Research on ecological value realization based on carbon trading—Take blue carbon as an example
Xu Shusheng is the co-first author.
Abstract
This study aims to develop and expand a new perspective on ecological value realization (EVR) and provide policy recommendations for marine ecological value realization (MEVR) based on Carbon Trading. Currently, the immaturity of EVR calculation methods and difficulties in determining the price of ecological products pose significant challenges to ecological value trading. By employing mathematical models and logical reasoning, this study proposes a novel framework for EVR, illustrated through several diagrams. According to this framework, ecological value is not static but fluctuates with factors such as human well-being (HV) or gross domestic product (GDP). Therefore, ecological value should be determined by an exchange market rather than solely relying on hypothetical calculation methods. Consequently, carbon trading cases are crucial in understanding ecological value. Based on the analysis of blue carbon (BC) trading cases, including the lack of international BC exchanges, challenges in carbon sink projects, and the Free Rider Effect, this paper identifies current issues in MEVR and BC trading in China. To address these challenges, we propose integrating carbon trading databases with evaluations of ecological protection and restoration projects, along with BC trading data, to calculate ecological value. Additionally, we recommend increasing the supply of BC products in both national carbon trading markets and voluntary markets, promoting the internationalization of BC accounting, addressing the Free Rider Effect through government actions and market mechanisms, attracting more foreign investment in BC enhancement projects, and formulating a BC enhancement plan during marine resource development.
1 PREFACE
Ecological products, provided by ecosystems for human beings, sustain the fundamental needs of human life and health, including ecological security and stability, climate regulation, and a high-quality living environment. Specifically, these products encompass oxygen production, greenhouse gas absorption, soil and water conservation, windbreaks, sand fixation, air purification, biodiversity maintenance, natural disaster reduction, and health preservation. However, due to the free services provided by ecological products, it is challenging to accurately calculate and evaluate their true value; moreover, most ecological products have not been traded, leading to a lack of market testing for their prices. The ocean, as the largest ecosystem on Earth, provides essential ecological services for human survival and holds immense ecological value (EV) that remains unquantified and untraded. Realization of marine ecological value (MEV) is crucial as it can promote marine protection and restoration and enhance the marine economy. Currently, due to immature calculation methods and pricing standards, estimating the value of marine ecological products is extremely difficult, with very few being traded. The ocean stores approximately 93% of Earth's CO2 (about 40 trillion tons), making it the largest carbon pool. It also absorbs over 30% of the CO2 emitted into the atmosphere annually. Presently, blue carbon (BC) trading is one of the marine ecological products that has been successfully implemented. China's maritime area spans 3 million km2, including 380,000 km2 of inland waters and territorial seas, with a coastline of 32,000 km, including 18,000 km of mainland coastline. As climate change becomes increasingly prominent, global carbon reduction has become a critical task. China plays a pivotal role in global efforts to control carbon emissions, aiming to peak CO2 emissions by 2030 and achieve carbon neutrality by 2060. BC is a key factor in achieving these goals, making it imperative to explore pathways for realizing MEV based on existing BC trading.
2 EV REALIZATION AND CALCULATION
The EV can be exclusive or nonexclusive. Nonexclusive EV is difficult to calculate, trade and realize (Xiaobin & Xiaoyun, 2023; Yutao et al., 2019). The exclusive EV refers to the quantification and calculation of various ecological services provided by the ecosystem through scientific methods (Bohao et al., 2021; Innovation and carbon investment, 2019; Yin et al., 2021), which include market value methods, alternative pricing methods, hypothetical market methods, etc., and is selectable to different ecosystem types and purposes (Ying & Guihong, 2021). The ecological value trading (EVD) involves the transaction and exchange of ecological products among countries, companies, or individuals, aiming to optimize natural resource allocation and achieve sustainable environmental protection. The market and ecological compensation mechanisms are specific activities that facilitate direct EVD. These initiatives have been recognized as promoting high-quality economic development while maintaining a high level of environmental protection. Ecological value realization (EVR) refers to the conversion of ecological resources into economic and social benefits through various methods, including the assessment of ecological service value, direct payments for ecological services (e.g., entrance fees to ecological parks), indirect payments (e.g., revenue from businesses near ecological parks), certification and trading of high-quality ecological agricultural products, carbon emission trading markets, valuation and financing of ecological resources, and support from environmentally friendly economic policies (Bowen & Xushu, 2021; Shaojun et al., 2021; Xing, 2019). This process can foster both a thriving economy and a harmonious society, such as by enhancing public awareness of ecological protection.
