Securing Natural Capital and Human Well-Being: Innovation and Impact in China

Gretchen C. Daily, Ouyang Zhiyun, Zheng Hua, Li Shuzhuo, Wang Yukuan, Marcus Feldman,Peter Kareiva, Stephen Polasky, Mary Ruckelshaus

1 Department of Biology, 371 Serra Mall, Stanford University, Stanford, CA 94305 USA2 State Key Laboratory of Urban and Regional Ecology,Research Center for Eco-Environmental Sciences, Chinese Academy of Sciences, Beijing 100085, China3 Institute of Population and Development Studies, School of Public Policy and Administration, Xi′an Jiaotong University, Xi′an 710049, China4 Institute of Mountain Hazards and Environment, Chinese Academy of Sciences, Chengdu 610041, China5 The Nature Conservancy, 4245 North Fairfax Drive, Suite 100. Arlington, VA 22203 USA6 Institute on the Environment, University of Minnesota, St. Paul, MN 55108 7 Natural Capital Project, 371 Serra Mall, Stanford University, Stanford, CA 94305 USA

1 Introduction

In little more than a decade, the idea that ecosystems are vital assets has spread like fire. Globally, this idea now appears in society′s thinking about agriculture, water, energy, cities, health, fisheries, forestry, mining, and the infrastructure supporting these and other vast sectors-and it is increasingly evident in the ways communities, corporations, governments and other institutions frame decisions[1-7]. In particular, there is growing demand for rigorous approaches that integrate the values of natural capital into major development decisions, in order to reverse the degradation of Earth′s life-support systems and enhance human well-being.

This marks a key moment for the research communities working on this grand challenge. To meet the demand from decision-makers requires that we make rapid advances on four science and policy frontiers: (i) fundamental understanding of ecosystem services, human well-being, and their inter-linkages, in biophysical, economic, social, institutional, and governance domains; (ii) practical, science-based tools, tailored initially for use in highest-priority decision contexts; (iii) pilot demonstrations that implement new understanding and tools in key decisions; and (iv) engaging leaders to achieve transformative and lasting change.

This Special Issue contributes exciting new work in each of these arenas, and fosters integration of knowledge and experience across disciplines and societies. Here we begin by offering perspective on the rapid advances underway in China today, to help orient readers internationally. Then we turn more broadly to discuss these four science and policy frontiers, for improving the conditions and prospects of humanity and nature.

2 Innovation and Impact in China

Among nations, China stands out as a leader in work at the nexus of environment and human development, with highly innovative and far-reaching policies, in terms of goals, scale, and duration. Following severe droughts and massive flooding in 1997-98, China began implementing policies designed to secure natural capital and human well-being[8]. Together, these policies directly involve over 120 million people and investments of 700 billion Yuan over their first decade (2000—2010)[9]. While these policies are unique to China, they mark a bold attempt to halt and reverse environmental destruction while at the same time promoting human development, with lessons relevant to the whole world.

China also stands out in strengthening the scientific foundation supporting these public policies. This is illustrated in the development of a first National Ecosystem Assessment, spanning a wide range of ecosystems, services, and spatial scales, over the past decade (2000—2010). The first step is to classify land cover for the whole of China, for 2000, 2005, and 2010, based on Landsat TM data at 30mx30m resolution. The next stages of work involve characterizing the composition and structure of ecosystems and their changes over the assessment decade. The final stage will involve characterizing levels and types of ecosystem services, and changes across China and the assessment decade. This important effort will showcase state-of-the-art technical approaches relevant to other nations undertaking such assessments[10].

Perhaps most ambitiously, China is establishing a new network of “ecosystem function conservation areas” (EFCAs)[2](Figure 1). EFCAs are being zoned so as to focus conservation and restoration in places with high return-on-investment for public benefit, to halt and reverse degradation of vital ecosystems and their services. The zoning is also meant to focus high-impact human activities away from EFCAs and in places where they will do least damage. The design and implementation of EFCAs involves assessments from local to national scales. At the national scale, the priority services are soil conservation, water conservation, flooding mitigation, biodiversity conservation and sandstorm prevention[1, 11].

