Vice Premier Wen Jiabao, Dr. Good, Professor Qu Geping, Vice Chairman Liu Jiang, Minister Xie, Members of the Council, ladies and gentlemen,

It is a privilege to be taking part, for the first time, in the Council's annual meeting. And it is a high honor to have been invited to address, directly, such a distinguished group of scientists and policy makers.

We are all privileged to find ourselves in the company of others who understand the imperative of sound environmental management in China in the 21st century, who see this as a time not only of great challenges but also great opportunities, and who are committed to making an enduring contribution to securing the future health and prosperity of the many generations to come. And we owe the Council our gratitude not only for having taken and pursued this worthy initiative these past ten years, but also for the significant concrete contributions it has made to environmental sustainability in the People's Republic of China.

I am confident that the work we will do at this meeting, to close the second phase of the Council's work and initiate the third, will constitute another substantial step toward a future of which we can all be proud.

Ⅱ. Opportunities and Challenges

Each of us recognizes, I am sure, that charting a viable path toward both a wider prosperity and a healthy and sustaining environment will be neither easier nor less urgently important here in China than it has been elsewhere. The challenges are huge; the competition for inherently limited resources is keen; the science is sometimes uncertain; and time marches on.

Yet each of us also recognizes, I am equally sure, how far the global community has come during the past two decades. Path breaking scientific insights; astonishing new technologies that embody those insights; global information systems that enable us to share and build on what we learn; and a much richer and more innovative array of public policy instruments through which we can translate our shared aspirations into real progress that materially improves peoples' lives.

This meeting and the Council's work more broadly, is a vivid expression not only of how far we've come but also of our appreciation for the unique challenges facing China and our shared hopes and confidence for an environmentally sound future for China.

Colleagues in this room understand those challenges better than I ever will. The PRC's impressive economic growth during the last two decades has raised living standards significantly and improved the lives of hundreds of millions. By any standard this has been an historic achievement, to be sure.

But it has also come, in many cases, at a heavy ecological price. Heavy, and in some cases unsustainable, exploitation of natural resources. Public policies and use of technologies that implicitly assign a zero price to clean air and water. High concentrations of people and industries that overwhelm the adaptive capacities of nature. No one can say with any real certainty what the offsetting environmental costs have been. But there is no question that they have been high, as they have been in so many other places around the globe where essentially the same observations could fairly be made. And, again as in so many other places, there is no question that those costs erode the aggregate benefits of growth and development, that they constitute a real burden on present and future generations, and that they are a hugely important public policy challenge.

The PRC's accession to the World Trade Organization next month represents another challenge. It will accelerate economic reforms and China's integration into the global economy. With that will come new pressures on the public policy process, but also a wealth of new opportunities, including in the area of environmentally sustainable growth.

The PRC's environmental problems stem in part from the use of obsolete, polluting technology; inappropriate pricing; and the lack of market-based incentives to encourage environmentally friendly behavior. This need not be so: economic development and environmental protection do not have to be in conflict. They can and should complement each other. The key is to incorporate environmental factors in economic decision-making.

Ⅲ. Strong Commitment to the Environment

Against this background I am sure that we all welcome the important political and financial commitments that have already been made by the Government to addressing environmental concerns. The list of specific legal and regulatory initiatives is a long one. At a larger level, improved environmental management is a key objective of the 10th Five Year Plan, and environmental challenges have directly informed the Government's thinking about developing the western regions. Maintaining balanced macro-economic performance, also a core commitment of the Government, will enable China to marshal the resources needed to pursue this objective and provide the "space" that is always essential for sound long-term public policy making.

At a more micro level, but a bit closer to home for us at the Asian Development Bank, is China's ongoing work to develop a strategic partnership with the Global Environment Facility (or GEF) to fight land degradation in the west. The causes of this serious environmental and economic challenge are multiple and complex. But they include diffuse responsibility across many different government units, leading to inadequate planning and weak coordination, conflicting priorities and, in the end, a serious problem that directly inhibits the capacity of affected people to improve their lives.

The GEF partnership, of which ADB is a proud member, aims to bring together all parties concerned in planning, executing, and financing activities to prevent or reverse land degradation. This strategic partnership for is expected to be signed when the GEF Assembly meets in Beijing next year. It will be one of the first such partnerships in the world.

Another separate initiative is exploring, under the leadership of Professor Qu Geping the preparation of environmental impact assessments for policies as well as projects. The intent would be to encourage agencies to take environmental impacts into account when making policies.