Pi: The “nth” person. Li: Value generated by a human labor. Ei: Ecological service enjoyed by a human individual. F: Ecological environment factors (Temperature, air, etc.). S: society factors (safety, collaboration, etc.). I: Individual factors (personal effort, personal ability, etc.). H: Healthy conditions due to environment factors (e.g., Pandemic virus linked to ecosystems, Radioactive seawater, etc.) D: Disaster reductions by ecosystem (e.g., Sea Waves and Typhoon Mitigation by Mangroves, etc.) T: comfortable temperature. A: Fresh air. W: Safe water, O: other beneficial ecological service functions.
It is widely recognized that ecological environmental factors exhibit a positive correlation with individual labor productivity. However, quantifying the value of ecological services (Ei) poses a significant challenge, as the “ecological services derived by an individual” constitute a non-computable variable. Empirical evidence suggests that these services are intrinsically associated with a healthy and stable environment, characterized by factors such as reduced pathogenic bacterial load (potentially linked to biodiversity), geophysical stability (e.g., absence of mudslides in mountainous regions), optimal thermal conditions, high air quality, availability of potable water, and other ecologically beneficial attributes. These elements collectively underpin the ecological services that contribute to human well-being and productivity.
As is shown in Figure 1, the upper left corner image depicts the ecological conditions before human intervention, such as during the Jurassic period. At this time, humans had not yet entered the area, and the ecosystem services were at their peak. However, the EV in this region was defined as 0 because EV is specifically measured in terms of its value to humans. In the Anthropocene era, with the arrival of human inhabitants, Area A began to exhibit two types of value: HV generated by labor and EV provided by ecosystems. As economic science advanced, HV could be quantified through market transactions. However, EV remained unquantifiable and untraded. Initially, residents focused solely on increasing HV, leading to rising property values in Area A. Despite diminishing natural resources, EV increased temporarily due to the expanding population and greater demand for ecosystem services. As the population grew, more settlements, industries, and agricultural activities emerged, leading to increased exploitation of diverse natural resources. Consequently, forests were cleared, grasslands degraded, rivers and oceans polluted, causing a steady decline in EV. Eventually, residents became aware of the decreasing EV, though it still could not be accurately measured or traded. To illustrate potential future scenarios, we consider an extreme state where unchecked HV expansion and ecological destruction lead to EV reaching zero. In this scenario, residents in Area A would face overcrowded living conditions, frequent natural disasters, unsafe air and water quality, and health issues from unknown viral outbreaks. The costs associated with disaster prevention, pollution control, and disease treatment would soar. Both HV and TV began to decline. In contrast, we hypothesize that there is an area B that has been isolated from area A for a prolonged period. Although Area B initially had the same EV as Area A, with comparable population and HV levels, it adopted nature-based solutions and developed efficient resource utilization technologies in agriculture and industry. Consequently, forests, grasslands, wildlife, clean rivers, and air have been preserved in Area B. Despite the residents of Area B not being able to measure EV, as EV remains untraded, the EV in Area B is higher than in Area A. If residents of Area A suddenly discovered Area B, they would be attracted by its superior conditions and attempt to migrate en masse. This influx would lead to a slump in real estate values and currency exchange rates in Area A while causing a surge in Area B. Since these tradeable products and services can be measured, the difference in EV between Area A and Area B can also be quantified, representing a portion of EV. Additionally, labor productivity in Area B is higher due to better ecological services, resulting in greater HV in Area B compared to Area A. Therefore, the measurable difference in HV (HVB − HVA) also constitutes part of the EV. By following statistical and tradeable value metrics, these two components of EV can be quantified.
- (1)
EV cannot be measured accurately even when ecological services are identical, as the value varies based on context and perception.
- (2)
EV fluctuates over the long term in response to changes in HV.
- (3)
Without effective ecological management, residents may “vote with their feet,” leading to either the realization or depletion of EV. The ultimate cost of such actions will be substantial.
- (4)
Technological upgrading is a key factor in realizing EV, as it can enhance the efficient use of natural resources and enforce strict ecological protection measures.