Figure 1 China′s new system of Ecosystem Function Conservation Areas (EFCAs). As delineated by the Ministry of Environmental Protection and the Chinese Academy of Sciences, EFCAs span 24% of China′s land area and 25% (708) of its counties. The work reported in this Special Issue is aimed at developing the conceptual frameworks, the research and policy approaches, and the practical tools for achieving the dual goals of EFCAs: to secure biodiversity and ecosystem services and to alleviate poverty. (Figure courtesy of our collaborator Z. Ouyang, Research Center for Eco-Environmental Sciences, Chinese Academy of Sciences.)

Each of these initiatives has dual goals: to harmonize people and nature by securing critical natural capital and alleviating poverty. Specifically, the government aims to protect ecosystems and their biodiversity for flood control, hydropower production efficiency, irrigation supply, more productive agriculture, and tourism. In addition, it aims to open non-farm sectors, increase household income, and make land-use practices more sustainable in rural areas[12].

While these initiatives represent a massive scientific and policy undertaking, there is still little understanding of the local costs of implementation, or their effects on poor and vulnerable populations in or near the target areas. The EFCA model represents a new paradigm for integrating conservation and human development, but for this policy innovation to have wide applicability and success, it will be important to assess and improve local livelihoods[12-15]. This need points to the science and policy frontiers before us.

3 Advancing the science of ecosystem services and human well-being

3.1 Quantifying provisioning and regulating service values

In theory, if public and private institutions recognize the values of ecosystem services, then we can greatly enhance investments in the natural capital underpinning them and foster human well-being at the same time. But in practice, the global research community is still in early stages of developing the scientific foundation, and policy and finance mechanisms, for integrating natural capital into land-use and other resource decisions on large scales. Relative to other forms of capital, assets embodied in ecosystems have been poorly understood, scarcely monitored, and undergoing rapid degradation[16-17].

Correcting this requires quantifying ecosystem services and their values as rigorously and routinely as in business accounting. In China, there is tremendous current research on developing and using new methods to quantify the value of ecosystem services provided by a range of different ecosystems (e.g., forest, grassland, river, farmland, marine), at different scales (e.g., watershed, county, provincial, regional, national), and in both biophysical and economic terms[18-27].

Some of the contributions to this Special Issue focus such quantification on places that have recently experienced loss. Indeed, it is often only after their loss that we recognize the importance of ecosystem services, such as in the wake of Hurricane Katrina or cyclones in India[28-29]. For example, Hainan Island has experienced significant reduction in natural forest as a result of the doubling of rubber plantations over the past decade. Hainan also experienced intensive flooding in October 2010, causing 11.5 billion Yuan in damages and the evacuation of over 130,000 people. Rao et al.[30]map and quantify the provision of soil conservation services across Hainan Island, showing the great importance of the Mountainous Area of Central Hainan National Ecology Function Reserve. They also quantify the higher performance generally of natural than human-dominated ecosystems in providing soil conservation services. This work is key to promoting natural forest protection and sustainable agriculture to enhance flood control, water quality in rivers and in coastal waters, hydropower, and agricultural productivity, and tourism development, and other benefits.

Another key region that has undergone recent, dramatic loss is the Wenchuan earthquake area. Three important papers in the Special Issue examine the need and opportunity to improve ecological security in this area. First, Fu et al.[31]quantify the importance of water retention for flood control in Dujiangyan City, the epi-center for the Richter 8.0 Wenchuan earthquake that devastated Sichuan Province in 2008. They find that, although water retention functions in Dujiangyan City were impaired in some places by the earthquake, overall they remain high. The most critical water retention areas cover 35% of the city, and require much stronger protection to ensure flood and water resource security of the city and whole Chengdu Plain beyond.

