Natural Resource Regulation in China (Contributions to Public Administration and Public Policy) 9819955920, 9789819955923

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Contributions to Public Administration and Public Policy

Tao Ding  Malin Song

Natural Resource Regulation in China

Contributions to Public Administration and Public Policy

The series Contributions to Public Administration and Public Policy contains publications in all areas of public administration and public policy, such as governance, public finance, public management, organization theory, institutional theory, administrative theory and practice, ethics and others. Publications are primarily monographs and multiple author works containing new research results, but conference and congress reports are also considered. The series covers both theoretical and empirical aspects and is addressed to researchers and policy makers.

Tao Ding · Malin Song

Natural Resource Regulation in China

Tao Ding School of Economics Hefei University of Technology Hefei, China

Malin Song Collaborative Innovation Center for Ecological Economics and Management Anhui University of Finance and Economics Bengbu, Anhui, China

ISSN 2731-9385 ISSN 2731-9393 (electronic) Contributions to Public Administration and Public Policy ISBN 978-981-99-5592-3 ISBN 978-981-99-5593-0 (eBook) https://doi.org/10.1007/978-981-99-5593-0 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore Paper in this product is recyclable.

Preface

As the socialism with Chinese characteristics has entered a new era, China’s governance modernization has entered a new historical stage. The problem of corruption must be solved to modernize China’s governance. The key to fighting corruption lies in the establishment of a scientific and feasible regulatory system. China is a large country with abundant natural resources. Natural resources are related to the national economy and people’s livelihood. The protection of natural resources is inseparable from effective supervision. The modernization of natural resources supervision is an important part of national governance modernization. Natural resource supervision should conform to the historical blueprint and goals of governance modernization. Currently, improving the natural resource supervision system and enhancing the capacity of natural resource supervision have become the top priority of China’s economic and social development. Taking China’s natural resource supervision as the research theme, this book adopts a combination of qualitative and quantitative analysis methods. On the basis of sorting out the theoretical basis of natural resource supervision and the historical status of the supervision system, this book analyzes the history and current situation of natural resource supervision systems at home and abroad. The book makes comparisons to draw lessons from the experience of natural resource regulatory system in China. It analyzes the accounting and pricing methods of natural resources from the perspective of regulatory objects and discusses the realization and reform of property rights by exploring the problems of confirmation registration, transfer and income distribution. By empirically studying the architectural design of natural resources regulatory system, the book provides an implementation path as a reference for China’s natural resource supervision. Specifically, the book is divided into ten chapters. The specific contents are as follows: Chap. 1 introduces the research background, current situation, existing problems, research ideas and frameworks of natural resources supervision; Chap. 2 elaborates on the theoretical basis of natural resource supervision from the perspective of economic theory; Chaps. 3 and 4 focus on the history and current state of natural resource regulation in China and other representative countries; Chaps. 5–8 study the accounting and pricing of natural resource assets, the realization and reform of natural resource asset property rights, v

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Preface

and the architectural design and implementation path of the natural resource supervision system, respectively; and Chaps. 9 and 10 mainly analyze the legal protection and future prospect of the natural resource regulatory system. This book is completed by Professor (Associate) Tao Ding from Hefei University of Technology and Prof. Malin Song from Anhui University of Finance and Economics. They are the directors of the National Natural Science Foundation projects (72271080 and 71934001), respectively. We also acknowledge Huaiyu Zhu, Yuhong Niu, Min Sun, Weiqiang Liu, Anli Cao, Shan Xie, Xiao Wang, Wei Yang and Yuchen Qian from Hefei University of Technology for their efforts on the data compilation of an earlier version of this book. The readers of this book include but are not limited to owners of natural resource asset, government officials and scholars who study natural resource regulation, etc. Due to the shortage of time and the limited level of the authors, there are inevitably omissions and errors in the book. We sincerely invite readers and colleagues to criticize and correct these errors. We can actively communicate and learn together. Hefei, China Bengbu, China March 2023

Tao Ding Malin Song

Contents

1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Research Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Current State of China’s Natural Resources . . . . . . . . . . . . . . . . . . 1.3 Problems in Natural Resource Regulation . . . . . . . . . . . . . . . . . . . . 1.4 Research Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

Theoretical Basis for Analysis of Natural Resource Supervision Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Process of Understanding the Scarcity of Natural Resources . . . . 2.1.1 Classical Economists’ Views of Resource Scarcity . . . . . 2.1.2 Neoclassical Economists’ Views of Resource Scarcity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Theory of Natural Resource Value and Price Composition . . . . . . 2.2.1 Theory of Natural Resource Value . . . . . . . . . . . . . . . . . . . 2.2.2 Price Composition of Natural Resources . . . . . . . . . . . . . 2.3 Game Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.1 Static Game with Complete Information: Nash Equilibrium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 Dynamic Game with Complete Information: Sub-game Refining Nash Equilibrium . . . . . . . . . . . . . . . . 2.3.3 Static Game with Incomplete Information: Bayesian Nash Equilibrium . . . . . . . . . . . . . . . . . . . . . . . . 2.3.4 Dynamic Game with Incomplete Information: Refining Bayesian Equilibrium . . . . . . . . . . . . . . . . . . . . . 2.4 Efficient Allocation of Natural Resources . . . . . . . . . . . . . . . . . . . . 2.4.1 Static Efficiency of Resource Configuration . . . . . . . . . . . 2.4.2 Intergenerational Efficiency of Resource Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.3 Market Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 1 3 4 5 11 12 12 13 14 15 17 19 19 21 22 22 23 23 31 33

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2.5

Theory of the Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5.1 Connotation of the Circular Economy . . . . . . . . . . . . . . . . 2.5.2 Characteristics of the Circular Economy . . . . . . . . . . . . . 2.5.3 Evaluation Index System of the Circular Economy . . . . . 2.6 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

4

Historical Changes in China’s Natural Resource Regulatory System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Historical Changes in the Philosophy of Natural Resource Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.1 The Regulatory Philosophy of Each Period . . . . . . . . . . . 3.1.2 The Law of Change of Regulatory Philosophy . . . . . . . . 3.2 Historical Changes in the Body of Natural Resource Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1 Changes in the Main Body of Natural Resource Regulation of Various Types . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2 The Changing Pattern of Regulatory Bodies . . . . . . . . . . 3.2.3 Current Regulatory Body . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Historical Changes in the Basis of Natural Resource Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.1 Changes in the Regulatory Basis of Various Types of Natural Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.2 The Changing Law of Regulatory Basis . . . . . . . . . . . . . . 3.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International Comparison of Natural Resource Regulatory Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Development History and Status Quo of the Natural Resource Regulatory System in the United States . . . . . . . . . . . . . 4.1.1 Distribution of Natural Resources . . . . . . . . . . . . . . . . . . . 4.1.2 Ownership of Land and Resources . . . . . . . . . . . . . . . . . . 4.1.3 Development History of Natural Resource Regulatory System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.4 Current Situation of Natural Resource Regulation . . . . . 4.1.5 Experience of US Natural Resource System Regulation for China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Development History and Status Quo of Japan’s Natural Resource Supervision System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1 Distribution of Natural Resources . . . . . . . . . . . . . . . . . . . 4.2.2 Ownership of Land and Resources . . . . . . . . . . . . . . . . . . 4.2.3 Development History of Natural Resource Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.4 Current Situation of Natural Resource Supervision . . . .

36 36 37 38 40 42 45 45 46 54 55 55 60 62 65 66 73 75 75 77 77 77 78 79 83 86 87 87 87 88 92

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4.2.5

Relevance of Japan’s Natural Resource System Supervision for China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 4.3 Development History and Status Quo of Russia’s Natural Resource Supervision System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 4.3.1 Distribution of Natural Resources . . . . . . . . . . . . . . . . . . . 95 4.3.2 Ownership of Land and Resources . . . . . . . . . . . . . . . . . . 96 4.3.3 Development History of Natural Resource Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 4.3.4 Current Situation of Natural Resource Supervision . . . . 99 4.3.5 Experience of Russia’s Natural Resource System Supervision for China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 4.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 5

6

Accounting and Pricing Methods for Natural Resources . . . . . . . . . . 5.1 Overview of the Natural Resource Balance Sheet . . . . . . . . . . . . . 5.1.1 System of Accounting for Natural Resources . . . . . . . . . 5.1.2 Accounting Elements of the Natural Resource Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.3 Accounting Methodology for Natural Resources . . . . . . 5.1.4 Principles of Compilation of the Natural Resource Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Accounting Methodology for Natural Resource Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 Accounting for Natural Resource Assets . . . . . . . . . . . . . 5.2.2 Accounting for Natural Resource Liabilities . . . . . . . . . . 5.3 Compilation and Analysis of the Natural Resource Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.1 Physical Balance Sheet and Analysis . . . . . . . . . . . . . . . . 5.3.2 Value Balance Sheet and Analysis . . . . . . . . . . . . . . . . . . . 5.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Realization and Reform of Property Rights of Natural Resources Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Concept of Property Rights System of Natural Resource Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.1 Connotation and Basic Attributes of Natural Resource Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.2 Classification of Natural Resource Assets . . . . . . . . . . . . 6.1.3 Definition of Property Rights of Natural Resource Assets in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Theoretical Basis for Building the Property Rights System of Natural Resources Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.1 National Ownership Theory of Natural Resources . . . . . 6.2.2 Asset Management Theory of Natural Resources . . . . . .

105 105 105 107 109 112 114 114 128 130 131 132 132 133 135 135 135 137 138 138 139 139

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6.3

Research on the Property Rights System of Natural Resource Assets—Taking Forest Assets as an Example . . . . . . . . 6.3.1 Registration of Confirmation of Rights . . . . . . . . . . . . . . . 6.3.2 Transfer Circulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.3 Income Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Problems in the Property Rights System of Forest Resource Assets in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.1 Registration of Confirmation of Rights . . . . . . . . . . . . . . . 6.4.2 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.3 Income Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 Suggestions for Improving the Property Rights System of Forest Resource Assets in China . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.1 Registration of Confirmation of Rights . . . . . . . . . . . . . . . 6.5.2 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5.3 Income Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Architectural Design of China’s Natural Resource Regulatory System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 The Layout of the Natural Resource Supervision System . . . . . . . 7.1.1 Supervisory Subjects and Objects . . . . . . . . . . . . . . . . . . . 7.1.2 Supervision Means and Tools . . . . . . . . . . . . . . . . . . . . . . . 7.1.3 Configuration of Supervisory Functions . . . . . . . . . . . . . . 7.1.4 Supervisory Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 The Principal–Agent Mechanism in the Natural Resource Supervision System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.1 Principal–Agent Relationship . . . . . . . . . . . . . . . . . . . . . . . 7.2.2 The Choice of Agent Behavior . . . . . . . . . . . . . . . . . . . . . . 7.2.3 Principal–Agent Model Setting . . . . . . . . . . . . . . . . . . . . . 7.2.4 Model Solution and Inference . . . . . . . . . . . . . . . . . . . . . . 7.3 The Game Relationship Among the Participants in the Natural Resource Regulatory System . . . . . . . . . . . . . . . . . . 7.3.1 Participant Game Problem Description . . . . . . . . . . . . . . . 7.3.2 Model and Parameter Setting . . . . . . . . . . . . . . . . . . . . . . . 7.3.3 Model Establishment and Solution . . . . . . . . . . . . . . . . . . 7.3.4 Game Equilibrium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.5 Conclusion of the Game Model . . . . . . . . . . . . . . . . . . . . . 7.4 System Design of Unified Supervision of Natural Resources . . . . 7.4.1 Building a Multi-information Sharing Platform for Natural Resource Supervision . . . . . . . . . . . . . . . . . . . 7.4.2 Establishing a Corporate Behavior Recognition System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4.3 Strengthening Risk Emergency Response and Prevention and Control Mechanisms . . . . . . . . . . . . .