Therefore, we propose a new approach that emphasizes the relationship between EV and HV, rather than focusing solely on accurate records of EV or HV. In Figure 2, the horizontal axis represents time (T), while the vertical axis represents value (V). Due to HV and population growth, more residents benefit from ecological services, leading to an increase in EV. If the difference between HV and EV remains constant, there will be no intersection, and EV will fluctuate harmoniously with HV (as shown in the right chart). However, the left chart illustrates unsustainable development, where the focus is primarily on HV growth. This results in a diminishing difference between HV and EV, eventually leading to an intersection between EV and HV. After this point, despite continued HV growth, EV begins to decline, ultimately causing a decrease in HV. Effective monitoring of both ecological and economic data is essential. Once a significant change in the difference between EV and HV is detected, development strategies should be adjusted to prevent their intersection. While HV data can be monitored through various trading information and datasets, obtaining EV data is challenging due to the lack of trading information. Therefore, it is crucial to utilize available trading data, such as carbon trading data, to monitor EV.
Although carbon trading represents only a portion of EVR, as is shown in Figure 3, it provides valuable data and information for researching EV. BC, which has progressed from its initial stages to gaining recognition and now experiencing rapid development, serves as an excellent case study for examining its EVR.
3 BC CLASSIFICATION
BC, first formally introduced by the United Nations Environment Programme (UNEP) in 2009 (Nellemann et al., 2009), refers to the processes, activities, and mechanisms by which ocean activities and marine organisms absorb CO2 from the atmosphere and fix and store carbon. There are two primary carbon fixation methods associated with BC (Table 1): physical and biological (Danyan et al., 2017). The upper seawater layer absorbs CO2, which dissolves and transforms into bicarbonate (HCO3−). This dissolved CO2 gradually spreads to the deep sea, where it is fixed in low-temperature sediments or converted into Calcium carbonate. This process, known as the “physical pump,” is significantly influenced by water temperature and CO2 solubility. Another physical method of deep-sea carbon sequestration involves purifying, compressing, and liquefying CO2, then transporting it via pipeline to depths below 3000 meters. In this low-temperature, high-pressure environment, CO2 reacts with water to form a stable hydrate, preventing its escape as a gas. Additionally, CO2 can be fixed in offshore oil and gas fields through injection and extraction processes.
| Methods | Physical carbon fixation | Biological carbon fixation |
|---|---|---|
| Natural | Physical pump | Coastal wetlands, Marine biological pump |
| Artificial | Deep-sea carbon storage | Coastal wetland restoration |
- Abbreviation: BC, blue carbon.
The “biological pump” refers to the process by which marine algae and other organisms produce organic carbon through photosynthesis and other biological activities. This organic carbon is then transferred, settles, decomposes, deposits, and ultimately becomes fixed. Biological pumps effectively reduce CO2 levels in seawater. The BC ecosystems, such as marine algae, coral reefs, and coastal wetlands, are capable of producing and fixing BC. Coastal wetland carbon sequestration, including mangroves, seaweed beds, and salt marshes, exhibits high carbon fixation efficiency (Hong & Yan, 2021; Jianwu et al., 2018; Nianzhi et al., 2016; Ziji, 2021) and is closely related to green carbon, which refers to land plant carbon sequestration. Drilling sampling results indicate that coastal wetlands are rich in both inorganic and organic carbon. Coastal plants capture carbon through photosynthesis, while the moist soil conditions create an environment suitable for anaerobic bacteria, ensuring that fixed carbon remains stable and not easily oxidized, thus maintaining high carbon fixation efficiency.
4 EVR OF BC ECOSYSTEMS
The purpose of carbon trading is to enhance carbon sequestration through artificial means. The price trends in carbon sink trading reflect the trends in EV. Although several methods exist for BC fixation, only coastal wetland BC fixation is currently economically viable and safe. Therefore, most current BC trading focuses on coastal wetlands. The three major BC ecosystems recognized by the IPCC (Chang et al., 2022; Wang, 2023), mangroves, seagrass beds, and salt marshes, are integral components of coastal wetlands.
