The Fiscal Policy For Ecological Compensation In China

Ecological environment is the foundation of the survival and development of human society. With the development of economy and society, the damage caused by human activities on the ecological environment restricted the further development of economy and society. The protection of the ecological environment, the "win-win" solution to achieve economic development and ecological environmental protection is the inevitable choice for every country. Our country is also facing challenges of economic development and ecological environmental protection, especially the reform and opening up 30 years later, when the country made great economic success, environmental constraints increasingly strengthened. Therefore, the protection of the ecological environment has gradually attracted the attention of all sectors of the community. But because of the public and external characteristics, the coordination of the protection and construction became an important problem to be solved. After American economist Seneca and Higgs proposed Compensation theory of development in 1970s, ecological compensation got a lot of attention and research. Currently, ecological compensation has been considered as the most important means to internalize external costs to achieve ecological and environmental protection and balance stakeholder interests, studying and practice of ecological compensation theory explored deeply in various countries.In the research process of the ecological compensation mechanism, the role which the government should play is the focus of the study, especially the fiscal policy which is an important means of government macro-control. Recently the governments at all levels have strong willingness to establish a system of ecological compensation mechanism with certain basic conditions but the progress is slow. On the one hand because the theoretical research and practice of China’s ecological compensation started late, the basis is very weak, and the connotation and understanding of ecological compensation are different; on the other hand in the exploration and practice of ecological compensation, there is a tendency of policy boundaries fuzzying and the scope of policy measures expanding. It should be said athough the government and researchers were aware that finance should play a leading role in the process of ecological compensation but how to achieve this goal did not reach a consensus.Based on the demand of the reality above, this paper chose "China’s fiscal policy of ecological compensation" as the object of study. At present, the financial support of ecological compensation or ecological environmental protection policies are scattered in various documents, On one hand the policy were random strongly and did not form a system; on the other hand, financial participation in ecological compensation areas was limited and the means was single it is difficult to play a guiding role. Therefore, it is necessary that the fiscal policy form a policy system based on financial theory and environmental economics theory, This study hope to achieve the above goals, eventually form a fiscal policy system of ecological compensation based on the national conditions.The thesis is divided into eight chapters, the first part is the analysis about the theory of ecological compensation fiscal policy, the second part is the summarization of the international experience and the analysis on ecological compensation practice in our country, the third part put forward the overall framework of ecological compensation fiscal policy and concrete policy implications, select ecological compensation of inter basin water transfer as the research object, propose the practical financial compensation scheme.The concrete chapters described as follows:The first chapter, from the current contradiction between economic development and ecological protection, analyzes the importance of establishing ecological compensation mechanism, and proposes the research goal, way of thinking and the basic method, based on the actual situation of China’s ecological compensation.The second chapter is the analysis of the basic theory of ecological compensation, including ecological service value theory, externality theory and public goods theory, and the discuss of the advantages and disadvantages of government mode and market mode.The third chapter combs the international ecological compensation mode, analyses the practices of international ecological compensation fiscal policy in the next part, the sums up the experiences of ecological compensation subject of foreign governments, to provide a reference for the establishment of ecological compensation system of fiscal policy in our country.The fourth chapter combs the ecological compensation in our country, especially analyses the ecological compensation fiscal policy, finds the existing problems and the experience of success from the income policy, expenditure policy and the transfer payment system.The fifth chapter puts forward the basic target, system of fiscal policies of ecological compensation in China and basic framework of elements according to the theory and practice basis of ecological compensation.The sixth chapter puts forward the countermeasures to improve the tax policy of ecological compensation in our country.The seventh chapter puts forward the ideas to improve the vertical transfer payment system of ecological compensation based on status, and proposes some improvement measures to solve the problems in the current policy. Finally it designs the vertical transfer payment system covering the main function region in whole country to compensate development opportunity loss.The eighth chapter studies the horizontal transfer payment system and puts forward the general solutions. It designs the horizontal transfer payment system of ecological compensation and calculates the amount of each province based the mathematical model taking the middle and lower reaches of the Hanjiang River as an example.Through the research of this paper, the author draws the following conclusions:First, through adding environment variables in the analysis of the endogenous growth model, the author finds that there is a win-win path about economic development and ecological protection. But the premise is that the local economy in early economic development must allocat more capital in environmental management and ecological protection, that is, the local economy must give up part of the rate of economic growth. However, local government and local market players have no incentive to allocate capital like this. For achieving this goal, the central goverment must take some compensation to ensure policy’sustainability in these areas. This also provides a theoretical support for the central government to carry out ecological compensation, and the compensation focus on the opportunity cost due to giving up development opportunities in these areas.Second, the ecological compensation market model is described as perfect model, but there is a congenital deficiency in the model of ecological compensation. First, the hypothesis that zero transaction cost and the complete information market dose’t conform to the reality; second, it is difficult to divide the property right of ecological environment. Because the transaction cost and cost of negotiation is very largethe ecological services dose’s exchange through a free market as ordinary commodities; finally, because the market compensation model does’t consider the initial allocation of resources, it does not meet the pursuit of social equity. However, the government as the main body of compensation in government compensation mode, can avoid the above problems. The efficiency and fairness of compensation by the govement model is better than the ecological compensation market model.Third, government ecological compensation model consists two layers: the first layer contains two main bodies, the government and the market. The government raise fund compensation or compensate the main players in the market directly through the means of tax and tax expenditure. The second layer contains governmental bodies at all levels, it refers the compensation between governmental bodies at all levels and its main means is the transfer payment. The transfer payment between central government and local government mainly compensate for the loss of development rights; the transfer payment between the local government is mainly to solve the problem of externality. Therefore, the research on ecological compensation fiscal policy need to improve the ecological tax policy, so as to raise the compensation funds; it is necessary to establish the vertical and horizontal ecological transfer payments, realize the compensation funds to flow free between the government, achieve the conversion from the financial compensation between local government financial compensation to self compensation.The possible innovation of this dissertation are the following 3 points:l.The paper analyzed the necessity of the government model about the ecological compensation theory, the difference of the government model and the market model, Then it concluded that the government model is better because of the feasibility and fairness2.The paper put forward the thoughts of the improvement of the ecological compensation fiscal policy based on the status of the current economic development Status, the fiscal system case and the main functional areas status.3.The paper proposed the scheme that combined the government model as main means and the transfer payments as the specific solutions based on the theoretical analysis and China’s national conditions.