Market Based Eco-Compensation Mechanism for Forest Carbon Sink
In the PRC, around 90% of climate change-sensitive areas are found in poverty-stricken regions. Reducing poverty through market mechanism is crucial to poverty-relief programs and to coping with the climate change challenge. ADB’s technical assistance project for the “Market-based Eco-compensation Mechanisms in Beijing” (TA 8471-PRC) found an innovative way for Beijing’s carbon market to explore eco-compensation through forest carbon sink projects, with urban compensating rural, industry compensating agriculture, and high emitters compensating low emitters. Seven carbon emissions trading pilots, including Beijing, have commenced since June 2013, are running successfully and are well prepared for the unified national carbon market scheduled to start in 2017. The offset mechanism design in carbon markets, related to the Chinese Certified Emission Reductions (CCER) project, has created large-scale stable demand for forest carbon sink projects. To promote the potential of market-based eco-compensation mechanism, the high cost of carbon sink project needs to be resolved.