4.1 Development of support policies of EVR in BC
BC is not only crucial for achieving carbon peaking and carbon neutrality goals but also plays a significant role in the realization of EV. Since 2016, China has been actively exploring the comprehensive value of BC, implementing BC projects, and expanding the supply of BC products (China government network, 2016; The Ministry of Ecology and Environment, 2023) (Table 2).
| Time | Document | Content |
|---|---|---|
| 2016 | China's “13th Five-Year” greenhouse gas emission control work plan “ requirements | Explores the pilot project of carbon sequestration in Marine ecosystems. |
| 2016 | Several Opinions on Improving the Strategy and System of Main Functional Zones | Explore the establishment of a BC standard system and trading mechanism. |
| 2019 | The Implementation Plan of The National Ecological Civilization Pilot Zone (Hainan) | Will carry out pilot projects of carbon sinks in Marine ecosystems, investigate the distribution of BC ecosystems, find the path and potential of carbon sequestration increase in Hainan province, and carry out pilot projects of different types of carbon sinks in some regions. Protect and restore the existing BC ecosystems. Combined with the construction of Marine ecological ranching, the carbon sequestration mechanism and carbon sink increase of ecological mariculture are studied. Will carry out research on the BC standard system and trading mechanism, and explore the establishment of international carbon emission trading venues in accordance with the law. |
| 2020 | China has published its position and actions on the United Nations Climate Action Summit | In the ocean, we will carry out sea level monitoring and assessment, carry out research and pilot work on the BC sinks, and carry out Marine ecological restoration. |
| 2020 | The Ministry of Ecology and Environment responded to Mo Zhaolan's proposal on accelerating the development of the seaweed carbon sink industry | The carbon sink is the process of removing CO2 from the atmosphere, and this part of the CO2 will not return to the atmosphere again in the short term. Carbon sink projects that can participate in carbon trading also need to be additional and meet the corresponding methodological standards. Unless fully sealed, all the carbon absorbed by the seaweed will eventually be emitted in the form of CO2 and cannot be considered as a carbon sink. At present, the project methodology of seaweed carbon sink is still under study and is not mature. In the next step, we will continue to study the methodology of compiling seaweed carbon sink projects and study the possibility of Marine carbon sink to participate in carbon trading. |
| 2021 | The 9th meeting of the Financial and Economic Commission of the CPC Central Committee | Carbon peak and carbon neutrality are important to ecological civilization construction. To improve ecological carbon sink capacity, strengthen national spatial planning and use effective method to play an important role of forest, grassland, wetland, ocean, soil, frozen soil carbon sequestration, improve ecosystem carbon sink increment. |
| 2021 | Construction Plan for Major Coastal Zone Ecological Protection and Restoration Projects (2021–2035) | Restoration of coastal wetlands and coastal ecosystems, increase of carbon sink. |
| 2021 | NPC and CPPCC sessions | Carbon peak and carbon neutrality were included in the government work report for the first time, BC as part of the carbon sink increase and emission reduction. |
4.2 Research on EVR in BC
Many scholars in China have conducted quantitative research on the value measurement of BC resources. The “Economic Value Accounting Method of Marine Carbon Sink” was officially implemented in January 2023, providing assessment and calculation methods for marine biological carbon sequestration. These methods are similar for mangroves, salt marshes, seagrass beds, and large seaweeds, involving both sediment carbon sequestration and plant carbon sequestration. For marine phytoplankton carbon sequestration, the method combines sea area with the ratio of net primary productivity and average carbon content. Shellfish carbon sequestration capacity is calculated as the sum of carbon sequestered in shells and soft tissues. ZHAO (Gaishan, 2023) has outlined physical (geological) carbon sequestration methods, which include simulation and monitoring techniques. Li et al (Jie et al., 2019). provided a methodological analysis for measuring the carbon sink of mangroves, seaweeds, and salt marshes, estimating that the expected increment of BC sink in coastal zones would be approximately 3.4 to 5.16 million tons of CO2 per year. Wang et al (Faming et al., 2021). estimated that the carbon fixed by sediment burial in Chinese coastal wetlands reaches 0.97 million tons of carbon annually and is projected to increase to between 1.82 and 3.64 million tons of carbon annually by the end of the 21st century.