140 140 142 144 144 144 147 150 151 151 153 156 158 158 161 162 162 163 165 166 167 167 168 169 170 172 172 173 175 180 183 184 184 184 185

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7.4.4 Establishing a Skills and Technology Training Base . . . . 185 7.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 8

9

Implementation Path of Natural Resource Regulation . . . . . . . . . . . . 8.1 China’s Unique Natural Resource Supervision System—The Audit System of Natural Resource Assets for Leading Cadres When They Leave Office . . . . . . . . . . . . . . . . . 8.1.1 Connotation of Exit Audit System of Natural Resource Assets for Leading Cadres . . . . . . . . . . . . . . . . . 8.1.2 Theoretical Basis of Exit Audits of Natural Resource Assets for Leading Cadres . . . . . . . . . . . . . . . . . 8.2 Construction of the Evaluation Index System for the Exit Audits of Natural Resource Assets for Leading Cadres . . . . . . . . . 8.2.1 Principles for Constructing the Indicator System . . . . . . 8.2.2 Elements of the Indicator System . . . . . . . . . . . . . . . . . . . 8.2.3 How to Determine the Indicator Weight . . . . . . . . . . . . . . 8.2.4 Calculation of Indicator Weights . . . . . . . . . . . . . . . . . . . . 8.3 Application of the Audit Evaluation Index System of Natural Resource Assets in Xi’an City . . . . . . . . . . . . . . . . . . . . 8.3.1 Current Situation of Natural Resources in Xi’an City and Exit Audits of Natural Resource Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.2 Application of Exit Audit and Evaluation Index System of Natural Resource Assets in Xi’an City . . . . . . 8.3.3 Exit Audit and Evaluation Conclusion of Natural Resource Assets in xi’an City . . . . . . . . . . . . . . . . . . . . . . . 8.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Legal Safeguards for the Natural Resource Regulatory System . . . . 9.1 Natural Resource Regulation and Law . . . . . . . . . . . . . . . . . . . . . . . 9.1.1 Legal Problems in the Regulation of Natural Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1.2 Improvement of Natural Resources Regulatory System Under the Legal Environment . . . . . . . . . . . . . . . . 9.2 Legal Perspective on Natural Resource Asset Management . . . . . 9.2.1 Current Management System of Natural Resource Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2.2 Current Status of Natural Resource Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2.3 Introduction of Foreign Experience in Natural Resource Asset Management . . . . . . . . . . . . . . . . . . . . . . . 9.2.4 Improving Natural Resource Asset Management . . . . . .

225 225

189 189 194 194 194 196 201 203 211

211 215 216 222 223

226 229 233 234 234 237 239

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9.3

Natural Resource Tax System Management . . . . . . . . . . . . . . . . . . 9.3.1 Resource Tax System Related Theories and Functional Positioning . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.2 Current Development of China’s Resource Tax System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.3 Countermeasures for Improving China’s Current Resource Tax System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4 Improving the Legal Guarantee of Natural Resources Regulatory System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4.1 Establishing Goals and Values, and Improving the Legal System of Natural Resource Regulation . . . . . 9.4.2 Sounding Property Rights System and Strengthening Standardized Management . . . . . . . . . 9.4.3 Combining “External Traceability Control” and “Internal Traceability Control” to Improve the Monitoring Mechanism of Natural Resources . . . . . . 9.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

241

10 Outlook: The Road Ahead for Natural Resource Supervision . . . . . . 10.1 Basic Idea of Natural Resource Supervision . . . . . . . . . . . . . . . . . . 10.1.1 Basis of Natural Resource Supervision . . . . . . . . . . . . . . . 10.1.2 Implementation Path of Natural Resource Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 Institutional Innovation of Natural Resource Asset Elements . . . . 10.2.1 Improving the Property Right System of Natural Resource Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.2 Improving the Accounting Mechanism of Natural Resource Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . 10.3 Innovation of Natural Resource Asset Mechanism . . . . . . . . . . . . . 10.3.1 Improving the Natural Resource Trading Market . . . . . . 10.3.2 Improving the Exit Audit System of Natural Resource Assets for Leading Cadres . . . . . . . . . . . . . . . . . 10.4 Establishing a Land and Resources Planning System . . . . . . . . . . 10.4.1 Improving the Spatial Planning System . . . . . . . . . . . . . . 10.4.2 Improving the Rural Land Resource Planning System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5 Strengthening the Trade Mechanism of Natural Resources . . . . . . 10.5.1 Export Control Reform of China’s State-Owned Natural Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5.2 Natural Resource Supervision from a Global Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

253 253 253

242 244 246 248 248 249

250 251 251

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Contents

10.6 Improving the Multi-agent Natural Resource Supervision System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.6.1 Improving the Government Administrative Law Enforcement System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.6.2 Building a Public Supervision Platform . . . . . . . . . . . . . . 10.7 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Chapter 1

Introduction

Natural resources, those that exist without any human intervention, form some of the essential components of the environment. Natural resources provide a material basis for humans and have great economic and ecological value for humankind. Ecological problems related to resources and the environment have become increasingly serious around the world. On the one hand, humans cannot stop development and need to use natural resources continuously to improve production and living standards. On the other hand, traditional development methods have destroyed natural resources and significantly threatened ecosystems. China’s rapid economic development in the twenty-first century led to huge consumption of natural resources. Therefore, the government began issuing a series of policies and regulations successively to protect resources. However, many problems remain due to the lack of coherence in the promulgation of laws and the lack of scientificity in legislation related to natural resource supervision. These problems are embodied in the inability of all production activities of producers to achieve comprehensive supervision, spatial overlap, information dislocation, etc. The main purpose of this book is to study the Chinese natural resource regulatory system in depth and to provide information for improving it. By combing through the process of historical change, analyzing resource accounting and pricing methods, and studying the realization and reform of property rights, the book discusses China’s current problems in the process of natural resource supervision, and then proposes solutions and implementation paths as a reference for the construction of the Chinese natural resource regulatory system.

1.1 Research Background Natural resources form the material basis for human survival and development, and play an important part of the ecological environment. According to the definition of the United Nations Environment Programme, natural resources can generate benefits © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 T. Ding and M. Song, Natural Resource Regulation in China, Contributions to Public Administration and Public Policy, https://doi.org/10.1007/978-981-99-5593-0_1

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under certain conditions and improve the quality of life and welfare of humankind. The Chinese dictionary Cihai defines natural resources as material resources that humans can directly obtain from nature and use for living. Combining these definitions, natural resources must meet two requirements. First, resources should be formed in a natural state without being processed by humans; and second, resources should have certain benefits and guarantee the survival and development of people. There are various ways to classify natural resources. According to regeneration ability, natural resources can be divided into renewable resources and nonrenewable resources. Renewable resources are those that can be repeatedly used by people. Such natural resources can regenerate infinitely, and include water resources, soil resources, and biological resources; non-renewable resources refer to resources whose reserves are reduced after human exploitation and cannot be regenerated for a long time, and include fossil fuels and metal minerals. According to geographical distribution, natural resources can be divided into biological resources, water resources, mineral resources, land resources, and so on. Natural resources provide the necessary material basis for human development, create living conditions for people, and bring great economic and ecological value to humans. On the one hand, the exploitation of natural resources improves the living standard of humans, given that people make full use of the substances provided by nature in the process of development; on the other hand, the natural environment has unique ecological value, and humans experience spiritual upliftment in the process of viewing and experiencing nature. For survival and development, people constantly exploit and use natural resources, resulting in the reduction and even exhaustion of resources. In recent years, global climatic conditions have been deteriorating, glaciers have melted, sea levels have risen, and extreme natural disasters have occurred frequently. In addition, nonrenewable resources, such as mineral resources, have become increasingly depleted, and renewable resources, such as water and land resources, have become increasingly scarce, all posing great threats to human survival and development. With the development of science and technology, the demand for natural resources by humans is rising, and the consumption of natural resources by people is also increasing. The global resource and environmental problems are becoming more and more serious. On the one hand, humans cannot stop development and need to continuously use natural resources to improve living standards. On the other hand, traditional development methods have destroyed natural resources and threatened the ecological environment significantly. Therefore, realizing harmonious coexistence of humans with nature has become the top priority of current resource problems. The rational development and utilization of natural resources, and strengthening the supervision and protection of natural resources will enable solutions for resource and environmental problems.

1.2 Current State of China’s Natural Resources

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1.2 Current State of China’s Natural Resources China has vast territory and abundant reserves of natural resources. With the world’s third largest land area, Chinese water resources account for 6% of the world’s, and forest resources account for 4%. In terms of mineral resources, China’s per capita shares of coal, oil, and natural gas account for 55%, 11%, and 4% of the world’s. However, the large population base has led to a relative lack of per capita resources in China, giving its natural resources the characteristics of large volume and low per capita possession. China has witnessed rapid economic development in the twenty-first century. An extensive development model in pursuit of growth has enabled China to achieve rapid economic growth in a short period of time, but at the same time has caused massive consumption of natural resources and irreparable damage to the environment. In recent years, China’s resource and environmental constraints have intensified, and ecological problems have become increasingly serious. The most prominent manifestations are the frequent occurrence of extreme weather conditions and the repeated occurrence of human-induced pollution. Therefore, strengthening the construction of the natural resource supervision system, improving the laws and regulations related to natural resource supervision, as well as raising people’s awareness of environmental protection and creating a good atmosphere for resource conservation would promote the construction of a modern society in which humans live in harmony among nature, thereby realizing a resource-saving and environmentally friendly society. Given the reform and opening up since 4 decades ago, the Chinese government has gradually realized the importance of strengthening the regulation of natural resources and begun to formulate and issue a series of laws and regulations to protect natural resources. However, legislative deficiencies have created a dilemma for natural resource regulation to a certain extent, manifesting as a lack of coherence in the promulgation of the law, and thus, a lack of the scientific nature of the laws. Meanwhile, China’s natural resource regulatory system has undergone several significant reforms and mergers since the founding of the People’s Republic of China, from the initial establishment of numerous institutions to the current unified supervision pattern. However, there are many participants in the regulatory system, and although the unified regulatory pattern integrates the originally scattered regulatory functions to a certain extent, it is still unable to fully achieve effective targeted regulation. Therefore, an urgent goal is to fully understand the current situation of China’s natural resources, conduct an in-depth study of China’s current natural resource regulatory system, and then provide targeted suggestions for the improvement of China’s natural resource regulatory system. In recent years, the Chinese government has successively introduced a series of policies and measures to improve the current environmental situation, promote the efficient use of natural resources, and alleviate increasing resource constraints. These include the establishment of a specialized natural resource regulatory agency, and the clarification of natural regulatory responsibilities. In 2018, the Chinese government officially approved the establishment of the Ministry of Natural Resources, serving

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as a marker that the development, utilization, and supervision of China’s natural resources have risen to the national strategic level.

