to the CDM program also provides additional incentive to villagers to continue with long-term forest management. Study groups from 12 other Chinese provinces and  10 other countries visited the project areas to learn from the experience in CDM reforestation and cave and karst ecosystem conservation which has potential for replication. 

Beneficiaries

Tan Jianming, farmer from Leyi Village in Huanjiang County:  

“I participated in the reforestation project in 2006. We only knew that we could earn money by selling timber, but never realized that we could benefit from selling fresh air. I am very happy and will continue to participate in such projects in the future.”

Wei Wenxian, farmer from Juqun Village of Liangjiang Township:

“We received seed grants in 2008. I chose to raise silkworms. I planted 3 mu (about 0.2 hectares) of mulberry trees, and can earn more than 30,000 yuan a year. It has increased our family income.”