4.3 Pilot BC trading
In China, local BC trading initiatives are encouraged by the central government. Our analysis reveals that most BC transactions are facilitated by local governments, with state-owned and private enterprises as the primary parties involved. The revenues generated from these trades are allocated for ecological protection and restoration. Notably, BC prices have been significantly higher than those in the Carbon Market-Emissions Trading (CEA) system. Specifically, BC prices were approximately twice as high as CEA prices at the same time and reached up to 6.39 times higher than CEA prices (Carbon Neutrality Network, 2023; CCTV Fujian Channel, 2024; Chinese Academy of Fishery Sciences, 2022; Department of Ecology and Environment of Fujian Province, 2021; Development and Reform Commission of Guangdong Province, 2021; Municipal Bureau of Planning and Natural Resources of Shenzhen City, 2023; Municipal Bureau of Planning and Natural Resources of Shenzhen city, 2024; Sina Finance, 2023; The People's Government of Hainan Province, 2022; Zhejiang Online, 2023). This discrepancy arises because BC trading in China is primarily voluntary, with lower trading volumes, resulting in relatively low total trading costs. Additionally, BC buyers tend to receive more media attention compared to CEA participants (Figure 4). Table 3 provides an overview of BC trading practices in China. The first recorded BC trade occurred in 2021, and the number of transactions has increased since then. Various local governments have claimed to conduct their “first” BC trades, often with specific conditions attached, such as the first mangrove BC trade or the first fisheries BC trade.
| Time | Location | Events |
|---|---|---|
| 2016 | Weihai City | Construction of a BC research and development lab, research on mariculture carbon sink, and promote the development of BC trading accounting. |
| 2021 | Shenzhen City | The first national Marine Carbon Sink Accounting Guide has been compiled, and the BC accounting method in coastal areas has been constructed, but it has not been publicly released. |
| 2021 | Xiamen City | The first BC trading platform in China, Xiamen Property Rights Trading Center (Xiamen Carbon and Pollution Trading Center), was set up. and the first BC sink transaction was completed on this platform, with the CO2 emission reduction of 2000t (Department of Ecology and Environment of Fujian Province, 2021). |
| 2021 | Zhanjiang City | The first mangrove carbon sink trading project was completed in China, and 5880t CO2 emission reduction with price 66yuan/t was traded (Development and Reform Commission of Guangdong Province, 2021). |
| 2022 | Lianjiang County, Fuzhou City | Relying on Xiamen Property Rights Exchange Center, the 15,000 t of mariculture BC trading project was completed, with total price of 120,000 yuan, which is also the first mariculture BC sink trading project as a trial (Chinese Academy of Fishery Sciences, 2022). |
| 2023 | Xiangshan County, Ningbo City | The 2340.1t of annual mariculture BC sink is on auction, the starting price is 30 yuan/t, and the price is 106 yuan/t. It is the first mariculture BC auction in China (Zhejiang Online, 2023). |
| 2023 | Haikou city | “Methodology of Mangrove Afforestation/Reforestation Carbon Sink Project of Hainan” was registered, which is the first mangrove carbon sink project methodology in China. |
| 2023 | Haikou city | The first BC ecological product trading of Hainan Province has been completed, with a trading carbon sink of more than 3000 t and a trade amount of more than 300,000 yuan (The People's Government of Hainan Province, 2022). |
| 2023 | Shenzhen City | The mangrove BC sink was bought by a company in Shenzhen at 485 yuan per ton, becoming the highest unit price in the Chinese national carbon sink market. The income from the auction will be use to mangrove protection and restoration of Shenzhen (Municipal Bureau of Planning and Natural Resources of Shenzhen City, 2023; Sina Finance, 2023). |
| 2023 | Beijing City | Voluntary Green House Gases(GHG) reduction projects methodologies of Mangrove was issued, which is the first BC CCER methodologies in China(CCER—14—002—V01). |
| 2023 | Fuzhou City | BC has completed nearly 60,000 tons of trading (CCTV Fujian Channel, 2024). |
| 2024 | Shenzhen City | The 5-year state-owned mangrove protection carbon sink was 5913 t, and the final trading price was 336 yuan/t (Municipal Bureau of Planning and Natural Resources of Shenzhen City, 2024). |
5 MAIN PROBLEMS OF EVR OF BC ECOSYSTEMS
The lack of BC investigation and monitoring data is frequently mentioned, but the underlying reasons and issues are seldom thoroughly discussed. The main challenges stem from the short history of BC trading, the limited availability of tradable BC products, and insufficient price data to support comprehensive research. However, we cannot wait for the completion of a “Blue Carbon Price Reference System” to address these issues. This paper primarily examines current problems from three aspects: conceptual clarity and supply and demand dynamics of BC products. We believe that resolving these issues is essential for realizing the EV of BC.