Second, Xu et al.[32]complement this analysis with a broad spatial assessment of biodiversity, identifying two biodiversity hotspots (the Minshan region and the southern Qionglai mountain region) where establishing a protected ecological corridor would greatly enhance biodiversity conservation. And, third, Peng et al.[33]map and quantify the carbon storage in the earthquake area, finding a significant decline in carbon storage of ca. 10×106t in elevations of 750—1750m asl. They recommend priority post-disaster restoration and carbon management strategies including improving forest area and quality; certain restoration approaches that will be most effective; and a suite of sustainable agriculture improvements on farmland and grazing land.

Finally, underpinning virtually all quantification of ecosystem services at large scales, is the remote sensing science of monitoring and assessing vegetation. This is nicely illustrated in the Special Issue by Hou et al.[34], who undertake this using cumulative NDVI across China′s National Key Ecological Function Regions, National Important Ecological Function Regions, National Biodiversity Protection Priority Regions, and National Natural Protection Regions. These protected regions account for 56% of China′s land area. They also assess the condition and trends in vegetation across regions, which is crucial to estimating service provision today and into the future.

3.2 Quantifying cultural services and intangible dimensions of value

In addition to methods and analysis for provisioning and regulating services, there is also a critical research frontier on intangible cultural ecosystem services. These refer to “ecosystems′ contribution to the nonmaterial benefits (e.g., capabilities and experiences) that arise from human-ecosystem relationships”[35]. Conceptual frameworks, methodologies, and data for characterizing cultural ecosystem services were developed in the social and behavioral sciences before the ecosystem services field emerged. This foundation is ripe for integrating with broader ecosystem services work, to define cultural services operationally, deploy methods for estimating their values, and analyze the tradeoffs and synergies they present[36].

In this Special Issue, Cheng et al.[37]apply the travel cost method (TCM) and contingent valuation method (CVM) to characterize the value of natural landscapes in the scenic area of Wulingyuan in Zhangjiajie City, Hunan Province. They use questionnaires to estimate use (visitation) values of 7930 million Yuan. In addition, they estimate non-use values: existence (496 million Yuan), option (174 million Yuan), and bequest (301 million Yuan) values. Taken together, these estimates show that people greatly value this scenic spot, but there remains a gap between estimating and actually realizing Wulingyuan′s value in a sustainable way.

This study is complemented by Gao et al.[38], who characterize the perception and attitudes of local people concerning ecosystem services of culturally protected forests-those stewarded by local people on the basis of traditional practices and beliefs. Using semi-structured interviews, they found that services considered important have been better protected. While a great range of valuable services derive from the forest, cultural services are valued most highly. Enthusiasm for stewarding culturally protected forests was high, with 70 percent of respondents willing to manage them, with no difference across age, education level, or gender.

3.3 Securing ecosystem services and human well-being through compensation mechanisms

As in the case of cultural services, there are very well-established fields in the behavioral, economic, health, and social sciences that together could yield a strong foundation for linking explicitly ecosystem services and human well-being-through compensation mechanisms. This exciting work is in early stages now, with much interdisciplinary research and also real-world policy experiments in a suite of pioneering countries.

Ouyang et al.[39]explain the national urgency in establishing compensation mechanisms that effectively secure the provision of vital ecosystem services. The mechanisms require ecosystem service beneficiaries-from existing, restored, or newly constructed ecosystems-to pay for the services and the activities required to sustain them. Such a system rewards production of services, and helps ensure fairness among producers and consumers. Ideally the system also ensures appropriate economic returns to ecological investors, thereby encouraging sustained or enhanced production of services, and promoting a better “human-nature harmony”. Reflecting on the experience in compensation mechanisms globally, Ouyang et al. draw out key strategies for improving the schemes in China: clearly defining goals and target geographic regions; enhancing participation and protecting participants; streamlining institutional oversight and governance; developing consistent standards; implementing accountability and enforcement; and balancing rights and responsibilities.

