The China Council for International Cooperation on Environment and Development Task Force on Environmental Governance assembled a group of environmental policy experts and academics from China, Germany, the Netherlands, Japan, and the United States to examine means for developing more effective environmental governance strategies for China. The Task Force surveyed the status of environmental governance in China and across East Asia, the European Union, Japan, and the United States to form the basis for the recommendations in this report.

 

The Task Force was convened because China is facing unprecedented challenges in its efforts to protect the environment and natural resource base. The rapid deterioration of the nation’s environmental quality and depletion of its natural resources are threatening the lives and health of the largest population in the world and the very potential for sustained growth of the economy. In response, the Chinese government has recently elevated the importance of environment protection in its national development strategy.

 

However, the Task Force believes that what is required is a more dramatic and comprehensive shift in approach to these problems. In essence, China must reform important elements in its approach to environmental governance. The challenges that China faces are no less vexing and important than the challenge of economic reform, the restructuring of the management of state owned enterprises (SOEs), and the challenge of effectively managing the state’s (and the people’s) financial assets that are so key to the economic aspirations of the nation. The environment and natural resources of China are no less critical assets of the nation, representing the patrimony of the people, and no less deserving of good governance.

 

As development proceeds and more citizens are lifted from poverty, their attention naturally focuses on enjoying their new lives, enjoyment that requires a healthy environment. The government has set a goal of achieving the Xiaokang Society by the year 2020. The common representation of this goal is primarily in terms of material wealth. However, material wealth without the good health to enjoy it is an unsatisfying outcome. Therefore, the Task Force recommends that a set of measures and institutional innovations be adopted similar in scope to those for the economic reform which will insure that the environmental and natural resource wealth of the nation will be preserved and enhanced to support the welfare of the people. 

 

In his April speech during the Sixth National Environmental Conference, Premier Wen Jia-bao emphasized the importance of three transitions, the transition (1) from a focus on economic growth to a focus on environment and economic development; (2) from environment as a lagging objective to equal importance with economic development; and (3) from the primary use of administrative methods of environmental management to a more comprehensive system combining many approaches. Some positive moves have been made in this direction. The government has begun to consider evaluating the performance of local government leaders on environmental performance rather than just focusing solely on economic growth categories. To aid this evaluation, there have been experiments with measuring Green GDP, of a number of cities and provinces in China. These are extremely interesting steps. However, if China is to embark on these transitions, significant institutional changes are necessary. 

 

The Task Force notes that to be successful the process of reform should be systematic and driven by the goal of improving environmental governance. As the experience of the economic reforms has shown, picking just one or two international experiences for adoption without consideration of a comprehensive plan of reform is not likely to achieve the goal. Specifically, the Task Force believes China would benefit greatly by strengthening its environmental governance in four major issue areas:

(1) Improving the government’s capacity to enforce environmental laws and oversee the implementation of environmental programs, to enhance the government’s capacity to control environmental pollution, and to improve the management of natural resources;

(2) Engaging the business sector to take a more proactive role in environmental management by providing incentives to those that perform well and punishing those that do not, and by promoting best practices of industrial production and hazardous accident preparedness;

(3) Engaging civil society by providing greater transparency of information concerning environmental and natural resource conditions and of government decision-making activities, combined with access and participation by stakeholders, NGOs, and the general public, and;

(4) Establishing greater policy coherence and planning capacity for both domestic and international environmental and natural resource issues. 

To put China firmly on the path of the three transitions, the following action items are recommended by the Task Force on Environmental Governance in each of the four major issue areas:

1 Government

The first major challenge identified by the Task Force (TF) is the insufficient administrative authority and capacity accorded to the State Environmental Protection Administration (SEPA) in policy planning, implementation, and coordination with related agencies. The second major challenge comes from a policy approach that tends to be reactive—responding to pollution problems once they occur, rather than proactive and preventive—working to limit the extent and range of pollution problems and natural resource destruction before they occur. The third major challenge is in relation to the development of multi-sector and public access and participation in policy-making, enforcement, monitoring, and evaluation. Accordingly, the Task Force on Environmental Governance makes the following recommendations.

1.1 Executive Branch

(1a) Elevate SEPA to full cabinet rank in the government. 