5.1 Conceptual clarity
In terms of conceptual clarity, research and efforts on the connection between ecosystem protection and restoration, value realization, and trading of ecological products are insufficient. Most of these activities are conducted in isolation, without sufficient attention to their interrelationships. For example, recent BC initiatives have primarily focused on investigating and assessing carbon reserves and the potential for increasing carbon sinks. There is a notable lack of research on methods to promote the realization of ecological product value through carbon sequestration. For instance, significant efforts have been devoted to developing offshore wind power, but less attention has been given to developing BC products around offshore wind turbines, which represent large protected areas free from human disturbance. Similarly, considerable research has been conducted on exploring offshore oil and gas resources, while relatively little effort has been directed toward trading the EV of these areas. These conceptual issues lead to imbalances in natural resource investment returns and increased ecological risks.
5.2 Supply of tradable BC products
5.2.1 Decrease of coastal space resources required for BC sink
Coastal space resources, which are fundamental for BC ecosystems, are diminishing. For example, mangrove planting is a well-established method for generating BC with favorable trading prices. However, mangroves can only be planted in narrow coastal zones, limiting the production of BC and its EV. While there are methods to plant more mangroves after land reclamation, these approaches are often ineffective due to economic and policy constraints. The income from BC trading is relatively low compared to the costs of reclamation and tree planting, making it economically unattractive for current generations, despite potential long-term benefits for future generations. Additionally, policies restrict reclamation activities for mangrove planting and only encourage planting within existing coastal areas.
5.2.2 Too few BC trading products to exchange
Currently, only the method of increasing mangrove carbon sinks has been approved and authorized in China. Compared to other BC ecosystems, such as seagrass beds, salt marshes, and seaweed, mangroves constitute only a small portion of BC ecosystems. This limitation results in a scarcity of tradable BC products, despite the strong carbon fixation capacity and significant potential for enhancing the quality of BC trading products.
5.2.3 The hitchhiking effect
The hitchhiking effect refers to a phenomenon in the realm of public goods where certain individuals or organizations benefit from others' investments without contributing to the costs of the public goods they utilize. In the context of marine EVR, this hitchhiking effect is also prevalent. BC trading represents only a portion of EV, while other untraded aspects of EV may be exploited by third parties. For instance, mangrove carbon sink projects generate additional ecological benefits such as marine disaster prevention and mitigation, enhanced fisheries biodiversity, and tourism development. However, some enterprises and individuals may capitalize on these ecological benefits without bearing the corresponding costs, leading to a funding deficit for EV development projects.
5.2.4 Lack of international trading cases
Most domestic BC sink enhancement products have not been traded internationally. For example, a mangrove planting project in Zhanjiang city, supported by a French company, adheres to EU standards because the company aims to exchange BC credits within the EU market. While Zhanjiang offers suitable conditions for mangrove planting, and some international companies are interested in developing BC projects there, there are no official national-level mechanisms for trading international BC products between China and the EU. Meanwhile, although ASEAN countries near China have favorable conditions for mangrove planting, these regions lack BC investigations and investments from China. Currently, China focuses on supporting mangrove restoration domestically but has not extended this support internationally.
5.2.5 Separation between marine resources development projects, ecological restoration projects and carbon sink enhancement initiatives
Marine resource development projects, such as offshore wind power, typically require a large surrounding sea area to be designated as a protected zone. This protected area, free from human disturbance, could potentially host BC ecosystems like marine algae, shellfish, and seaweed farming to enhance carbon sequestration. Additionally, the current resource fees for offshore oil and gas exploration are insufficient to meet ecological compensation requirements. Marine ecological restoration projects are primarily funded by the government, but funding evaluations often focus on the quantity of restoration work rather than EV, such as BC. In these evaluations, terms like “ecological benefits” are frequently used instead of “ecological values”, possibly because the evaluators lack the ability to fully realize or quantify these values.
5.3 Demand for tradable BC products
5.3.1 Voluntary and not compulsory in BC trading
During the initial phase of the China Certified Emission Reduction (CCER) mechanism from 2012 to 2017, BC projects were not included due to the lack of an approved methodology for quantifying BC sinks by Chinese authorities. In 2023, methodologies for mangrove carbon sink enhancement projects were officially approved, allowing these projects to be traded under the CCER framework, which primarily governs mandatory emissions trading. However, as of now, there is no mandatory trading of BC in China, BC trading remains in a pilot stage and is limited to voluntary transactions aimed at addressing climate change.