Zheng et al.[40]follow with progress and perspectives on ecosystem services management in China. They point to the challenge of quantifying services individually, as done in some of the articles presented above, as well as characterizing relationships among services across scales, and incorporating understanding of services into policy design. Calling for focused, interdisciplinary research to address these challenges, they also highlight the need for better displaying of results of services analysis.

In a nice demonstration of the work called for by Ouyang et al.[39]and Zheng et al.[40], Li et al.[41]examine the aims, theoretical foundation for, and design of a forest eco-benefit tax that would help internalize the externalities of forest ecosystem services. Taking Shaanxi Province as a case study, they analyze the potential impact of such a tax using an input-output model encompassing 42 sectors. Applying under three alternative scenarios, they find a tax rate of 10% has larger impacts on industrial prices of the following sectors: the forestry industry; furniture manufacture; timber processing; and the bamboo, rattan products and paper industry. Their results show such a tax potentially feasible under any of these realistic scenarios.

3.4 Further research advances

The lines of work presented in the Special Issue are exciting and vigorous, and we expect rapid progress in many important areas. Here we highlight a few opportunities for breakthrough worthy of special attention:

First, major advances in methods and tools are needed to incorporate dynamic effects, as well as shocks and uncertainty. This means we need to go beyond working simply off maps describing ecosystems and their services, and move to being able to capture dynamic changes, such as in climate or in vegetation-as well as changes arising through economic development and evolving human preferences. Feedbacks within ecosystems, and between ecosystem services and human behavior, can have profound effects on outcomes, and should inform policy design. Similarly, shocks such as fires, droughts, disease, and economic fluctuations, all can have major influences on ecosystems and the services produced. The occurrence of these shocks is difficult to predict but virtually certain to come about. Understanding their likely impacts on ecological and social systems will help us prepare for them.

A second major area for further development is in relating ecosystem condition to human health. The relationships between biophysical attributes of ecosystems and human communities are complex[42]. Destruction of ecosystems can at times improve aspects of community health; for example, draining swamps can reduce mosquito habitat, thus reducing the incidence of malaria. On the other hand, ecosystems provide many services that sustain human health, for which substitutes are not available at the required scale, such as purification and regulation of drinking water flow; regulation of air quality; nutrition (especially of protein and micronutrients); psychological benefits; and, in complex ways, regulation of vector-borne disease[7]. To date, there is little rigorous research establishing the links between ecosystem conditions and human health.

Finally, the links between ecosystem and human condition, considering the many dimensions of human well-being, remain poorly characterized. So far, ecosystem services work often focuses on quantifying the contribution of natural capital to human well-being in the aggregate-that is, to all members of a society as a whole. It is now critical that we create practical, well-designed tools for decision-makers that reveal specifically how poor and vulnerable members of society will be affected by resource and development projects. Without this, there is a risk of worsening the plight of the poor in pursuing economic growth and human development. The efforts in China are especially noteworthy in their aims to forge a new path that combines improved well-being of people and preservation of Earth′s life-support systems.

4 Advancing practical, open-source Tools

Mainstreaming ecosystem services into everyday decisions requires a systematic method for characterizing their value-and the change in value resulting from alternative polices or human activities. Unlike the accounting tools we apply to measure the value of traditional economic goods and services, which are already well established and integrated into economic decisions, we have no ready set of existing accounting tools to measure the value of ecosystem services[43-45]. Without these tools, ecosystem services are invariably undervalued or not valued at all-by governments, businesses, and the public[16-17, 44, 46].

