Project Scope and Relationship to China's Agenda 21

This project seeks to develop methods for natural resource and environmental accounting and apply them on an experimental basis, in order to lay the groundwork for an integrated national environmental and economic accounting system. This project was developed in accordance with programme area 4D of China's Agenda 21 - Establishing the System for Integrated Environmental and Economic Accounting - and will contribute to China's overall strategy for sustainable development in every sector.

1. Background

China is one of the leading countries in the world in the field of natural resources and environmental accounting. It realizes that although gross national product (GNP) can be used as an indicator of the growth of national income, it does not at present include the value of a country`s natural resource base, nor the impact upon national wealth of ecosystem destruction and environmental deterioration.

The failure of traditional development models to consider natural resources as part of each nation's capital has led to the extravagant use and despoliation of such resources and the jeopardizing of future economic growth. As the 1992 United Nations Conference on Environment and Development made clear, a common framework urgently needs to be developed whereby the contributions made by all sectors and activities of society, that are not included in the conventional national accounts, are included in satellite accounts as soon as possible.

China is now actively engaged in studying the theory and methods of natural resource accounting and analysing its possible consolidation with the national economic accounting system. In cooperation with the UN, Canada, and USA organizations, China has conducted key research projects on natural resource accounting, particularly in the forestry sector. It is also developing and implementing pricing systems for forestry, water, land, mineral, and marine resources.

China is now seeking to expand its theoretical and methodological research and to draw in experts and administrators from every resource sector. After developing the necessary concepts and system, including methods of resource valuation and pricing, China will experiment with the application of these systems through various pilot projects. Because of the strong support of the central government for this work, China could become one of the first countries to establish an integrated environmental and economic accounting system.

2. Objectives

• Long-term Objectives
  • To integrate sustainability into economic management by establishing better measurements of the crucial role of the environment as a source of national capital and as a sink for by-products generated during various human activities; to develop and implement a system for integrating natural resources and environmental accounting into the national economic accounting system.

• Immediate Objectives
  • To conduct research and carry out pilot projects by coordinating groups of experts from various resource and environmental sector.
  • To develop the necessary concepts and systems through the dissemination of theoretical and methodological research.
  • To design and conduct experimental pilot projects to apply the concepts of natural resource accounting to forestry and other resources in selected areas.

3. Activities

These activities will be implemented by the Ministry of each resource and environment sector under the coordination of the State Planning Commission, the State Science and Technology Commission and the State Statistical Bureau.

Project duration is for five years.

• 3.1 Coordinate groups of experts from every resource and environmental sector who will conduct research and carry out experimental pilot projects.
  • Organize an expert committee on natural resource and environmental accounting, composed of 8 groups with expertise in water, land, forestry, grassland, biological, mineral, ocean and recycled resources.
  • Establish a leading group for experimental application, including representatives from each resource and environmental sector ministry.

• 3.2 Expand theoretical and methodological research to develop the necessary concepts and systems of natural resources and environmental accounting.
  • Through material measurements, statistical analysis and use of market price and resource charges, examine the dynamics of resource stock, flow and valuation, in order to lay a foundation for integrated environmental and economic accounting.
  • Emphasize consideration of environmental resource accounting issues during research on natural resource accounting.
  • Develop and propose concepts, classifications, theoretical frameworks and principle methods for natural resource and environmental accounting.
  • Research and design a material statistical index system to correspond to the natural resource accounting system.
  • Develop and refine a natural resource pricing system and a standard system of charges for environmental services in light of market conditions in China's economy.
  • Build up a more complete natural resource and environment accounting framework and explore methods of integrating it into the national environmental accounting system.

• 3.3 Design and conduct experimental pilot projects to apply the concepts of natural resource and environment accounting to forestry and mineral resources in selected areas.
  • Conduct experiments in forestry and mineral resources and environment accounting in selected areas in Heilongjiang, Shanxi, Xinjiang, Sichuan, Guangdong, Guangxi, Fujian, Shandong, and other provinces and regions.

• 3.4 Capacity Building
  • Train 20 researchers in various subjects from 1995-1996.
  • During 1997-1999, train 40 researchers from the provinces and areas selected for experimental study on how to conduct the pilot projects.
  • Provide necessary communication equipment such as a 486-PC computer, a HP printer, a duplicator, and a fax machine.

4. Inputs

5. Benefits

Development of an integrated environmental and economic national accounting system will provide a sound basis for the proper valuation, conservation and management of China;s limited natural resource base. It will further sustainable development in every sector and contribute towards effective integration of environment and development at the planning and decision-making level.

China's progress in developing and applying natural resource and environmental accounting methods can in turn prove valuable to other countries engaged in similar work.