1.3 Problems in Natural Resource Regulation With the continuous development of China’s economy and legal system, the regulation of natural resources is gradually improving, but at the same time, new problems are constantly exposed. Before the economic reform and opening up, the separation of China’s natural resource regulatory agencies faced many challenges related to regulation. For example, the separation of regulatory bodies could easily lead to a disconnect between policy formulation and implementation. Furthermore, because each regulatory body was responsible only for matters within its own jurisdiction, the development, utilization, and protection of natural resources did not form a unified whole. Moreover, the unclear division of institutional rights and responsibilities often resulted in difficulty of supervision, disorderly supervision, and absence of supervisors. The existence of “multiple regulatory entities” not only has brought higher regulatory costs, but also has not been conducive to the rational development and utilization of the ecosystem as a whole. After the economic reform and opening up, China’s natural resource regulatory system gradually moved from decentralization at the beginning of the founding of the People’s Republic of China to a unified system. However, due to increasingly prominent resource and environmental problems, the regulatory system is facing new challenges. First, the natural resource regulatory system is easily affected by such factors as urban–rural differences and administrative planning, resulting in diversification when natural resource management matters or specific functional uses are managed by different departments. On the one hand, the Chinese government’s environmental supervision has always regarded producers as the main object of supervision, and adhered to the environmental protection guidelines that whoever destroys the environment should restore it and whoever pollutes the environment needs to restore it. At the same time, natural supervision departments generally have the problems of insufficient regulators and shortage of funds, leading to the failure of all-round supervision of all production activities and the frequent occurrence of fragmented management. On the other hand, China has abundant resources with many kinds of natural resources. A space carrier often has different types of natural resources. However, due to government interests and lack of coordination and cooperation between superiors and subordinates, various governments and departments create inconsistencies in the preparation and planning of different types of natural resources, resulting in the generation of target differentiation. Spatial superposition is another main problem. Natural resources, such as land and sea, agriculture and livestock, forests, river beaches, and wetlands, are ubiquitous in China. In addition, there is

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no good demarcation standard for geographical boundaries and management boundaries, making it is common for overlapping and repeated management of natural resources to occur or the phenomenon of regulatory gaps. These problems of coordination between regions would lead to diversified and non-uniform spatial classification standards for survey registration and planning, resulting in erroneous basic data, conflict of planning objectives, and information differences. Second, in the regulatory systems of Western countries, it is common to observe their systems having shifted from government regulation to multi-level regulation for historical reasons and economic development. With economic development and the awakening of people’s awareness about protecting their rights, problems have also begun to appear in various fields of society. To solve them, various regulatory agencies have been created by Western governments, and the direction of industry supervision has changed from economic to social. Compared with developed countries, China’s relevant laws and regulations of natural resource supervision need improvement. The number of laws and regulations is relatively small, and the scope of adjustment is micro-specific with lack of connection, making it difficult to achieve the goal of natural resource supervision. Third, there are still many problems in China’s natural resource asset property rights system. On the one hand, the market transaction mechanism of natural resource assets is immature. The allocation of natural resource assets in China was basically controlled by the government in the past, with basically no role for the market. On the other hand, although the government is constantly improving relevant policies and laws, there is no special law in China dedicated to property rights of natural resource assets. Moreover, there are almost no property rights of natural resource assets. Specifically, the problems include an unclear definition of owners and the disorderly development of users. Taking forest assets as an example, there are still many problems that need to be solved, such as lack of unified standards for the content of rights confirmation and registration, disputes over the boundaries of forest resource ownership, and an imperfect circulation mechanism of forest resource assets.

1.4 Research Framework The establishment of a complete natural resource supervision system could fundamentally solve the problems in China’s current environmental governance and resource utilization process. It could promote the coordinated development of natural resources and realize the concept of a so-called “beautiful China.” As the basis for deepening the reform of the “ecological civilization” system, the establishment of a natural resource supervision system plays a pivotal role. However, the natural resource system is complex, involving many subjects and covering a wide range, which increases the difficulty of constructing a supervision system and hinders the rational utilization of natural resources. The main purpose of this book is to improve China’s natural resource supervision system, and conduct an in-depth study of China’s natural resource supervision system. The following chapters identify

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the process of historical changes, analyze the accounting and pricing methods of resources with the realization and reform of property rights, discuss the current problems faced in the process of natural resource supervision, and then propose solutions and implementation paths to serve as a reference for the construction of a natural resource supervision system for China. The innovative aspects of this book are as follows: First, it uses qualitative and quantitative methods to analyze the realization and reform of the property rights of natural resource assets. Through empirical research on the architectural design of the natural resource supervision system, this book provides a reasonable implementation path for China’s natural resource supervision. Second, it scientifically analyzes the efficiency of resource allocation by combining the consumption function and indifference curve. Finally, it scientifically defines the supervision of natural resources from the perspective of auditing. The main contents of each chapter of this book are as follows: This chapter, the introduction, mainly defines natural resources by connotation and type, focusing on analyzing the scarcity of natural resources and the problems they currently face. Then, the chapter analyzes the current situation of natural resources in China, introduces the characteristics and use of China’s natural resources, and identifies the laws and policies related to China’s natural resource supervision since the last century. Then, the chapter discusses the current problems in China’s natural resource supervision from three aspects: supervision subject, supervision law, and property rights system. This chapter provides an overview of the research ideas, innovations, and main content of each subsequent of this book. Chapter 2 lays the theoretical foundation for the whole book. This chapter first introduces the concept of resource scarcity from the research perspectives of classical economists and neoclassical economists, and then discusses how to price natural resources through stage theory, wealth value theory, and the natural resource value theory based on utility value. Then, the chapter uses the indifference curve and utility function to rigorously analyze the effective static allocation and intergenerational efficiency, studying the allocation of natural resources under the market failure from the perspectives of externalities, public goods, information asymmetry, and monopoly. Finally, different types of game theory and circular economy theory are used to provide a theoretical basis for the framework design of the natural resource supervision system. Chapter 3 takes the concept, main body, and basis of natural resource supervision as the starting point. First, it categorizes the historical changes of the natural resource supervision concept in China since the founding of the People’s Republic of China, and then divides the development of China’s natural resource supervision concept into five stages: extensive supervision, rational development and utilization, sustainable development, construction of ecological civilization, and innovation supervision (with three changes summarized in the concept of supervision). Second, by listing the time axis, the chapter systematically outlines the regulatory bodies for land resources, water resources, mineral resources, energy resources, forest resources, grassland resources, marine resources, and biological resources, analyzing their changing laws and main responsibilities. Finally, this chapter delineates the historical changes in

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China’s natural resource supervision by integrating various laws and regulations of the natural resource supervision system, and analyzes the existing problems. Chapter 4 combines the development history and current situation of typical national natural resource supervision systems, with focus on the United States, Japan, and Russia. First, the chapter analyzes the goals and direction of reform of China’s natural resource supervision system. Then, it studies the regulatory model and the development of the natural resource regulatory system in the United States. from the perspective of analyzing the decentralized and independent management of US territorial and resource ownership, it identifies the development history of the US natural resource regulatory system, and provides a reference for China to build related systems. Thereafter, it considers the diversification of Japan’s natural environment, which provides the basic conditions for its developed natural resource regulatory system. This chapter presents a detailed analysis of Japan’s natural resources, from water resources to land resources and forest resources. Finally, since Russia has undergone the stage of state-owned land, this chapter conducts a similar analysis on Russia to those for the United States and Japan. The experiences of these three countries serve as a reference for China. Chapter 5 focuses on supervision. Taking the accounting and pricing of natural resources as the starting point, it compiles balance sheets of natural resources, analyzes the balance sheets from a macro perspective, and introduces the System of National Accounts (SNA) and System of Environmental-Economic Accounting (SEEA). Taking the construction of natural resource accounting system in Western countries as an example, this chapter lists the relevant accounting framework, analyzes the accounting elements, and summarizes the physical quantity method and value quantity method. It uses the market method, replacement cost method, shadow price method, and fuzzy mathematics comprehensive evaluation method, among others, to calculate the physical quantity and value of natural resource assets of forests, water, land, minerals, oceans, and grassland resources combined with an analysis of excessive energy consumption. Then, this chapter analyzes and calculates natural resource liabilities in terms of energy consumption, environmental pollution, and ecological crowding. At the end of this chapter, we compile and analyze the physical scale of water resources as an example. Chapter 6 focuses on the analysis of the property rights system of natural resource assets, and introduces the concept of natural resource assets from three aspects, namely, the attributes, classification, and property rights of natural resource assets. Then, this chapter discusses the theoretical basis for the establishment of the system, that is, the theory of state ownership and the theory of asset-based management. The last three subsections take China’s forest resource asset property rights system as an example, analyze the content of the natural resource asset property rights system, examine the problems existing in the system, and then propose specific suggestions and solutions. Specifically, this chapter analyzes the property rights system of China’s natural resource assets, explores the problems of confirmation registration, transfer, and revenue distribution in the current system. It promotes the development of China’s natural resource assets in the direction of clear property rights and efficient allocation. Chapter 7 focuses on the structure of China’s natural resource regulatory system.

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The first section of this chapter analyzes the current structure of China’s natural regulatory system from the perspective of regulatory subjects and objects, regulatory agencies, regulatory means and methods, and the organizational structure and function of China’s Ministry of Natural Resources. The second and third sections analyze the principal–agent relationship and game relationship among the major participants in the regulatory system based on principal–agent theory and game theory, respectively. By analyzing the problem, setting parameters, establishing and solving the model, conclusions of the principal–agent model and game model applied to the nature regulatory system are drawn. The last section provides targeted suggestions for the unified regulation of natural resources from four aspects: establishing a sharing platform, improving the identification system, strengthening the prevention and control mechanism, and establishing an incubation base. The recommendations are intended to promote the construction of a more reasonable and effective structure of natural resource regulatory system. Chapter 8 explores specific solutions that can be implemented in the process of natural resource regulation and provides an in-depth analysis of the leading cadres’ ex-officio audit system for natural resource asset. By analyzing and discussing the connotation and theoretical basis of the system, it introduces the principles of constructing the indicator system, the constituent elements, the methods of determining the indicator weights, and the calculation methods, and then systematically summarizes the operation mechanism and the performance evaluation methods of the ex-officio audit system. Meanwhile, by combining the evaluation index system with the actual situation of Y City, the chapter studies the current situation of natural resources in Y City, provides an overview of the ex-officio audit of natural resource assets, and tests the feasibility of the index system. Then, providing targeted suggestions for the system, this chapter suggests directions for the improvement of the regulation and the audit system. Chapter 9 identifies and discusses relevant laws in the natural resource regulatory system, analyzes the natural resource regulatory system from the perspective of law, and discusses the legal protection of the regulatory system from three aspects: regulation, asset management, and the taxation system. The first three sections analyze the current situation of natural resource regulation, asset management, and taxation management in China, respectively. These sections analyze the relevant problems at the legal level, and then provide suggestions for improving the relevant institutional mechanisms. The asset management section focuses on foreign experience to make the recommendations more scientific and reasonable. The fourth section combines the contents of the chapter to provide a legal implementation path to improve relevant systems and mechanisms, providing an important reference for improving China’s natural resource regulatory system, and at the same time, helping to strengthen the legal protection of China’s relevant systems and mechanisms. Based on the previous review and analysis of the natural resource regulatory system, Chapter 10 highlights the basic ideas of natural resource regulation from the standpoint of natural resource regulation, that is, sustainable development, efficient and high-quality use, fair distribution, and overall and coordinated planning. The

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chapter also combines the analysis of the general path of natural resource regulation, that is, improving the legal system, promoting mechanism construction, and improving organizational structure. The following four sections provide a specific implementation path for China’s natural resource regulation from five aspects: institutional innovation, mechanism innovation, planning system construction, domestic and foreign exchange mechanism strengthening, and multi-subject participation system improvement. The policy recommendations are proposed with full consideration of the current situation of China’s natural resource regulatory system and they provide a reference for the construction of a natural resource regulatory system for China in the future.

Chapter 2

Theoretical Basis for Analysis of Natural Resource Supervision Systems

With the rapid development of the economy, the demand for kerosene and other natural resources has increased rapidly. The market is in short supply, prices have risen sharply, and many important energy resources remain highly dependent on foreign countries. However, China is currently in the process of industrialization and there is still great demand for natural resources. The shortage of natural resources has become an important factor restricting China’s economic development. Therefore, it is necessary to vigorously promote the efficient utilization and recycling of natural resources and regulating natural resources. There are three stages of research of natural resource regulation theory. First, before the regulation of natural resources, it is necessary to understand the scarcity of a natural resource, so as to clearly understand the reasons for regulating the natural resource, which would improve regulation. Second, in the process of regulating natural resources, the theory of natural resource value and price is used in the accounting of natural resources at the beginning of supervision. While game theory provides a theoretical basis for the architectural design of natural resource supervision system, the theory of natural resource allocation provides a perspective for the improvement of natural resource supervision. Finally, after the regulation of natural resources, the circular economy theory provides a measurement standard for the ultimate goal of the regulation of natural resources, so as to judge whether the regulation effect is good. This chapter is presented from five aspects: natural resource scarcity recognition process, natural resource value theory and price structure, natural resource allocation, game theory, and circular economy theory. Considering these aspects lays a solid theoretical foundation for the follow-up study of natural resource supervision system.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 T. Ding and M. Song, Natural Resource Regulation in China, Contributions to Public Administration and Public Policy, https://doi.org/10.1007/978-981-99-5593-0_2

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2.1 Process of Understanding the Scarcity of Natural Resources The relationship between population growth, natural resources, and economic development is complicated. For most of history, many people lived in poverty. Maximizing the utilization efficiency of scarce resources has always been a core issue in economic research. The essence of the economy is to convert resources into subsistence materials. As early as hundreds of years ago, resource scarcity became a factor affecting economic development. In the mainstream economics that followed in the post-industrial era, resource scarcity was still the subject of study. Although the views of economists differ from generation to generation, the basic theory remains about technology and economic growth [1]. From the economic point of view, the scarcity of natural resources is the inevitable result of market supply and demand. Because of the economic characteristics of resources, it is necessary to find ways to maximize allocative efficiency. This section introduces the views of classical and neoclassical economists on resource scarcity, so that readers can have a clearer understanding of natural resource pricing and natural resource allocation theories in natural resource regulation.

