In China, a “national park” is a terrestrial or marine area designated and led by the central government whose primary purpose is to conserve nationally representative natural ecosystems; it is a zone where natural resources are scientifically protected and sustainably used [1]. National parks thus embody the most important natural ecosystems, the most singular landscapes, the finest natural heritage and the richest biodiversity anywhere in the country.
Since the 2013 decision to “establish a national-park system”, a succession of policies has been issued to advance the programme (Table 1). In 2019 the General Offices of the CPC Central Committee and the State Council released “Guiding Opinions on Building a Protected-Area System with National Parks as the Mainstay”, which made it official policy to create an in-situ biodiversity-conservation network and to place all nationally representative ecosystems inside the national-park system behind ecological-red lines. The 20th Party Congress report (2022) called for accelerating this system so that China will possess the world’s largest national-park network. In 2024 the Third Plenary Session of the 20th CPC Central Committee adopted the “Decision on Further Deepening Reform to Advance Chinese-Style Modernisation”, again requiring the full construction of a protected-area system centred on national parks.
Table 1 Major Chinese policy documents on national-park development
National parks are vital both for global conservation and for China’s own ecological civilisation: they guarantee the supply of high-quality ecological products and create new development opportunities for less-developed regions. Five national parks have already been gazetted; the target is 49 by 2035, i.e. another 44 in the next eleven years. On current spending patterns, central-government financing alone is projected to exceed RMB 50 billion. Yet studies show that present fiscal inputs are both insufficient and fragmented, so diversified financing channels are urgently needed [2].
Because national parks supply large quantities of high-quality ecological products, the core of financial support is to monetise the value of these products. This paper reviews the main models and innovative instruments now being used, offering ideas for financing further park development.
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Loans
Commercial banks can respond to park projects by widening the range of acceptable collateral: ticket revenues, concession rights, carbon-sink rights, resource-use rights, etc., thereby improving credit access for biodiversity-friendly entities. Illustrative loan types:
Ecological-value collateral loans. The key step is reliable valuation. Two metrics are now used—Gross Ecosystem Product (GEP) [3] and the Value of Ecosystem Product in specific geographic units (VEP) [4]. Banks lend on the basis of third-party calculations. Example: a 300-mu plantation inside Hainan Tropical Rainforest National Park obtained a RMB 500 000 loan from a local rural commercial bank by collateralising the forest’s water-conservation, soil-retention, carbon-sequestration and climate-regulation services [5].
EOD loans. The Ecology-Oriented Development model integrates eco-protection and environmental remediation with commercially viable industries, using extended industrial chains, joint operations or bundled development to internalise the economic value created by ecological improvement [6]. Example: the Kaihua “National-Park City” EOD project received a RMB 120 million infrastructure fund investment plus a RMB 900 million loan from China Development Bank; the Qiandao Lake headwaters landscape restoration scheme attracted almost RMB 500 million in private capital.
Carbon-sink loans. Carbon sinks absorb atmospheric CO₂ and include forest, grassland, cropland, soil and marine sinks. A forestry carbon-sink loan allows a borrower to pledge expected carbon-sink revenue from afforestation or forest management as collateral, with future carbon income earmarked for repayment [7]. Example: Industrial Bank’s Chongqing branch extended two loans totalling RMB 60 million to a local forestry company, enabling it to expand planting, improve stand quality and develop under-forest economy.
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Bonds
Financial institutions can issue or invest in biodiversity-themed green bonds, including ordinary green bonds whose proceeds are earmarked for biodiversity projects and special biodiversity-protection bonds. Example: in March 2022 the International Bank for Reconstruction and Development launched a five-year, USD 150 million “Wildlife Conservation Bond” to increase the black-rhino population in two South African reserves. It is the first outcome-based financial instrument: instead of a coupon, investors receive a “conservation success payment” of up to USD 13.76 million contingent on rhino numbers [8].
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Insurance
National parks need cover both for ecological-restoration losses caused by environmental damage and for the high value of fauna, flora and whole landscapes. Products can therefore be designed around ecosystem services and biodiversity benefits. Example: in April 2022 CPIC Property & Casualty launched the country’s first wetland-carbon-sink ecological-value policy for Hangzhou Bay National Wetland Park, with a premium of RMB 123 000. Indemnity is triggered when typhoons, drought or other natural disasters reduce the wetland’s carbon sink. After Typhoon Meihua struck in September 2022, the insurer paid RMB 246 000 to the park authority—the first claims payment ever made under a wetland-carbon-sink policy in China [9].
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Blended-finance models
Park administrations and local governments can deploy blended structures in which grants or concessional capital from government or philanthropic sources absorb part of the project risk, lowering the risk perception of private investors. One variant is a national-park conservation fund in which government money forms a first-loss tranche, protecting subsequent private capital.
Overall, present spending is still conservation-oriented and generates little cash flow or profit, so commercial banks and private investors remain reluctant. To meet this challenge, mechanisms such as biodiversity offsets can be designed around the “beneficiary pays”, “user pays” and “polluter pays” principles, and regulation can mandate net-zero biodiversity loss, thereby creating a market that gives ecosystems and biodiversity a price. Germany, for instance, has embedded biodiversity offsets in its Impact Mitigation Regulation, providing a legal basis for mandatory compensation and creating an “eco-account” system that registers and banks ecological credits. Each credit’s ecological value reflects the standard value of the habitat type and the area concerned, and covers all costs from planning and implementation to monitoring, risk and bridge financing [10]. Developers buy these credits to offset the impacts of their projects. Such a mechanism both reduces the time lag in conservation and internalises externalities, maximising both ecological and economic value.
Notes
[1] Draft National Park Law (second reading) http://www.npc.gov.cn/flcaw/userIndex.html?lid=ff808181927f12760193fccbd4197d8f
[2] Zang Zhenhua, Zhang Duo, Wang Nan, et al. Experience, effectiveness, problems and recommendations from China’s first batch of national-park pilots. Acta Ecologica Sinica, 2020, 40(24): 8839-8850.
[3] GEP is the aggregate value of all final material goods and services supplied by ecosystems for human well-being and sustainable socio-economic development, including provisioning, regulating and cultural services.
[4] VEP calculates the market value of ecosystem products within a specific geographic unit, focusing on the costs of eco-protection/restoration and rational utilisation plus the expected future market returns from associated eco-industries. It is used in development, collateral lending, equity trading and other market-based realisation pathways.
[5] https://agri.hainan.gov.cn/hnsnyt/ywdt/zwdt/202308/t20230830_3483865.html
[6] Notice on Recommending Pilot Projects Using the Ecology-Oriented Development Model https://www.mee.gov.cn/xxgk2018/xxgk/xxgk06/202009/t20200923_800005.html
[7] Zhao Yudan. Securitisation and risk prevention of carbon-sink loans of Industrial Bank. Changchun University of Technology, 2023. DOI:10.27805/d.cnki.gccgy.2023.000842.
[8] Tang Mingzhi, Yu Kunlian, Zhong Xianqian, et al. International experience and lessons of financing biodiversity conservation. Fujian Finance, 2024(05): 62-70.
[9] http://fgw.ningbo.gov.cn/art/2022/9/16/art_1229622698_58961684.html?eqid=b10668f3000246120000000464%20264765
[10] Meyer, J., & Henseler, A. (2018). The practice and challenges of biodiversity offsetting in Germany. Journal of Environmental Policy & Planning, 20(4), 567-585. https://doi.org/10.1080/1523908X.2018.1477775
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