The Natural Capital Project, an international partnership, is developing tools for Integrated Valuation of Ecosystem Services and Tradeoffs (InVEST). These open-source, software-based models help decision makers visualize the impacts of potential policies by quantifying and mapping the generation, distribution, and economic value of ecosystem services under alternative scenarios[47-48]. They are designed for use in an iterative decision-making process, in which stakeholders identify critical management decisions and explore scenarios of change (e.g., demographic, climate, technological). The outputs identify tradeoffs and compatibilities between environmental, economic, and social benefits. The models are being applied in a wide range of decision contexts and scales globally[11, 49].

InVEST spans a range of terrestrial and marine services (Figure 2). The modular design permits evaluation of synergies and tradeoffs under alternative decisions options. The models are open-source, developed in fruitful collaboration with researchers and practitioners from many disciplines, institutions, and countries. In this Special Issue, four papers use InVEST in contrasting decision contexts[30-31, 50-51].

Figure 2 The suite of InVEST models, created and being improved through an open-source process. Models in development are available for research use

5 Pilot demonstrations promoting innovation in policy and governance

An effective way to guide policy and institutional change is through pilot demonstrations in key decision contexts concerning ecosystem services. Priority decision contexts in many countries include

?Zoning, or spatial planning, as in the EFCA case;

?The evaluation and design of major infrastructure investments;

?Agriculture and food security;

?Natural defenses against extreme weather events;

?Urban development

Poverty alleviation and other human development objectives are central in all of these decision contexts.

Li et al.[52]take the Sanjiangyuan Nature Reserve as a key case to evaluate the compensation mechanism of ecological migration currently implemented there. Sanjiangyuan is one of the most important nature reserves in China, key to the ecological security of lower watersheds in China and Southeast Asia. To develop a fair and effective standard of compensation, Li et al.[52]estimate the opportunity costs of ecosystem conservation to local people, using three approaches. They conclude that, while an ecological compensation mechanism alone is unlikely to be sufficient in alleviating poverty, it can play an important, partial role.

6 Engaging Leaders for Transformative Change

Engaging leaders is crucial for support of pioneering individual efforts. It is even more important for replication and scaling of successes, locally, nationally and globally. There are now hundreds, maybe even thousands, of individual efforts underway. It is important that the ecosystem service research and policy communities bring visibility to these efforts, so that they mature into more than the sum of their parts. With our emerging scientific foundation, credible yet practical tools, and pioneering demonstrations, we can engage leaders to achieve the transformative change necessary.

The time is ripe to begin asking some questions, in considering how to focus, prioritize, and accelerate the work ahead. What real-world successes have been achieved, in integrating natural capital into decisions and thus achieving better outcomes? What forms do successful efforts take? By what pathways have individual efforts achieved local impact, replication, and eventual scaling? What new science and policy initiatives are needed to magnify the collective impact of these proliferating efforts, to secure the well-being of people and nature? In the years just ahead, it will be time for a synthesis and analytical review of ecosystem service demonstrations, with special attention to their social, economic, institutional, and governance dimensions.

This Special Issue on ecosystem services comes at a critical time for advancing many lines of work and for thinking about new questions ahead. With rapid economic development in China, the conflict between environment and development is escalating. Ouyang et al.[39]say it well: “The establishment of effective ecological compensation mechanisms to ensure sustained provision of ecological services is urgently needed for national ecological safety, and is also an inevitable requirement for social justice and human-nature harmony.” We hope this message is taken up with seriousness and vigor not only in China but across the world.

Acknowledgements: We owe thanks to many colleagues in the rapidly emerging fields linking nature and human well-being. For help and inspiration over the years, we thank especially Wang Rusong, Paul Ehrlich, and Harold Mooney. For leading the way in new field work in China, we thank our close collaborators Li Jie, Fu Bin, Liang Yicheng, Li Cong, Li Feng, and Brian Robinson, and the many members of the Natural Capital Project internationally. We are very grateful to The Gordon and Betty Moore Foundation, the Rockefeller Foundation, the Winslow Foundation, and the International Cooperation Project of The Chinese Academy of Sciences (GJHZ0948) for support.

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