2.1.1 Classical Economists’ Views of Resource Scarcity Classical economics, also known as classical political economy, originated with the works of David Hume and Adam Smith. The core issue that classical economists focus on is the determinants of economic growth, and its social production function is: Q = f (K , L , N )

(2.1)

Q represents output, K represents capital input, L represents labor input, and N represents input of natural resources, such as land. Classical economists paid less attention to the effect of capital on output and focused instead on the use of natural resources. In classical economics, the resource scarcity theory mainly includes Malthus’ absolute scarcity theory, Ricardo’s relative scarcity theory and John Mill’s static economic view. (1) Malthus—Absolute scarcity of resources Early classical economists believed that the economy would not grow for long, but would eventually plateau, and that the future of human life would be bleak as the population increased. Malthus discussed this point of view in his Treatise on Population (1798), which came to be known as Malthusianism. Before Malthus developed the theory of population, he proposed two hypotheses: first, food is necessary for human survival; second, lust is inevitable. On this premise, he established the theory

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of absolute scarcity of natural resources based on the contradiction that the population growth rate far exceeded the speed of land to provide survival materials. Malthus believed that food was essential for human survival, and thus, the productivity of land and the population growth rate had to be relatively balanced. When there is no limit to population growth, the population would grow exponentially and infinitely, while the food on which people depend would increase by an arithmetical ratio, influenced by the level of production. At this time, the balance between land productivity and the population multiplication force would be broken; famine, plague, and war caused by insufficient living materials would eventually restrain further population growth; and per capita output would eventually be maintained at the minimum living level, with the economy reaching a stable state at this time. (2) Ricardo—The theory of relative scarcity of resources In 1871, the classical economist David Ricardo argued that natural resources were heterogeneous, and that natural resources that were less palatable and harder to exploit could also be economically exploited. Thus, Ricardo thought that resources were relatively scarce. For Ricardo, the relative scarcity of natural resources was not insurmountable. Nonetheless, Ricardo did not stop worrying about the future, although there are increasing returns to industrial production due to technological advances, the demand for natural resources is also increasing. When the natural resources update speed does not match the speed of economic development, the use of a lot of natural resources would disadvantage other industries and decrease their returns by more than the increasing returns in the first industry. As a result, the rate of economic growth would continue to decline until it stagnates. (3) John Stuart Mill—Static economics In 1848, John Stuart Mill, a British economist, started from the hypothesis of diminishing marginal returns and emphasized the role of knowledge growth and technological progress on output. Mill considered there is an absolute limit to natural resources, but that social progress and technological innovation widen this limit. Mill did not approve of the human conquest of nature and high intensity of exploitation of natural resources. The “static economy” that he put forward has the nature of sustainable development. He believed that a static balance should be maintained between the population size and the amount of natural resources utilized, and that this balance should not be close to the limit level of natural resources, so as to prevent an unsustainable balance and cause the depletion of natural resources.

2.1.2 Neoclassical Economists’ Views of Resource Scarcity As time went by, the Industrial Revolution led to rapid development, and the position of capital in economic development gradually became prominent. Although the reserves of natural resources were limited, new natural resources were constantly being discovered, and there were always replacement reserves for the original natural

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resources; it seemed that natural resources were no longer central for economic development. Natural resources, such as land resources in a broad sense, seemed infinite. Therefore, the attitude of neoclassical economists toward resource scarcity was expressed by the following production function: Q = f (K , L)

(2.2)

Q represents output, K represents capital input, and L represents labor input. In the twentieth century, industrialized countries nearly overcame the fear that their economies would end up in a low-level equilibrium, but the crisis was not permanently averted. The world food and oil crises of 1972–1974 brought these fears back into the public eye and gave birth to the “new Malthusianism.” NeoMalthusianism has the same basic theory as Malthusianism, considering population growth to be faster than resource growth, and advocating population control through birth control [2]. Neoclassical economists argue that natural resources are relatively scarce rather than absolutely scarce. Neoclassical economics develops further on the basis of classical economics, proposing the marginal utility value theory and establishing consumer preference theory, and paying more attention to economic efficiency.

2.2 Theory of Natural Resource Value and Price Composition Natural resources consist of natural materials and the ecological environment. When the demand for natural resources is small, the stock of natural resources that can be exploited and utilized by people is not scarce. When the demand for these resources is large, they become scarce. The scarcity of natural resources manifests in three ways. First, rapid economic development exceeds the renewal rate of natural resources, which leads to over-utilization and exhaustion of natural resources. Second, there is degradation of natural resources. Third, the ecological environment is destroyed. Because natural resources are scarce, they can satisfy human desire and thus, they have value. Therefore, it is very important to reflect the scarcity of natural resources with an accurate price mechanism. This section mainly introduces the value theory and price structure of natural resources, which provides a theoretical basis for the pricing of natural resources in the supervision of natural resources.

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2.2.1 Theory of Natural Resource Value (1) Natural resource axiology based on labor theory of value The basic idea of the labor theory of value is that the time it takes to produce a good constitutes its value. Its representative figures mainly include William Pedi, Adam Smith, David Ricardo, and Karl Marx. Pedi first proposed that the value of a good was related to the time it took to produce it. Labor is the source of commodity value. Smith shared Pedi’s view that value was determined by wages, profits, and rents. Ricardo developed this theory, making a distinction between simple and complex labor. Marx’s labor theory of value was established on the basis of critically inheriting the labor theory of value of classical political economy. In Marx’s view, the undifferentiated labor in goods determines their value. At present, many scholars explain the value of natural resources based on the labor theory of value, including the stage theory and wealth theory of value [3]. (a) The stage theory Some scholars believe that the value of natural resources is not innate and will manifest only after social and economic development reaches a certain stage [4]. In the stage of abundant natural resources, natural resources can be recycled, and people do not need to input labor to reproduce the natural resources. At this stage, natural resources have no value. With economic development, all kinds of economic activities require the input of natural resources, the speed of human consumption of natural resources accelerates, and the speed of natural resource regeneration cannot keep up with the speed of human exploitation and utilization. To maintain stable economic development, people must reproduce natural resources through labor. At this stage, natural resources begin to have value, and their size is the socially necessary labor time in the reproduction process. (b) Wealth axiology Natural resources are a form of wealth, and wealth has value, and thus, natural resources have value. The wealth theory of value analyzes the value of natural resources from the perspective of their usefulness. The main points of wealth axiology are as follows. First, the wealth value of natural resources refers to the income that can be generated when natural resources are used for production. Meanwhile, when natural resources are directly exchanged, the wealth value is the basis of pricing; Second, with the development of an economy and society, natural resources and commodities are gradually formed, which cannot be separated from the development, utilization, management, and protection of people. The socially necessary labor time consumed in this process is called the profit and loss value of resources and commodities;

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Third, the benefit value of natural resources equals the difference between its wealth value and its profit and loss value, which reflects the “surplus value” created by resource developers. (2) Natural resource axiology based on utility axiology Western economics posits that the theory of natural resource value is developed from the utility value theory. Utility axiology holds that the purpose of human economic activities is to satisfy human desires. Utility measures the degree to which goods satisfy human desire, while value is a subjective evaluation of this degree. In addition, abundant resources make it easy to satisfy human desires. Only scarce resources can attract people’s attention and thus, have value. Therefore, the basic idea of utility axiology is that only scarce resources have value, and utility is the source of value. According to the above description of utility axiology, natural resources can be used for production as well as commodities to satisfy human desires. At the same time, the amount of natural resources is limited in a specific time and space. Due to the needs of economic development, the demand for natural resources is increasing, which leads to scarcity of natural resources. Therefore, the value theory of natural resources based on utility value theory can easily conclude that natural resources have value. However, from the above analysis, we should realize that the utility value theory has the following two problems: First, the quantity of value is difficult to determine. Value is determined by utility, which is subjective; it is individuals’ evaluation of the extent to which an object satisfies their desire, and thus, cannot be measured objectively and accurately. The utility theory evolved into the cardinal utility theory and ordinal utility theory. The ordinal utility theory emerged to avoid the measurement of utility. However, to know the value, utility must be evaluated. Second, utility axiology cannot solve the problem of long-term or intergenerational utilization of natural resources. Because the utility of future generations is not known in the present, the value of natural resources is measured based on the current generation. It is not reasonable to substitute the utility of the present for that of the future. In the economic accounting of value, if the contemporary utility is high, the value of natural resources will be overestimated, otherwise it will be underestimated. Therefore, although utility axiology can yield the conclusion that natural resources are valuable, it is not optimal to evaluate the value of natural resources on this basis. (3) The valuation of natural resources cannot depend entirely on the market Both the labor theory of value and the utility theory of value employ a reference value when studying the value of natural resources, but neither provides an accurate method for evaluating this value. In the philosophy of value, value belongs to the category of relation, which refers to the benefit relation that the object can meet the needs of the subject. The more the object can meet the needs of the subject, the greater its value. Among them, humans are the subject of value, and it is meaningless to discuss value separately

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from people. As long as the object can meet the needs of the subject, there is value. Natural resources have value because they satisfy human desires and have utility. From the perspective of economists, a resource can be effectively allocated only if it meets some conditions, such as clear property rights and perfect market competition. However, it is difficult for many natural resources to meet all conditions due to their own characteristics. It is hard for these natural resources to be allocated effectively through the market, which cannot reflect their intrinsic value correctly, resulting in market failure. Therefore, market forces cannot be solely relied on to determine the value of natural resources.

2.2.2 Price Composition of Natural Resources The value of natural resources is based on their prices. The price composition of natural resources refers to various factors that affect the pricing of natural resources [5]. (1) Property rights of natural resources The property rights of natural resources means that owners of natural resources have the right to possess, use, profit from, and dispose of their own natural resources according to the law. Therefore, natural resource property rights are a combination of various rights, rather than a single right. Ownership is the core, and the right to earnings is a way to realize the ownership of natural resources. The property rights of natural resources can be transferred in the market and form the price, which is called the property right price of natural resources. Natural resources themselves have not been developed by human labor, and the circulation of natural resource property rights can bring benefits to the owners of natural resources, which is the opportunity cost generated by the owners of natural resources giving up the use of their own natural resources. Thus, it also represents compensation to the owners of natural resources for the transfer of ownership. Natural resources are related to the national economy and are an indispensable part of economic development. Most natural resources are limited in quantity, and even if they can be recycled, the regeneration rate cannot keep pace with the demand for natural resources in economic and social development. For efficient use of natural resources, sustainable economic development, and ensuring benefits of natural resource ownership, it is necessary to charge fees to the users of natural resource exploitation, that is, the ownership price of natural resources. (2) Social production prices of natural resources In daily life, most natural resources can be used by people only through human cognition, exploration, development, and other processes. The social production price of natural resources has five components: recognition cost, exploration cost, development cost, production cost, and average profit.