(1b) Establish a leading group on national environmental issues chaired by the Premier, with membership comprised of the Ministers of all relevant agencies and the Secretariat provided by SEPA. 　

(1c) Reforming the institutional status of SEPA will place new burdens upon it to enhance the effectiveness of its policy, planning, and evaluation process. Especially, SEPA will need to develop internal mechanisms for coordination across departments to build more comprehensive policy regimes and integrated databases whose elements may require cooperation from several traditionally independent management responsibilities. Internal vetting of policy proposals will insure that the strongest possible initiatives emerge from SEPA’s internal process, and require that all policy proposals are evaluated for their environmental, economic, and social impacts. A mechanism for identifying new and emerging environmental threats also needs to be developed. 

(1d) Improve multi-level governance by realigning local environmental management to create a direct line of authority to provincial environmental protection bureaus (EPBs). This can be done by giving provincial governments the power to appoint local environmental protection bureau directors and requiring provincial governments to provide the budget for local EPB operations. In addition, SEPA can enhance the performance of local management by providing financial support to those provinces in greatest need of resources, by charging the new regional SEPA offices with the responsibility to coordinate and guide local implementation efforts, and by establishing performance requirements for environmental outcomes reviewed for conformity by SEPA. 

(1e) Enhance the scientific basis of environmental management by developing science and technology capacity within SEPA to assess and manage major environmental issues across major pollutants and industrial sectors by providing SEPA with the authority to establish independent advisory commissions in particularly salient and complex issue areas. These commissions should have a legal status with requirements for membership to be drawn from government, business, and civil society. The work of these commissions should be documented in a publicly released report. SEPA should also be provided with the resources to support research in cooperating universities and research institutions to improve scientific and societal understanding of emerging environmental problems and aid in the development of practical solutions. 

(1f) Enhance the capacity of the environmental administrative system of China’s central government by increasing the budget and size of SEPA in order for it to adequately meet its responsibilities of analysis, monitoring, regulation, technical and professional training, and enforcement. Provide funding, through SEPA grants, for the costs of demonstrating new innovative environmental management programs in cooperation with participating local environmental bureaus. 

 

1.2  Legislative Branch

 

(1g) Strengthen the legal foundations of environmental management. Insure that all environmental policy tools have an appropriate legal basis. Remove the inconsistencies between environmental laws and the laws governing natural resources and energy. 

 

(1h) The National People’s Congress capacity to develop and oversee the implementation of the nation’s environmental laws should be strengthened. The Committee on Environment and Natural Resources in particular should have a standing professional staff and budget to allow effective inquires and analysis to be conducted so as to inform the process of revising current laws and enacting new ones. The Provincial People’s Congresses and Municipal Assemblies also could have such committees. 

 

1.3 Judicial Branch

(1i) Train judges and the procuracy in environmental problems and solutions to make them aware of the extensive damages to human health and the environment caused by various types of emissions. Equip them with knowledge of the tools and resources available to them in making decisions in complex environmental liability and compensation cases. 

2 Business

The Task Force on Environmental Governance (TF) is of the opinion that the immense power of the market to address environmental problems should be harnessed to create a resource efficient and environmentally friendly society.  Furthermore, in view of the knowledge and capital accumulated in the non-public sector, every effort should be made to mobilize these resources to facilitate the smooth implementation of environmental management. Performance-based environmental responsibilities either required by the government or self-imposed by companies seeking to thrive in the globally competitive economy will create additional space for innovation towards ecological modernization of China. Economic incentives can energize business and harmonize economic and environmental goals. 

 

(2a) Establish clear legally enforceable environmental responsibilities for enterprises and maximize compliance by insuring that the suite of government incentive programs targeted to business are environmentally coherent in the direction of creating an environmentally friendly society. Reinforce compliance by establishing penalties for non-compliance with environmental laws and regulations that recapture any financial benefit from non-compliance. Use the penalty structure to create a deterrent to pollution. Strengthen civil penalties for pollution damage and criminal penalties for the most severe violations. Additionally, provide incentives for companies to improve environmental management, move towards cleaner technology and products, and thus go beyond mere compliance. 