5.3.2 Commercial reputation publicity stunt
BC trading initiatives frequently attract significant media attention, providing an excellent platform for traders to demonstrate their commitment to climate change mitigation and build a positive reputation. However, this approach lacks sustainability because once the media spotlight fades, it becomes difficult to ascertain whether these traders continue their BC trading activities.
6 SUGGESTIONS OF EVR ON BC ECOSYSTEMS
In response to the aforementioned issues, strategies to enhance the realization of the value of marine ecological products are explored from three perspectives: conceptual framework, enhancing the supply and demand of tradable BC products, and finally, we develop an implementation roadmap for realizing EV based on BC trading.
6.1 Suggestions for conception
Taking BC trading as a vehicle to drive ecological protection, restoration, and the realization of EV. The purpose of trading BC products is not only to monetize the BC itself but also to protect and enhance the broader value of BC ecosystems. The non-tradable ecological benefits are assessed based in the market price of tradable BC products, sea area use fees, offshore oil resources, or other tradable resources. Additionally, the non-tradable value includes the positive social reputation gained by BC buyers, which serves as an effective form of advertising for them. We should integrate these factors with BC products to promote the overall realization of EV. Simultaneously, we need to establish and regulate packaging standards for these combined elements, such as regulating the publicity of BC trading to prevent false or exaggerated claims, thereby enhancing public trust in BC transactions.
6.2 Increasing the supply of BC trading products
More tradable BC products that can be recognized by the market on the supply side should be produced.
6.2.1 More traded BC products
Interdisciplinary research, supported by government initiatives, should be conducted to understand various types of BC sinks and their enhancement mechanisms, as well as to protect and expand suitable habitats for these sinks. For instance, large-scale system investigations combined with remote sensing technologies should be employed to assess seagrass beds, salt marshes, algae, and shellfish carbon sinks. These assessments should lead to the development of methodologies for enhancing BC storage, which can then be submitted for recognition under the CCER framework, ultimately facilitating their inclusion in mandatory trading markets.
6.2.2 Promotion in international BC product trading
The government should not wait for consumers to develop a strong demand for the value of ecological products before taking action, as by then ecological security may already be compromised and it could be too late. Instead, they should proactively promote BC product trading. Given the varying demand levels worldwide due to different stages of development in various countries, the United Nations (UN) and major nations should prioritize promoting international BC product trading. For example, the UN should explore international business opportunities related to mangrove afforestation, identifying suitable areas with favorable coastal terrain, climate, hydrodynamic conditions, and lower labor costs. These sites should be ranked globally to select the most appropriate ones for producing BC products at the lowest cost while providing better employment opportunities for local communities. As a beneficiary country from marine mariculture BC sinks, China should actively promote the accounting and trading of these sinks, striving for early international recognition and collaborating with other countries to advance the accounting of other types of BC. China should not only focus on increasing domestic BC products but also investigate BC sink enhancement projects abroad, particularly in low-income countries.
6.2.3 Tradable EV products data monitoring
The government should prioritize the development of tradable EV products, such as BC, and enhance market supervision, particularly in areas like BC publicity. Leveraging EV data analysis and research, the government should formulate policies to support EV trading markets, including BC trading markets, thereby improving market transparency and participation. The government should encourage enterprises and institutions to engage in BC trading and restoration projects by providing financial support and technical guidance, ensuring that these markets are effectively supervised.
6.2.4 Solve the hitchhiking effect
The cost of producing EV products should be reduced. For example, preferential sea area use policies should be granted to ecological restoration projects that enhance BC sinks, with beneficiaries providing compensation. Meanwhile, the cost of “free-riding” should be increased. Enterprises and individuals benefiting from the restoration of BC ecosystems should be evaluated and compelled to participate in protection and restoration efforts. For instance, after mangrove restoration, coastal hotels, fishing enterprises, and other beneficiaries should allocate a portion of their gains to compensate affected fishermen.
6.2.5 Implement of marine resources development, ecological restoration projects and carbon sink increasing projects
A portion of offshore oil and gas profits should be taxed by the government and allocated as a BC sink enhancement fund to support ecological protection. We recommend that government-supported ecological restoration projects prioritize the development of tradable carbon sinks. For instance, during the application stage of ecological restoration projects like China's “Blue Bay” initiative, the calculation of BC sink increments and the formulation of BC trading plans should be mandatory requirements.