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

First, the cost must be recognized. Only through human research can natural resources come into public domain and be utilized. People need not only understand the use of natural resources, but also study the exploration methods, how to develop the resources, and so on. Knowledge of a natural resource may take generations to acquire. In the social production price of natural resources, it is essential to recognize the cost, which is usually expressed as C1. After the understanding of natural resources, through the survey and exploration of natural resources, a distribution report of natural resources is created, which provides the basis for the final exploitation of resources. The cost formed in the course of exploration is called the exploration cost, expressed as C2, and the accounting valuation method is generally adopted. After the exploration, according to the distribution report of natural resources formed by the exploration and understanding of the mining difficulty, the corresponding labor and capital are invested. The labor and capital invested are called the development cost, which is represented by C3. After understanding the exploration and development, natural resources can be exploited. All costs incurred in the mining process, such as direct labor costs, manufacturing costs, and processing costs, are called production costs and represented by C4. Profit is the ultimate goal of the utilization of natural resources. In an economic society, all sectors compete with each other, and resources flow from low-profit sectors to high-profit sectors. As a result, the profit margins of the whole society tend to be the same, forming the average profit represented by C5. In summary, before natural resources can be used, they go through such processes as recognition, exploration, and exploitation, which integrate labor into natural resources and make them valuable. This value is expressed as the social production price in the composition of natural resource prices, as shown in Fig. 2.1. (3) Compensation prices for natural resources The natural resource compensation price refers to compensation for the interests of natural resource stakeholders. Its purpose is to maintain social fairness and achieve sustainable development of natural resources. This is because in an economic society, the behavior of an economic subject always has an impact on other economic subjects Fig. 2.1 Composition of social production prices of natural resources

2.3 Game Theory

19

without bearing the consequences of this part of the impact, and thus, it is necessary to give compensation in the economic sense. For example, mining mineral resources in a certain area will destroy the living environment of local residents, and thus, the miners should compensate the local residents whose interests are damaged. The impact on the use of natural resources not only affects people of the current generation, but also impacts future generations. The consumption of natural resources by current generations reduces the use of such resources by future generations. Therefore, the compensation price of natural resources should also include compensation for the loss of profits of future generations. The purpose of charging a compensation price for the utilization of natural resources is to solve two major problems. First, the excessive utilization of natural resources leads to the destruction of the ecological environment, and the excessive utilization of resources can be reduced through horizontal compensation. Second, in the case of scarce natural resources, the unreasonable use of natural resources by the current generation reduces opportunities for future generations to use them, and prevents waste of resources through vertical compensation. Thus, the natural resource compensation price is equal to the sum of the intergenerational compensation price and the intra-generational compensation price.

2.3 Game Theory Game theory is a discipline that studies how decision-makers choose their own strategies according to the strategies of the parties concerned. Game theory considers two types of games, dynamic and static, according to whether there is a sequence of actions. In the process of natural resource supervision, the utilization of natural resources by various social entities is just like a game. This section introduces different types of games to provide a theoretical basis for the architectural design of the natural resource regulatory system [6].

2.3.1 Static Game with Complete Information: Nash Equilibrium A static game with complete information is a game in which players make their own decisions at the same time without knowing the decisions of others under the condition of public information. Nash equilibrium is a solution to a static game with complete information. Nash equilibrium refers to the fact that when n players play a game, each player chooses the most advantageous strategy based on the given strategies of others. The set of strategies chosen by all players is called Nash equilibrium. The following are classic examples to deepen understanding of Nash equilibrium.

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

Fig. 2.2 Prisoner’s dilemma

prisonerB admit

deny

admit

-8 -8

0 -10

deny

-10

0

-1 -1

prisonerA

(1) Prisoner’s dilemma (see Fig. 2.2) One man was killed in his home, and property was stolen. During the investigation, the police found two suspects, A and B, and seized the stolen property from them. However, there was insufficient evidence to prove that they had committed the murder in the house. The suspects were tried separately. The police separately told each man, “We have solid evidence of stealing and you will be sentenced to 1 year in prison, but if you confess now, you will not be convicted of the crime. If you deny it and the other suspect confesses, you will face 10 years in prison. If you both confess, you will both get 8 years.” In this game, when prisoner B chooses to confess, prisoner A’s optimal choice is confession; when prisoner B chooses to deny the crime, prisoner A’s optimal choice is confession. Prisoner B’s choices are the same, and thus, Nash equilibrium is (admit, admit). This game is thus a conflict between individual rationality and collective rationality, because when both prisoners deny the crime, the utility is significantly higher than when they both confess, but neither suspect has an incentive to deny it. (2) Market entry obstruction (see Fig. 2.3) If there are monopolistic firms and potential entrants in the market, the monopolistic firms must obstruct the entry behavior of potential entrants if they want to maintain their position. In this game, monopoly firms have two strategies: acquiescence and struggle, and potential entrants also have two strategies: entry and non-entry. It is assumed that in the case of no potential entrant entering, the profit of a monopoly firm is 300; after the potential entrant enters, the profit of an oligarchic firm is 50 and the entry cost is 10. Figure 2.3 shows the payment situation of each policy combination. Fig. 2.3 Barriers to market entry

Monopoly vendor acquiescence enter

40

50

keep out

0

300

struggle -10

0

entrant 0

300

2.3 Game Theory

21

When given potential entrants enter, acquiescence is the optimal choice for monopoly firms, and when given potential entrants do not enter, any choice is optimal for monopoly firms. Similarly, when a given monopoly firm acquiesces, the optimal choice for potential entrants is to enter. When a given monopoly firm struggles, the optimal choice for potential entrants is not to enter. Therefore, in this game, there are two Nash equilibria (enter, acquiescence) and (not enter, struggle). The use of some natural resources with common nature can manifest as a prisoner’s dilemma. For example, if everyone is willing to control the amount of grazing on public grassland, then everyone can enjoy the grassland resources for a long time. The problem is, if someone else is going to herd more, and you are going to herd less, you are going to get less. If you herd a lot and someone else farms a little, you earn a bigger return. Thus, the optimal choice for everyone is to graze a lot, and this Nash equilibrium leads to the tragedy of the commons.

2.3.2 Dynamic Game with Complete Information: Sub-game Refining Nash Equilibrium A dynamic game with complete information refers to the case of information disclosure, in which the participants make decisions successively, and the person who makes the decision later can observe the decision information of the person who makes the decision earlier. There are three problems with Nash equilibrium introduced above. First, Nash equilibrium may not be unique in a game, and thus, we do not know exactly what happens. Second, in a static game, players do not need to consider the effect of their actions on others, while in a dynamic game, the person who makes the later decision will observe the person who makes the first decision, and thus, the person who makes the first needs to consider how their actions will affect the person who makes the later decision. Third, in a static game, both decision-makers choose strategies at the same time, and it is not necessary to consider how their behavior would affect others. Thus, there is a incredible threat in Nash equilibrium at this time, such as market obstruction. From the perspective of profit, when potential entrants choose to enter, monopoly firms choose acquiescence with the goal of maximizing profits. At this point, the struggle becomes very threatening. In other words, it would be implausible if a monopoly claimed to have blocked all potential entrants, but Nash equilibrium contains this threat, and thus, it becomes a Nash equilibrium.

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

2.3.3 Static Game with Incomplete Information: Bayesian Nash Equilibrium A static game with incomplete information is one in which both sides of the game act at the same time, and each player knows their own type, but might not know the type of others, and knows only the probability of each type occurring. Such incomplete information makes it difficult to analyze the game, because the players do not know who they are playing with, and there are no rules to define the game. Thus, Harsanyi proposed a method for analyzing an incomplete information game, that is, introducing a “third party,” a natural person. Natural persons determine the types of participants, and inform participants only of their own types and the probability distributions of other types of participants. Then, the incomplete information game can be analyzed. Based on this, Harsanyi proposed Bayesian equilibrium. Bayesian equilibrium means that each person maximizes their expected utility when given the probability distribution of their own type and other player types. One of the most common examples of Bayesian equilibrium in daily life is sealed bid bidding. When the government needs a contract for a project, applicants bid in the form of a sealed quotation. Bidders seal their bids in envelopes and hand them to the government, which selects the lowest bid. It became a game of chicken between different bidders. It is assumed that each bidder knows their own type (high and low cost of production) and the probability distribution of others’ types. At this point, each bidder faces two situations: first, the lower the price, the more likely the bidder is to win; Second, the lower the price, the lower the profits. In general, each bidder’s bid is higher than its own cost of production, which makes the Bayesian equilibrium bid higher than the average cost of production, and more the people who participate in the bidding, closer they get. Thus, it is profitable for the government to allow more companies to bid.

2.3.4 Dynamic Game with Incomplete Information: Refining Bayesian Equilibrium An incomplete information dynamic game means that the actions have a sequence, and each player knows the types of other players and their probability distribution. In the process of a dynamic game with incomplete information, players first establishes their preliminary judgment based on the information they know, and then gradually revise the judgment and make a decision as other players start to act. Refined Bayesian equilibrium is a combination of subgame refined Nash equilibrium and Bayesian equilibrium. The key point of refined Bayesian equilibrium is to modify subjective judgment according to the behavior of others and choose their own actions. Refined Bayesian equilibrium consists of the decisions and beliefs of all participants. First, everyone’s decisions are optimal when beliefs about other

2.4 Efficient Allocation of Natural Resources

23

people’s types are determined. Second, each person’s beliefs about other people’s types are formed from observed behavior according to Bayes’ law. In the previous example of market entry obstruction, the monopolist may be lowcost or high-cost, which is unknown to potential entrants. In the dynamic game, the monopoly firm sets the price first. Let P be the price, and P contains the cost information of the monopoly firm. Because different cost functions have different optimal prices, it is assumed that the price P* can be profitable only when the monopoly manufacturer is low cost. Then, the refined Bayesian equilibrium is as follows: when the potential entrants observe the monopoly manufacturer’s price P*, they infer that the monopoly manufacturer is a low-cost manufacturer and choose not to enter. On the contrary, it is speculated that high-cost manufacturers choose to enter. This is known as the monopoly price fixing model.

2.4 Efficient Allocation of Natural Resources Markets are often seen as a place to allocate resources efficiently, but they are not a panacea. In reality, for various reasons, it is difficult to achieve effective allocation of natural resources. For example, the use right and ownership of natural resources belong to different individuals or groups, and no one is willing to protect them, which harms social interests. Some natural resources are monopolized, and normal competition between peers is absent, resulting in low efficiency and other phenomena. This section analyzes the characteristics of natural resources and the resulting market failure from the perspective of resource allocation efficiency, so as to provide a perspective for the improvement of natural resource regulation.

2.4.1 Static Efficiency of Resource Configuration (1) Welfare economics Welfare economics, first proposed by Pigou, is a subject that analyzes economic welfare. Welfare economics is the study of the optimal allocation of scarce resources and income to enhance the economic welfare of a country. The more equal the distribution, the greater the social welfare, with maximum efficiency as its core concept. Welfare refers to the utility and satisfaction obtained by individuals. In economics, we study welfare only in economic life, that is, welfare that can be measured in monetary terms. Economic welfare is determined by national income and its distribution. In Pigou’s welfare economics, welfare represents the psychological state of individual satisfaction and is usually measured in terms of utility. Utility is measured by the amount of money a person is willing to pay for a certain satisfaction. Thus, the study of social and economic welfare can be regarded as the study of national

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

income. Regarding the relationship between the two, Pigou believed that economic welfare could be related to money through the intermediary of utility, while national income was measured by money, and thus, the two concepts were equivalent. To compare the size of welfare, Pigou proposed the cardinal utility theory, by which utility can be expressed as a cardinal number. Based on this theory, Pigou put forward the basic hypothesis of welfare economics: the higher the national income, the more evenly distributed it is, and the greater the social and economic welfare. Pigou discussed two issues in his research on national income. The first issue concerned the relationship between national income and economic welfare. The higher the national income, the greater the economic welfare if purchasing power remains unchanged. The second issue concerns the relationship between national income distribution and economic welfare. When national income remains constant, the smaller the income gap between rich and poor, the greater the economic welfare. This is due to diminishing marginal utility, where income for the poor is much smaller than that for the rich, but utility increases more for each additional unit of income the poor receive. As time went by, after the economic crisis of 1929–1933, many economists began to put forward their own ideas under the new economic background. Pigou’s welfare economics was gradually improved and the new welfare economics was formed. New welfare economics replaces the cardinal utility theory with the ordinal utility theory and establishes the social welfare function. According to the ordinal utility theory, utility is a psychological phenomenon that cannot be measured by specific values, but can only be compared in order. As shown in Fig. 2.4, the higher the indifference curve, the greater the utility value. The social welfare function is intended to illustrate what people want and what social welfare consists of. In this section, we discuss a common social welfare function, that is, social welfare is the sum of individual welfare. Suppose there are n people in the society; then the social welfare function is W = f (U1 , U2 , . . . , Un )

