Water, soil control projects traded as carbon sinks

Authorities across the country are stepping up efforts to tap the potential of the trade of carbon sinks stemming from water loss and soil erosion control in broadening the funding avenues for such conservation endeavors.

In a recent development in November, an entrepreneur and four local enterprises that are engaged in foreign trade collectively acquired 115,600 metric tons of carbon sinks from a water and soil conservation project in Qujing, Southwest China's Yunnan province.

A carbon sink is anything that absorbs more carbon from the atmosphere than it releases.

The transaction's total value exceeded 3.8 million yuan ($520,000), with the entrepreneur contributing 297,000 yuan, according to local authorities. Notably, this entrepreneur is believed to be the first individual in China to purchase carbon sinks generated through water loss and soil erosion control efforts.

The water and soil conservation strategies implemented in the Gaojiancao area, spanning almost 31.2 square kilometers, involve practices such as afforestation and the transformation of hillside slopes into terraces, according to local authorities.

Water and soil erosion control projects can create carbon sinks by preventing or reducing soil erosion, which helps to retain the carbon stored in the soil and prevents its release into the atmosphere.

The promotion of healthy vegetation as a result of these initiatives further enhances carbon sequestration through photosynthesis and the storage of carbon in plant biomass.

In early 2023, China's central authorities unveiled a guideline vowing to include carbon sinks generated in water and soil erosion control into the China Certified Emissions Reductions Program, a national voluntary mechanism that allows participants to earn and trade carbon credits that can be used to offset carbon emissions.

The document said the country will strive to enhance the assessment criteria and refine accounting methodologies for measuring the carbon sequestration potential of water and soil conservation practices, while strengthening the regulatory framework for water and soil conservation standards.

Relevant methodologies for calculating such carbon sinks, however, have not yet been developed. This means they cannot currently be used to offset carbon emissions, said Wang Wei, deputy head of the water and soil conservation center of Yunnan.

But the trading of carbon sinks generated by water and soil conservation is currently guided by a mechanism named Tanpuhui, and the purchase of the four enterprises may facilitate their exports to countries and regions that have carbon footprint requirements, the official said.

The Tanpuhui mechanism is designed to encourage the general public and micro, small and medium-sized enterprises to embrace green, low-carbon approaches to production and life through incentives. These incentives are derived from the proceeds that Tanpuhui platforms earn by selling carbon credits.

According to local authorities, the proceeds from this transaction will be allocated toward upcoming water and soil conservation endeavors.

In another case, roughly 151,000 metric tons of carbon sinks generated in water and soil erosion control in Yan'an, Shaanxi province, changed hands at a price of more than 5.4 million yuan in September. The buyers were three local companies.

The carbon sink is generated from the efforts to enhance water and soil conservation since 2000, which have seen almost 256 hectares of forest and grass planted, 66 hectares of terraced fields renovated and five warping dams reinforced.

These measures have successfully brought 75 percent of the areas in the small basin under comprehensive control.

The country's first transaction for a carbon sink generated by water loss and soil erosion control took place in December 2023 in the basin of Luodi River in Changting county, Fujian province. In the deal, a 100,000-ton carbon sink was traded for 1.8 million yuan.

A 110,000-ton carbon sink was generated in the basin in the past over two decades following comprehensive soil erosion control measures, including land leveling for afforestation, forest nurturing and management, and the application of organic fertilizers in forests.

Yue Hui, director of Changting's water loss and soil erosion control center, said the local government designated Changting County State-Owned Investment Group to manage the proceeds from trading carbon sinks generated in projects for water and soil conservation in the basin of the Luodi River.

"The earnings will be dedicated to the comprehensive management of water loss and soil erosion and ecological restoration in the basin," he said.

In April last year, 10,000 tons of carbon sinks generated from projects aimed at controlling water loss and soil erosion in the basin were sold to Yellow River Co, headquartered in Zhengzhou, the capital of Henan province, for 180,000 yuan.

The deal marked a notable achievement as the country's first cross-regional trade involving carbon sinks of this kind, according to Yue.

Chen Xian, head of soil and water conservation and technology at the Fujian Provincial Department of Water Resources, said trading carbon sinks generated from water loss and soil erosion control could be a way of achieving the "lucid waters and lush mountains are invaluable assets" concept put forward by the central government.

"Previously, water loss and soil erosion control efforts primarily depended on government financial allocations and limited social donations, leading to relatively constrained funding," he said.

But carbon-sink trading can facilitate the transformation of environmental benefits stemming from water loss and soil erosion control into economic value, which can then be reinvested in conservation efforts, thereby expanding the funding channels for such work, he said.

"Carbon-sink trading offers a more defined economic outlook for individuals, corporations and entities involved in water and soil conservation," he said, adding this clarity encourages increased participation in the conservation work.

He said the initiative may also propel the innovation of technologies for water loss and soil erosion control and their application as those involved in such conservation work strive to make even more gains from trading carbon sinks.

Xinhua contributed to the story.