6.3 Expanding demand for BC trading products
6.3.1 Establish the BC trading index
A BC trading index, which links BC trading data with the conditions of BC ecosystems, should be established by industry associations as an indicator of EV associated with BC ecosystems. This index would serve as a key parameter for assessing the environmental value of BC ecosystems.
6.3.2 Produce new tradable EV products, and strict their standards to meet the demands of consumers
The government should support enterprises in producing more tradable EV products, such as packaging additional public welfare benefits, including social reputation values, with BC projects. Standardization of BC ecosystem restoration effects should be enforced, ensuring that only traders meeting these standards can receive public welfare support. Additionally, mechanisms should be established to filter out traders who engage in false or exaggerated publicity.
6.3.3 Accounted EV into virtual trade
Government should promote the accounted ecological product value into the “virtual” trading market, such as “Virtual stock exchange”. Carbon sink trading is “true” trading, but it is only a small part of EV, for the rest of the EV products, it can be traded in this virtual trading market on the basis of calculating. Through the form of virtual value trading, we can gradually establish the true value trading system of EV. The accounted EV also can help to develop the real economy, taking mangrove as an example, according to the calculation of EV, mangrove-related tourism agencies could advertise “how much money can tourists earn from the mangrove service”, and let tourists have more sense of gain, so as to promote the development of the real tourism economy.
6.3.4 Public participations
The public is often educated to protect ecosystems, but they receive less guidance on how to “consume” ecological products, particularly because many are geographically distant from well-protected ecosystems. The market should focus on allocating more EV products to ensure that more consumers can access high-quality ecological services at reasonable prices. For example, with carbon credits, the public can earn credits by participating in carbon reduction activities. Once they accumulate a certain number of credits, they can use them for seaside or forest tourism experiences.
6.4 An implementation roadmap for realizing EV based on BC trading
As shown in Figure 5, first, we should embrace the concept of EVR based on carbon trading and emphasize comprehensive management when implementing policies, supporting projects, and promoting economic development. Second, we should adopt three measures: technological, administrative, and market-based approaches. Technological and administrative measures are top-down strategies aimed at increasing the supply of BC trading products, while market-based measures are bottom-up strategies focused on cultivating the market and expanding consumer demand for these products. Finally, through continuous regulation, we should adjust the balance between ecological protection and restoration, the EVR, and economic development. This will ensure that the production and consumption of BC products continue to increase, thereby driving the realization of non-tradable EV products.
7 CONCLUSION
The value reflected by BC trading represents only a small portion of EV. As an “indicator” of other EV, it is still not mature and cannot yet be used to accurately calculate overall EV. Perhaps we should consider bypassing the technical challenges associated with “accurately accounting for EV” and instead focus on the trends in EV and HV. This would allow us to adjust our policies on economic development and environmental protection more promptly. Currently, it remains essential to conduct ecological resource monitoring to avoid discovering significant EV losses too late. Improving the efficiency of spatial resource utilization is crucial for both ecosystems and humans. For example, in coastal areas, constructing taller buildings rather than open mariculture ponds can free up more coastal space for producing EV products. We believe that incorporating more types of carbon sinks, such as seaweed and salt marsh wetlands, into the trading market will become feasible. This approach will not only help realize EV more comprehensively but also promote scientific research and technological innovation in related fields. Furthermore, we anticipate that more ecological products will no longer be freely available in the future, and more EV should be transformed into HV. For instance, natural cool breezes in summer, fresh air, and carbon sinks could all be monetized. This transformation should not be seen as a burden on economic development but rather as a driver for economic growth. By quantifying the EV enjoyed by humans, HV or GDP can be increased, benefiting both environmental protection and economic development.
ACKNOWLEDGMENTS
This paper is supported by the Fund of Laboratory of Marine Ecological Conservation and Restoration, Ministry of Natural Resources/Fujian Provincial Key Laboratory of Marine Ecological Conservation and Restoration (Grant No. EPR2023010), the Fund of Key Laboratory of Marine Environmental Survey Technology and Application, Ministry of Natural Resources (Grant No. MESTA-2022-D003).
ETHICS STATEMENT
None declared.
Open Research
DATA AVAILABILITY STATEMENT
https://www.mee.gov.cn/gzk/gz/202310/t20231020_1043695.shtml.