Fig. 2.4 Indifference curve

(2.3)

Y

0

X

2.4 Efficient Allocation of Natural Resources

25

The same social welfare level can be obtained according to different utility combinations, thus forming an equal welfare curve. Many natural resources, even renewable natural resources, are limited due to economic development being faster than the speed of natural resource renewal or human unreasonable use, and it is possible some natural resources would decline to zero irreversibly. In the context of limited natural resources, maximizing social welfare requires consideration of two issues: the allocation of scarce natural resources among different uses and the allocation at different points in time. Only by achieving intergenerational efficiency of natural resource allocation can social welfare be maximized. (2) Static efficiency standards for resource allocation Although the evaluation of social welfare needs to consider both economic efficiency and resource allocation, new welfare economics involves only the study of economic efficiency, and new welfare economics considers that welfare economics includes only the content of economic efficiency. Economic efficiency refers to the Pareto optimal allocation of resources in the social economy. Pareto optimality includes production optimality, consumption optimality, and production and consumption optimality, and reflects the idea that resources are reallocated in any way that does not make one person’s utility increase and the others’ stay the same. When the social economy is Pareto optimal, there is no chance of Pareto improvement in the social economy at this time. For the allocation of natural resources, economic efficiency is also very important, because natural resources are limited yet they may provide a range of beneficial services. For example, forest resources are used for water and soil conservation and air purification, and mineral resources are used for various types of industrial production. The allocation of resources involves the production of different combinations of commodities, the different combinations of production factors used to produce a commodity, and the distribution of commodities. Resource configuration can be divided into static configuration and intergenerational configuration. Static configuration refers to resource configuration at a certain time point, and intergenerational configuration refers to resource configuration at different time points. However, the good or bad of resource allocation is measured by the allocative efficiency, and its standard is Pareto optimality; that is, no matter what way resources are reconfigured, some consumers’ welfare cannot be bigger, while the others’ welfare remains unchanged [7]. (a) Consumption efficiency conditions An economic system can be simplified into two sectors: production and consumption sectors. Consumption efficiency maximization refers to the optimal allocation of two products with a given number between two consumers, which is optimal if they can each achieve maximum utility.

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

Suppose there are only two people in the economic system, A and B, who consume X and Y, and the production of X and Y requires K and L. The two elements are available in fixed quantities. Additionally, there are no externalities in production and consumption. Let U represent the total utility of the individual, and utility is represented by the indifference curve I, which depends only on the type and quantity of goods consumed by the individual. Z is the maximum value that individuals can consume, Px and Py represent the prices of goods X and Y respectively; the utility function of A and B is expressed as U a = U a (X a , Ya )

(2.4)

U b = U b (X b , Yb )

(2.5)

Z = Px X + Py Y

(2.6)

As shown in Fig. 2.5, when the indifference curve I1 intersects the budget constraint line, there is an indifference curve representing higher utility within the budget range. When the indifference curve is located at the position of I3 , there is no intersection with the budget constraint line, and there is not enough budget to satisfy any combination of goods consumption on the indifference curve. Only when the indifference curve is located at the position of I2 , which is tangential to the budget constraint line, the consumption combination at the tangent point can maximize consumer utility, and thus, consumption efficiency must meet the following requirements: U Xa U Xb PX = a = UY PY UYb

Fig. 2.5 Maximization of consumer utility under budget constraints

(2.7)

Y

I3 Y0

I2

I1 0

X0

X

2.4 Efficient Allocation of Natural Resources

27

At the consumption efficiency point, the marginal utility ratio of the two goods of consumers A and B is the same, and the marginal utility ratio of the two goods is the slope of the indifference curve, namely, the marginal substitution rate. It refers to the quantity of a good to be given up in order to maintain the same utility when a consumer adds a unit of a good. If one unit of good X (∆X) is taken from the consumer, the quantity of good Y must be increased to maintain the same utility. Assuming that the quantity of Y needed to be increased to maintain constant utility ∆Y represents the ratio of consumers willing to substitute Y for X. If ∆X is ∆Y, then ∆X ∆Y ∆X namely UUYX

is small, so that ∂U ∂X ∂U ∂Y

are close to the slope of indifference curve, it can be transformed

into , (see Fig. 2.6). When the price or income level changes, the budget constraint line also changes, and consumers adjust their consumption behavior accordingly. For different income and commodity price combinations, there is a commodity mix, which becomes the optimal choice for consumers. Then, how does the consumer’s optimal choice change when prices and incomes change? The price of good X decreases from PX1 to PX3 , so that the budget constraint line rotates to the upper right. When X is a normal good, the consumption of X in the optimal combination increases as the price of X decreases (see Fig. 2.7). Fig. 2.6 Marginal replacement rate

Y

Z/PY ∆Y/∆X Marginal replacement rate ∆Y

∆X

0

Fig. 2.7 Influence of price change of commodity X on optimal choice of consumers

X

Z/PX

Y Z/PY

I1 I2

I3

Z/P1X

Z/P2X

Z/P3X

X

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

Fig. 2.8 Influence of income Z change on consumers’ optimal choice

Y Z3/PY Z2/PY

I2

I3

I1

Z1/PY

0 Z1/PX Z2/PX Z3/PX

X

Income increases from Z 1 to Z 3 , and thus, the budget constraint line shifts to the upper right (see Fig. 2.8). When X and Y are both normal goods, the quantity of consumption of X and Y increases [8]. (b) Efficiency conditions of production Production efficiency refers to the optimal allocation of two established production factors in the production of two kinds of products, which is optimal if the output of each factor can be maximized. The output of a product depends on the input of factors of production:   X = X K X, LX

(2.8)

  Y = Y K Y , LY

(2.9)

I X and IY represent the equal output lines of the two commodities. The quantity of commodity X and Y produced by the enterprise is limited by the quantity of available K and L, as shown in Fig. 2.9. Productivity means that the marginal output ratio (equal slope of the output curve) for different inputs is the same. As shown in Fig. 2.10, if the equal output curves of two commodities intersect at point A, the slope of the equal output curves of the two commodities is different, which does not meet the production efficiency condition. If the production point moves from A to B, then for good X, the quantity remains the same, and for good Y, the quantity is on a higher equiproduction curve, and the quantity increases. Moving from points A to B represents a process of Pareto improvement, with no room for Pareto improvement at point B. At this point, the marginal output ratio of input factors of different commodities is the same, and the production efficiency is

2.4 Efficient Allocation of Natural Resources Fig. 2.9 Edgeworth box diagram

29 K I

OY

I3X

2

q'

X

I1X

I3Y

q

I2Y

I1Y

OX

Fig. 2.10 Production efficiency conditions

K

L

1 A IX

OY

I3X

I2X

B I3Y

OX

M PLX M PLY PL = = X PK M PK M PKY

I1Y

I2Y L

(2.10)

(c) Consumption and productivity conditions Consumption and production efficiency refer to the combination of two kinds of products with a given quantity, which satisfy both consumption efficiency condition and production efficiency condition. Assuming that the indifference curve is fixed to the production possibility curve, in the Edgeworth box plot, qq, is the production contract curve. On this line, each point is the optimal production state of the combination of X and Y goods. Specifically, the dot on qq, means the optimal output after optimal allocation of K and L. According to this, the production possibility curve is obtained: on the coordinate axis with X commodity quantity as the abscissa and Y commodity quantity as the ordinate, the X output and Y output of each point on the production contract line qq, correspond to the new coordinate axis to obtain the production possibility curve PP, (see Fig. 2.11). In Fig. 2.12, the PP, curve divides the coordinate axis into three parts: the PP, , the curve itself, and the lower left and upper right regions. In the figure, the product production in the lower left part of the PP, curve is inefficient, because given the output of X, more Y can always be produced, while given the output of Y, more X can always be produced; The region on the upper right of the curve PP, is the

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

Fig. 2.11 Production possibility curve

Y production possibility curve

P

0

X

P,

Fig. 2.12 Social efficiency conditions

Y

I

P B production possibility curve

0

P,

X

production impossible region, that is, the product portfolio that cannot be produced under the condition of the input of a certain amount of production factors. The point at which consumption and production maximizes efficiency simultaneously is the point at which the indifference curve is tangential to the production possibility curve. At point B, the consumption and productivity of the whole society reaches its highest level. By the production efficiency conditions M PLX M PLY PL = = X Y P M PK M PK K

(2.10)

M PKY M PLY = X M PK M PLX

(2.11)

we obtain

Thus, the consumption and productivity conditions are

2.4 Efficient Allocation of Natural Resources

UX M PKY M PLY = = X UY M PK M PLX

31

(2.12)

In other words, the marginal replacement rate of the product equals the marginal conversion rate. Based on the above analysis, the following conditions must be met for a valid static configuration. • • • • • • •

There is a market for the exchange of goods or services. All markets are perfectly competitive. All traders are fully informed. Property rights are fully established. There are no externalities. There are no public goods and no resources of a public nature. Long-term average cost is non-diminishing.

2.4.2 Intergenerational Efficiency of Resource Allocation The allocation of natural resources is not only about the allocation of a certain point in time, but also about a lot of intertemporal allocation. This is because when a general decision is made, it affects not only the present but also future production and consumption. The conditions for the efficiency of static resource allocation have been described in Sect. 2.3.1. To derive the conditions for intergenerational resource allocation, it is assumed that the current utility is the sum of the utility of all people currently alive, and the future utility is the sum of the utility of future generations. Intergenerational efficiency of resource allocation needs to meet two conditions. These two conditions assume that natural resources will grow naturally. For example, forest resources and coal resources grow slowly over time. Therefore, if a natural resource is not utilized at the current point in time, there will be more natural resources in the future, and the benefits brought by using it at the future point may be greater than the losses caused by giving up the use of the natural resource at the current point in time. Assuming that there are M sectors in the economic system, the actual rate of return brought by a natural resource as a factor of production is δ, δi (i = 1, 2, …, M) represents the actual rate of return of this natural resource in sector i. (1) First generation efficiency conditions The real rate of return for all resources in different sectors is the same at any point in time. In other words, for all i (i = 1, 2, …, M), δi = δ. If the real rate of return of a resource is not equal in different departments, then it is possible for the resource to flow from a low-rate department to a high-rate department. Because of the law of diminishing marginal returns, low returns due to resource flows rise faster than high returns fall, and thus, total returns increase. Pareto optimality is achieved when all sectors have the same rate of return and there is no room for increasing the rate of return.

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

Fig. 2.13 Effective intergenerational resource allocation

C1 a C1*

b Indifference curve Production possibility curve

0

C0*

C0

(2) Second generation efficiency conditions Assuming that one unit consumed in the current period equals (1 + r) units consumed in the next period, the two consumption patterns have the same effect on welfare, where r is the consumption discount rate. Putting these resources into production while postponing the first phase of consumption yields (1 + δ) goods for consumption. The second condition for intergenerational allocative efficiency of resources is that r equals the real rate of return (δ). As shown in Fig. 2.13, the intergenerational indifference curve represents the amount of utility generated by all the different combinations of consumption in the current period C 0 and the next period C 1 . The indifference curve on the upper right shows greater utility. The slope of the intergenerational indifference curve is—(1 + r), and as we move to the right of the indifference curve, the slope becomes smaller, that is, r decreases. The intergenerational production possibility boundary refers to the commodity combination that a certain amount of resources can be produced for consumption in the current period C 0 and the next period C 1 , and its slope is—(1 + δ). It moves to the right along the intergenerational production possibility boundary and the slope gradually increases, that is, δ gradually increases. Point b in Fig. 2.13 indicates that intergenerational resource allocation is effective. At this point, the intergenerational indifference curve is tangential to the intergenerational production possibility curve (r = δ), and the upper right intergenerational indifference curve can be reached at this point, indicating that the utility of intergenerational consumption is maximized. If the condition of tangency is not met, the product mix of C 0 and C 1 moves along the intergenerational production possibility curve. For example, the indifference curve passing through point a has lower utility than the indifference curve passing through point b shown in Fig. 2.13. If the consumption can be increased to C0∗ in the current period and reduced to C1∗ in the next period, the consumption combination (C0∗ , C1∗ ) achieves maximum utility under the same intergenerational production probability curve.

