Anhui and Zhejiang have launched an ecological compensation initiative that is the first water protection program jointly begun by these provinces, according to an environmental official.
The neighboring provinces launched a trial project on Sunday that monitors the water quality of the Xin'an River, which originates in Huangshan, Anhui, and runs into Zhejiang's Qiandao Lake, the main source of drinking water for Zhejiang province and a strategic reserve reservoir for the Yangtze River Delta.
This is the first time such a program has been put into operation, according to Lie Weiping, head of the bureau for protection of the Xin'an River.
"If the water offered by upper Anhui has a quality higher than the basic standard, Zhejiang should compensate Anhui, and Anhui should pay compensation to Zhejiang if the water quality is lower than the standard," Lie said.
Huangshan and other places in Anhui hesitated to accept new industries in order to protect the environment along the Xin'an River, paying a heavy price in terms of slow development with delayed industrialization and urbanization.
In recent years, Huangshan denied operating permits to more than 40 companies whose investments totaled over 4 billion yuan ($632 million), and it permanently closed polluting factories engaged in paper-making and cement production, according to a report released last year by a committee of the Chinese People's Political Consultative Conference, the top political advisory body.
Nearly 30 percent of China's territory is made up of basins of big rivers, which traverse many administrative regions.
Huangshan Mayor Song Guoquan said the mutual compensation mechanism will not only ensure water quality for the lower regions, but also ease the funding scarcity of the upper province and alleviate the contradiction between economic and social development and environmental protection.
The compensation funds were set up by Anhui and Zhejiang provinces and the central government.
With the 50 million yuan startup fund provided by the central government, the local government of Huangshan will treat industrial pollution at its sources, improve efforts to clean major water courses and protect the environment in major villages and towns, said Lu Haining, vice-director of the Huangshan environmental protection bureau.
By 2015, Huangshan will invest more than 40 billion yuan in 521 projects to clean the Xin'an River basin, Lu said.
The Huangshan environmental protection official added that the compensation mechanism has limitations. "The compensation should not only be directed at pollution treatment costs. It should also cover the cost of the developmental opportunities lost (by the upper province) in the process of protecting the environment," said Lu. "That's ecological compensation in its true sense."