 

(2b) Establish reporting requirements for data to assure comparability of data across facilities and over time. Provide funding for the establishment and maintenance of an internet-based reporting system, with source by source data publicly available to all stakeholders. Public access to and analysis of environmental and natural resource data will enhance data quality and source accountability. 

 

(2c) Establish civil and criminal liability laws for damages caused by operators of facilities responsible for environmental pollution and accidents. Provide rigorous standard methodologies for the calculation of environmental damages. 

 

(2d) Require companies to report the presence of chemicals and other hazardous substances and establish emergency response plans and mechanisms with the requirement for timely reporting of any accidents. 

 

(2e) For the special case of the management of hazardous wastes and toxic substances, establish a Hazardous Substances Response Fund for clean up of emergency spills. This can be financed with a tax on companies using hazardous substances which, in turn, becomes an incentive to reduce their use. 

 

(2f) Enhance corporate environmental responsibility by requiring the designation of a corporate officer as the individual legally responsible and accountable for environmental compliance. Encourage environmental audits and annual public environmental reporting commensurate with annual financial reports. SEPA should require the disclosure of environmental liabilities by Chinese companies prior to Initial Public Offerings. 

(2g) Develop public-private partnerships and dialogues among government, business, and non-governmental organizations to leverage the individual resources, perspectives, and capacities of these stakeholders to find commonly agreed solutions. 

3 Civil Society and Public Participation

The complexity and quantity of the environmental issues confronting all nations today has overwhelmed the capacity of even the strongest and best prepared governments. Most developed countries have, as a result, opened their societies to greater environmental NGO participation. They have removed many of the legal, political, and financial obstacles that existed to the full realization of the capacity of non-governmental groups. The Chinese government is responding and has become increasingly open to civil society participation in environmental decision-making and implementation. The Task Force on Environmental Governance is of the opinion that strengthening this reform through the following measures is necessary to achieve effective environmental governance.

 

(3a) Enhance the legal status of citizens and NGOs, clarifying their rights in environmental controversies and providing them legal standing in the courts on behalf of injured parties and the environment. 

(3b) Conduct outreach and education of the public about the chances and opportunities to participate in environmental decision-making. 

(3c) Establish public advisory bodies convened around specific issues for the purpose of broadening government consultation with civil society. 

(3d) Improve public access to environmental information concerning emissions and their consequences in order to empower meaningful public participation. Widely publish advance notice of proposed regulations or permit proceedings for industrial and natural resource projects to facilitate public participation. 

(3e) Mitigate any barriers limiting citizen and NGO participation by streamlining the procedures for NGO registration, appointing NGO representatives to advisory boards and commissions, and educating non-governmental groups about the government’s perspectives and processes to enable participation. 

(3f) Enhance NGO capacity by clarifying the regulations concerning the qualifications necessary to achieve tax advantaged status. 

4 International Cooperation

The Task Force has concentrated its focus on the domestic elements of environmental governance. However, increasingly the serious environmental problems we face are beyond the scope of any one individual nation. Global environmental threats such as stratospheric ozone depletion, climate change, biodiversity loss, cycling of persistent organic pollutants, water shortage, and soils degradation require coordinated international action for their solution. The Task Force recognizes that effective international action is dependent upon sovereign willingness and capacity to act effectively and that individual sovereigns may be constrained in their commitments by this capacity. The recommendations on improving environmental governance - if adopted - will however enhance this capacity. China’s rise in the global economy has made the nation vital to the international efforts to conserve the global ecology.   

(4a) As part of the on-going regional free trade negotiations, China should propose to other nations in the region the establishment of an environmental commission to promote a comprehensive regional approach to the protection, improvement, and sustainable management of its natural resources. This commission should include mechanisms for environmental dispute resolution and participation by civil society from the participating nations. 

(4b) China should prepare for playing a more active role in the implementation and further development of ratified international environmental conventions and multilateral environmental agreements, especially on climate, biodiversity, desertification, persistent organic pollutants, water and forests, in order to insure that the mutually agreed goals of such agreements are met and fortified. Especially, the instrumental basis of such agreements needs to be enlarged in order to balance economic and environmental interests and to make win-win situations possible. 

(4c) Enhance the effectiveness of China’s environmental diplomacy and participation in global environmental governance by strengthening the environmental training of China’s diplomatic corps.