2.4 Efficient Allocation of Natural Resources

33

2.4.3 Market Failure Market failure refers to the result in which market equilibrium cannot make the allocation of resources reach the Pareto optimal state for some reason. Market failure usually corresponds to market efficiency. Effective market allocation of resources needs to meet certain conditions, if not, market failure arises. Some of the characteristics of natural resources do not meet the conditions for efficient allocation, which leads to market failure. The common market failures include externalities, public goods, information asymmetry, and monopoly. The nature of public goods of natural resources and their externalities make it impossible to meet the conditions of static allocation efficiency, so that effective allocation cannot be carried out at a certain point. The uncertainty caused by the asymmetry of natural resource information causes the conditions of intergenerational allocation efficiency to be unsatisfied, and thus, it cannot be effectively allocated at different time points. (1) Externalities Externalities mean that the welfare of a market economy subject is affected not only by its own behavior, but also by the activities of other economic subjects. Externalities can be positive or negative. When the behavior of an economic individual brings losses to others, and the individual producing such negative externalities does not bear the cost, there is a negative externality. When the behavior of an economic individual brings benefits to others, and the individual generating such positive externalities cannot be compensated by the beneficiaries, there is a positive externality. External diseconomy is the externalization of production and consumption costs, which leads to the production and consumption units to pursue the maximization of profit and output, while allowing the occurrence of negative externalities, thereby making the negative externalities increasingly influential. Therefore, the government pays more attention to negative externalities and hopes to control them through intervention. It is difficult to avoid externalities of natural resources for two main reasons. First, there are no property rights for many natural resources and they have the nature of public goods. Everyone can become a free rider. Therefore, regardless of the situation of natural resources, economic individuals make use of natural resources as much as possible, resulting in more serious negative externalities; Second, consumption of natural resources in the current period may affect other areas at the same time and other individuals in the next period and beyond. In terms of place, wasting natural resources in even a small area affects many regions and even the whole world. In terms of time, the overuse of natural resources in modern times may exhaust resources, affecting the utilization of resources by future generations. The temporal and spatial difference of this negative effect causes the occurrence of benefits without the burden of costs, which makes economic subjects abuse resources and transfer the resulting external costs to the whole society or the burden of future generations [9]. When there are externalities, obviously the efficiency conditions of competitive markets do not exist. This is because the effective production condition is

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

M PLX M PLY = X M PK M PKY

(2.10)

When externalities exist, let P M PK represent the private marginal output of capital, O M PK the external marginal output of capital, and S M PK the social marginal output of capital. The relationship between the three marginal outputs can be expressed as P M PK + O M PK = S M PK

(2.13)

To make the production of the whole society meet the conditions of production efficiency, the following formula must be satisfied: P M PLX P M PLY PL = = X PK P M PK P M PKY

(2.14)

Obviously, when externalities exist, social production efficiency cannot be satisfied, and social production is inefficient. (2) Public goods Public goods refer to items that belong to a certain person without fixed right of use and can be used jointly by members of society. Public goods are indivisible and non-exclusive. Indivisibility means that when one person consumes something, other people do not consume less. Non-exclusivity means that people can share a good without depriving others of the right to consume because of one person’s consumption. Many natural resources are public goods, among them forest resources, which provide oxygen, purify air, and preserve water and soil for use by humankind. When one person enjoys the benefits of forest resources, others cannot be excluded from enjoying them at the same time. The non-exclusivity of public goods makes no one willing to consume no matter how low the price. If a commodity cannot be priced, it is not available in the market. Therefore, we conclude that a pure market economy cannot provide non-exclusive public goods. Obviously, when goods are public goods, markets are inefficient. For consumers a and b, when both X and Y are private goods, the consumption efficiency conditions are U Xa U Xb PX = = a b UY PY UY

(2.7)

First, if X and Y are both private goods, then when one person consumes X, others cannot consume X, and the social willingness to pay for unit X is equal to the private willingness to pay. When Y is a private good and X is a public good, when one person consumes X, others can also consume X. At this point, the social willingness to pay for unit X is no longer equal to the private willingness to pay for it, but is equal

2.4 Efficient Allocation of Natural Resources

35

to the sum of all the private willingness to pay. Therefore, the economic efficiency condition at this time is transformed into  UX UY

=

PX PY

(2.15)

Therefore, if there is more than one consumer in the market, for a certain consumer, their willingness to pay for unit X measured by Y no longer equals the ratio of the price of X and Y, making the consumption of the society inefficient. (3) Information asymmetry Information asymmetry refers to the fact that the parties to a transaction have different information, and some members have information that other members do not, resulting in information asymmetry. According to the Pareto optimality principle, when all consumers face the same price of goods, utility maximization makes the marginal utility ratio of all consumers the same. When all producers face the same factor price, profit maximization results in the same marginal output ratio for all producers. Without this equilibrium, it is difficult to achieve Pareto optimality. In the case of information asymmetry, consumers and producers face an incomplete market, and those with less information face higher prices. It is concluded that when the information cost is greater than zero, the information is asymmetric and the market is inefficient. (4) Monopoly In addition to the abovementioned three reasons for market failure, there is another important reason: monopoly. In a perfectly competitive market, the price is determined by supply and demand, and no one can influence the price alone, whereas in an imperfectly competitive market, there are economic agents who can influence the price of a commodity. There are two main reasons for a monopoly: one is government regulation and concession and the other is the characteristics of the industry. The monopoly caused by the characteristics of the industry is called a natural monopoly [10]. The exploitation of natural resources has the nature of a natural monopoly. A natural monopoly refers to the fact that the economy of scale of production of an industry is particularly significant, and the average cost in the long run decreases with the increase of output; alternatively, even if the economies of scale are not significant, the market demand is small, so that the amount of market demand remains within the range of the decline in the average cost in the long run. For monopoly firms, the demand curve is the average yield curve, and the marginal yield curve is below the average yield curve. When the marginal revenue equals the marginal cost, the monopoly firm earns maximum profit. As Fig. 2.14 shows, the horizontal axis represents output and the vertical axis represents price. LMC is the long-term marginal cost curve, LAC is the long-term average cost curve. When the long-term marginal cost curve intersects the marginal revenue curve, the monopoly firm maximizes its profit, at which point the price is Pa and the output is Qa . However,

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

Fig. 2.14 Natural monopoly pricing

LMC

P

LAC

Pa Pb D

MR Qa

Qb

Q

to meet the effective condition of resource allocation, the product should be priced as Pb and the output as Qb , when the price is lower and the output is higher. Thus, in the case of a monopoly, the market is inefficient.

2.5 Theory of the Circular Economy China is a country with a large population, huge consumption of natural resources, and high import dependence, which represent a potential hazard for rapid economic development. At the same time, as a developing country in the process of industrialization, the contradiction between China’s natural resources and economic development will always exist and even expand. Therefore, the Chinese government has adopted sustainable development as a core principle and is trying to find a new path of industrialization, proposing the economic growth model of the circular economy. The circular economy, as a new productive force, opens up a new way for new industrialization. This section systematically introduces circular economy based on the connotation, characteristics, and evaluation index system of the circular economy, and provides measurement standards for the ultimate goal of natural resource supervision.

2.5.1 Connotation of the Circular Economy At present, there is no strict definition of circular economics in the world. Generally, the circular economy is a material closed-loop fluid economy in essence, which is characterized by material closed-loop circulation and focuses on the cyclic use and saving of resources to maximize the utilization efficiency of resources [11]. At present, due to rapid economic development, the intensity of the utilization of natural resources is increasing, often in the form of extensive use of resources, resulting in a shortage or even exhaustion of many natural resources. The new

2.5 Theory of the Circular Economy

37

development model of the circular economy makes repeated use of resources and fundamentally solves the conflict between scarce natural resources and economic development. The connotation of circular economics mainly includes three aspects: new development idea, new mode of production, and new industrial form. (1) New development philosophy The ultimate purpose of the circular economy is sustainable economic development. In the process of developing the circular economy, protecting the environment and saving resources should be deeply engraved in the hearts of every social citizen. We should prioritize “development” and solve the contradiction between economic development and resources with the idea of development. (2) New modes of production Compared with the production mode of the traditional economy, the most fundamental change of the production mode of the circular economy lies in the linear nature of the traditional economic growth mode. After obtaining natural resources from the Earth and producing products, the waste generated in the process is discharged to the Earth in the form of “resource–product–waste. As more resources are extracted, more products are produced and more profits are generated, allowing the economy to grow at the expense of the environment. The circular economy emphasizes the use of all available resources as much as possible, in the form of “resource–product–renewable resources.” This is a fundamental change to the traditional extensive mode of production and reflects the concept of sustainable development. (3) New industrial forms There is no economy without industry. If the circular economy is not implemented in industry, it would be difficult for the circular economy to develop in the long run. The core of the circular economy is turning waste into value, and thus, the circular economy can provide a guarantee for sustainable development by developing waste recycling and environmental protection industries. In this sense, the circular economy is the way to realize the sustainable development of economy and society [12].

2.5.2 Characteristics of the Circular Economy (1) Weak stress of ecological environment The traditional economic development model places a lot of pressure on the ecological environment, consuming a lot of natural resources and discharging waste. Although the Chinese economy has been developing rapidly, due to ecological destruction and resource depletion, this pace of growth cannot last long. The development model of the circular economy focuses on the recycling of natural resources. The economy is allowed to develop under the premise of saving resources and protecting ecology.

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(2) Multiple circularity of material flow The production mode of the circular economy is “resource–production–renewable resources.” In the production process of the circular economy, resources are fully utilized as much as possible, and only a little or even no waste is produced. It is characterized by less but full use of natural resources and waste discharge, so as to balance economic development and resource utilization [13]. (3) High standards of industry conduct The circular economy requires that the behavior from natural resource acquisition, production, sale, and consumption must conform to the premise of ecological friendliness. Therefore, the norms of industrial behavior are no longer based solely on economic standards, but also on ecological standards and other aspects to ensure the realization of high standards of industrial behavior. (4) Strong sustainability of industrial development The circular economy emphasizes reduction of the consumption of unit output. Today, the circular economy industry is more competitive than the traditional economy industry when the price of factors of production keeps rising. At the same time, the sustainable development of the circular economy industry can be realized by combining production technology with resource-saving technology [14]. (5) Unity of ecological, economic, and social interests The circular economy that develops on the basis of natural ecological law gradually transforms the extensive traditional economy to an intensive economy. Obtaining the same amount of resources results in more products being produced, utility can be maximized, the least waste can be discharged, and the ecological, economic, and social interests can be coordinated and unified. (6) Participation of the whole society The circular economy is advanced, integrating the economy, technology, and society. To develop the circular economy in the long run, scientific and strict management are indispensable. Therefore, an operational process needs to be developed. The circular economy needs not only the efforts of enterprises, but also the cooperation of consumers and the support of the government. Only by the joint efforts of all people can the sustainable development of the circular economy be ensured and the overall benefits for society maximized.

