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Compensation for the Conversion of Sloping Farmland to Forest in China: A Feasibility Study of Payment Based on Carbon Sink

^* To whom correspondence should be addressed. E-mail: wzxkm{at}hotmail.com.

	Abstract

Although China extended the length of compensation for the Upland Conversion Program (UCP), the sustainability of the program after government compensation expires is still a pending problem. This article proposes an alternative scheme of compensation payment based on the carbon sink of the UCP. Taking Yunnan province as an example, this article explores the feasibility of the scheme by comparing the value and opportunity cost of carbon sink. It is found that it is feasible to change the UCP to a carbon offset project if its length is more than 20 years when the discount rate is 7% and the current bid price (Yuan 91.8/ton) for Chinese carbon offset project prevails. The feasibility becomes higher as site productivity or discount rate decreases, or as the project period is prolonged, ceteris paribus. Increase in carbon sink or price can also make a carbon offset project more feasible. Unlike the existing compensation scheme, this proposed scheme can also provide an incentive for plantation management.

First published on August 17, 2009
The Journal of Environment & Development 2009, doi:10.1177/1070496509338838


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