And, we are all well aware of the enormous potential of achieving both economic growth and environmental sustainability by substituting market-based instruments for traditional command and control regulatory approaches. Considered largely the domain of theoreticians even just 15 years ago, such approaches have shown their viability and power in many circumstances and in many countries. Targeting achievement of specific results rather than application of specific technologies can produce huge efficiencies by creating positive incentives for innovation rather than coercive administrative structures. Market-based systems of tradable permits have proven their effectiveness in terms of both lower overall costs and more enduring results in many areas. Tax-based regimes offer other ways to achieve results by addressing basic incentives and encouraging innovation and risk-taking. And we cannot underestimate the crucial importance of appropriate pricing, whether for water, renewable resources such as timber, agricultural inputs, fuel, and so on. It is an unambiguous truth that resources that are under priced will be over consumed. Here in China, water tariffs now better reflect financial costs, wastewater tariffs are being introduced and pollution levies raised in line with marginal treatment costs. Other measures to discourage resource-depleting activities need to follow.

Enhanced public awareness and informed public debate can be a powerful tool to promote environmentally friendly behavior. Active and informed public participation on issues with environmental implications promotes greater cohesion around the choices made, and very often improves the final result. At ADB we have followed this approach systematically in all of our work in Asia, and with good effect. Here in China, public awareness about environmental issues is increasing, in part due to increased disclosure of environmental information through the print media and on television. Increasing public sensitivity to environmental. For example,"green" labeling of products helps consumers make more informed choices and sends powerful "green" labeling of products helps consumers make more informed choices and sends powerful signals to producers. Independent assessments of environmental issues and performance have much the same result.

Ⅴ. Looking Forward and the Role of CCICED

I know that all of these issues and challenges have both informed and been advanced by the work of this Council for almost a decade. They also offer excellent guidance for future work under the third phase. So too does the Council's unique capacity and track record in bringing environmental issues and policy challenges directly to the attention of the PRC's senior leaders. The open and frank exchanges between Chinese and international experts, through this Council, are making a real contribution, and one that, together, we should seek to deepen and extend.

During the next few days we will hear many suggestions about the Council's work. In particular there seems to be much support for a more sharply agenda during the third phase. In that connection I would offer two very general suggestions.

First, the Council might consider how to make even better use of the unique niche it now occupies. By that I mean exploring more systematically the hugely challenging interface between scientific and technical knowledge, on the one hand, and the formulation of public policy on the other. Good science can present us with crystalline insights, and that surely is one of its appeals. But at the end of the day, it is public policies and public choices that determine how those insights are used and the extent to which they yield tangible benefits. That suggests how those insights are used and the extent to which they yield tangible benefits. That suggests how those insights are used and the extent to which they yield tangible benefits. That suggests to me focusing more explicitly in the third phase on distilling out those core observations and recommendations that can move the public policy process forward in the most constructive possible way. It means being well informed about and connected to the larger priorities, and well positioned to respond with well-focused and timely contributions. At the broadest level this approach would mean that the Council would channel its technical work more systematically into strategic and policy issues.

My second suggestion is that the Council should develop mechanisms to draw more fully on the work of others. The World Bank, bilateral agencies, various UN organizations, and we at the Asian Development Bank, utilize considerable human and financial resources to support the PRC's efforts to address priority environmental challenges. All of us would benefit from a better developed collaborative mechanism to synthesize all of this work into well-formulated policy recommendations. This may well be a role to which the Council is well suited.

As an illustration, I mentioned earlier the ambitious development program for the Western Region, where official statistics indicate that poverty is more than four times the national average and about seven times that of the eastern region. There are clearly ecological dimensions to this poverty, such as desertification and soil erosion, that are relevant elsewhere in China. So perhaps there would be value for the Council in focusing on the Challenges in the West and extracting insights that could have wider applicability across China.

For example, how can better integration of development and environmental management be achieved? A horizontal integration of environmental objectives is essential in the policy, planning and investment project decision-making process of the multitude of central and sector development agencies. How can adequate financing be assured for both development and environmental objectives? And in this connection, are we taking a sufficiently comprehensive look at true costs, and is the right balance being found in the internal calculus of rates of return? Is there adequate institutional capacity to deal effectively with the multitude of crosscutting and sometimes conflicting objectives and tasks? 

These are profoundly difficult questions. But they are just as profoundly important. I am confident that this Council will play a central role in their resolution, and in so doing make an enduring contribution to the future of the Chinese people.

On behalf of the Asian Development Bank I deeply appreciate your attention this morning and am looking forward to the work ahead.

Thank you.