2.5.3 Evaluation Index System of the Circular Economy The evaluation index system of the circular economy refers to the collection of indexes reflecting different aspects and levels of the development process of the circular economy. The establishment of the system has the following two main functions: First, using an evaluation system to evaluate the development level of the

2.5 Theory of the Circular Economy

39

circular economy in a certain region, it reveals the problems in the development of the region to provide a basis for management decision-making; second, compared with international and regional circular economic development, the evaluation index identifies the gap and analyzes the reasons. In China, the selection of circular economy evaluation indicators mainly follows three principles: reduction, reuse, and resource recovery. The principle of reduction refers to improving the utilization efficiency of resources, reducing resources used for survival and consumption, and reducing emissions. The principle of reuse refers to the reuse of one or more resources to prevent them from becoming waste too early. The principle of resource recovery refers to recycling as much as possible and turning waste into new resources. Therefore, the evaluation indexes used in China are mainly divided into resource utilization indexes and waste resource utilization indexes. (1) Evaluation indicators of resource utilization (a) Resource productivity: This refers to the output per unit of resource input. Improving resource productivity can make the same resource input amount and create higher output. (b) Total resource consumption and per capita resource consumption: This refers to the sum of all consumption of a certain resource, and the per capita resource consumption equals the ratio of total resource consumption to total number of consumers. (c) Resource consumption intensity: This refers to resource consumption per unit of output, which is reciprocal with resource productivity. Most of the time, output is expressed in terms of GDP. (d) Resource reuse efficiency: This refers to the proportion of reused resources to directly invested resources. (e) Average service cycle of material: This is defined as the number of years it takes for resources to move from input to participation in production and reproduction to waste discharge. (2) Waste resource recovery index (a) Waste recycling utilization rate: This can be divided into the waste recovery rate and the waste recycling resource utilization rate. The former refers to the proportion of recycled waste in waste, showing the efficiency of recycling waste. The latter refers to the proportion of waste resource utilization in the recycling of waste. (b) Resource recycling utilization rate: This equals the ratio of waste material resource utilization and direct material input. Based on existing studies, the following Figs. 2.15, 2.16, and 2.15 summarizes the evaluation index system of the circular economy [15].

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

Energy consumption per unit of GDP

Clean energy ratio

Water consumption per unit of GDP

Material consumption per unit of GDP

Resource efficiency indicators Utilization rate of water for irrigation

Comprehensive utilization rate of livestock and poultry manure

Comprehensive utilization rate of straw

Urban garbage collection rate by classification

Fig. 2.15 Resource efficiency indicators

2.6 Summary This chapter introduces the important economic theories of natural resource regulation, including natural resource scarcity theory, natural resource price and value theory, game theory, natural resource allocation theory, and circular economy theory. The theory of natural resource scarcity includes the resource scarcity view of classical economics and neoclassical economics, which lays the economic theoretical foundation for the study of natural resource regulation. According to the theory of price and value of natural resources, natural resources have market value, but it cannot be effectively allocated through the market because of the characteristics of natural resources and market failure. Game theory can be applied to analyze the interactions between the main bodies in the process of natural resource supervision. The theory of natural resource allocation explains the efficiency conditions of static allocation and intergenerational allocation, analyzes the reasons for the failure of various market conditions, and provides a perspective for the improvement of natural resource regulation. The goal of natural resource supervision is to achieve the

2.6 Summary

41 Use intensity of chemical fertilizer and pesticide

COD emission intensity per unit of GDP

SO2 emission intensity per unit of GDP

Environmental impact index

Comprehensive utilization rate of industrial solid waste

Urban gas rate

Rate of centralized treatment of urban domestic sewage Rate of harmless disposal of urban household garbage

Urban household garbage resource utilization rate

Fig. 2.16 Environmental impact indicators

recycling of resources. The theory of the circular economy summarizes the measurement standards of natural resource supervision from connotation, characteristics, and evaluation indexes.

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2 Theoretical Basis for Analysis of Natural Resource Supervision Systems

Urban per capita public green space

Forest coverage rate

Annual PER capita GDP

The average annual disposable income of urban residents

Annual per capita income of peasants Indicators of social progress

Natural population growth rate

Average life span

per capita living floor area

Urban unemployment rate

Engel coefficient

Fig. 2.17 Indicators of social progress

References 1. Oberly JW. Land, population, prices, and the regulation of natural resources. The Other Side of The Frontier: Economic Explorations into Native American History, 2018: 190. 2. Barbier EB. The evolution of economic views on natural resource scarcity. Review of Environmental Economics and Policy, 2021, 15(1): 24–44. 3. Zhu J. Values of the times of Marx’s theory of science and technology progress and utilization of natural resources. Meteorological & Environmental Research, 2020, 11(4). 4. Pearce DW, Turner RK. Economics of natural resources and the environment. Johns Hopkins University Press, 1990. 5. Hackett S, Dissanayake STM. Environmental and natural resources economics: Theory, policy, and the sustainable society. Routledge, 2014.

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6. Marden JR, Shamma JS. Game theory and control. Annual Review of Control, Robotics, and Autonomous Systems, 2018, 1: 105–134. 7. Rees J. Natural resources: Allocation, economics and policy. Routledge, 2017. 8. Svensson LEO. Comment on RM Solow, “On the Intergenerational Allocation of Natural Resources.” The Scandinavian Journal of Economics, 1986, 88(1): 153–155. 9. Akhundjanov SB, Muñoz-García F. Transboundary natural resources, externalities, and firm preferences for regulation. Environmental and Resource Economics, 2019, 73(1): 333–352. 10. Kula E. Economics of natural resources, the environment and policies. Springer Science & Business Media, 2012. 11. Kirchherr J, Reike D, Hekkert M. Conceptualizing the circular economy: An analysis of 114 definitions. Resources, Conservation and Recycling, 2017, 127: 221–232. 12. Rajput S, Singh SP. Connecting circular economy and industry 4.0. International Journal of Information Management, 2019, 49: 98–113. 13. Tomislav K. The concept of sustainable development: From its beginning to the contemporary issues. Zagreb International Review of Economics & Business, 2018, 21(1): 67–94. 14. Morseletto P. Targets for a circular economy. Resources, Conservation and Recycling, 2020, 153: 104553. 15. Moraga G, Huysveld S, Mathieux F, Blengini GA, Alaerts L, Van Acker K, De Meester S, Dewulf J. Circular economy indicators: What do they measure?. Resources, Conservation and Recycling, 2019, 146: 452–461.

Chapter 3

Historical Changes in China’s Natural Resource Regulatory System

The natural resource regulatory system of China has gradually improved with the continuous improvement of the country’s economic development level and the continuous improvement of the legal system. The regulatory concept is the core guiding concept of natural resource regulation, which is constantly changing and has been gradually enriched with the development of China’s economy and society. The regulatory body is the main body that formulates and implements regulatory policies, and is generally assumed to be government organs at all levels. The regulatory basis is the concretization and regularization of the regulatory concept, reflected in constantly improving laws, regulations, and government documents, etc. The three together (regulatory concept, body, and basis) constitute China’s natural resource regulatory system. This chapter mainly focuses on the three aspects of the natural resource regulatory system, discusses the historical changes of the natural resource regulatory system in China since the founding of the People’s Republic of China, and analyzes the basis for its evolution.

3.1 Historical Changes in the Philosophy of Natural Resource Regulation Regulatory philosophy is the top logic of the natural resource regulatory system, and laws and policies related to natural resource regulation are all formulated under the guidance of regulatory philosophy. China’s natural resource regulation philosophy has been enriched through historical changes, from “rough regulation” in the early stage of the founding of the People’s Republic of China to “rational development and utilization” of natural resources after the reform and opening up, then moving to “sustainable development” as the goal. The current concept of natural resource regulation in China takes the construction of “ecological civilization” as the core and the realization of sustainable development and green development as the ultimate goal; it emphasizes the important position of the legal system and market mechanism © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 T. Ding and M. Song, Natural Resource Regulation in China, Contributions to Public Administration and Public Policy, https://doi.org/10.1007/978-981-99-5593-0_3

45

46

3 Historical Changes in China’s Natural Resource Regulatory System

in the natural resource regulatory system, and constantly explores innovation of the regulation mechanism [1].

3.1.1 The Regulatory Philosophy of Each Period The national economic and social development plan is a programmatic document and basis for the Chinese government to formulate policies, and its requirements on natural resource development, utilization, and regulation fully reflect the historical changes in the philosophy of natural resource regulation in China. In the national economic and social development plans before 1980, no content related to the regulation of natural resources was covered. And after 1980, the requirements for resource regulation can be see in Table 3.1. The course of change in China’s natural resource regulatory philosophy can be roughly divided into the following four stages. (1) Before the reform and opening up: rough regulation In the early years of the founding of the People’s Republic of China, China did not regulate natural resources at all; from 1953 to 1975, industrialization, mainly heavy industry, was the core of China’s economic development. Given that the level of economic development was measured by the extent and speed of industrialization, the Chinese government neglected the regulation of natural resources. In line with China’s economic system during this period, the Chinese government managed natural resources mainly by administrative order, that is, the government issued unified planning targets and allocated them according to physical quotas. The period from 1976 to 1980 was a transitional period of internal adjustment, with a serious imbalance in social development and no time for natural resource regulation. During this period, the crude regulation of natural resources led to the abuse and wastage of natural resources. (2) The early stage of reform and opening up: rational development and utilization From 1981 to 1985, the focus of China’s social development shifted from the onesided pursuit of growth in industrialized output to improving economic efficiency, and began to focus on coordinated and comprehensive development in all aspects. In this context, the Chinese government for the first time introduced elements related to energy and environmental protection, which was an important strategic turnaround. In addition, quantitative requirements for new industrial capacity and reduction of energy consumption for some natural resources were put forward, but no clear requirements for natural resource regulation were issued. Subsequently, the regulation of natural resources in China gradually became rule based. In the development plan from 1986 to 1990, the Chinese government began to emphasize the rational development and utilization of natural resources, especially mineral and energy resources. Specific quantitative targets were set for the

Specific content

(1) Vigorously reduce energy consumption and strengthen the construction of energy priorities (2) To estimate the energy consumed per billion yuan of gross industrial output value, the coal, oil, and forestry industries are required to provide quantitative requirements for new production capacity

(1) Strengthen the rational development and utilization of natural resources (2) Land resources: strengthen land management, and effectively protect arable land (3) Energy resources: quantitative requirements to estimate the total national production of coal, crude oil and natural gas, new crude oil and natural gas mining capacity within 5 years, the total scale of coal mine construction, and the growth of total national one-time energy production (4) Mineral resources: accelerate their development and rational use, strengthen exploration work, and increase reserves (5) Forest resources: implement the forestry-based policy, improve forest cover, strengthen forest management, prohibit indiscriminate logging, etc. (6) Marine resources: strengthen investigation, development, and management (7) Resource conservation: quantitative requirements set for the reduction of the total amount of energy saved and used within 5 years, and the amount of standard coal consumed per 10,000 yuan of national income

(1) Strengthen natural resource management and resource conservation (2) Protect and reasonably develop and utilize land, water, forests, grasslands, and various mineral resources (3) Forest resources: protect and effectively use existing forest resources; actively carry out afforestation and greening activities and strictly enforce forest harvesting limits; further increase the forest coverage rate (4) Water resources: vigorously promote water conservation (5) Energy resources: enforce policy of equal importance to development and conservation, and give conservation a prominent place; accelerate the development of the energy industry; set quantitative targets for increasing the total production of coal, crude oil, and natural gas nationwide (6) Mineral resources: actively carry out resource exploration and development work to improve reserves (7) Resource conservation: reduce the amount of standard coal consumed per 10,000 yuan of GNP; promote the progress of new energy conservation technologies (continued)

Planning coverage period

1981–1985

1986–1990

1991–1995

Table 3.1 Requirements for natural resource regulation in China’s national economic and social development plans [2]

3.1 Historical Changes in the Philosophy of Natural Resource Regulation 47

(1) Pay close attention to resource conservation and comprehensive utilization, implement a comprehensive conservation strategy (2) Protect and reasonably develop land, water, forests, grasslands, minerals, and marine resources in accordance with the law, and improve the system of paid use of natural resources and the price system (3) Land resources: protect arable land in accordance with the law; improve the land market mechanism; and gradually implement the system of paid use and limited-term concessions (4) Forest resources: actively cultivate forest resources and strengthen forestry construction (5) Energy resources: prioritize conservation over development; strengthen the exploration and development of resources; and put forward quantitative indicators for mining and storage capacity (6) Mineral resources: strengthen geological exploration, increase mineral resource reserves (7) Marine resources: strengthen marine resource survey; develop the marine industry

(1) Rational use, conservation, and protection of resources in accordance with the law, and a sound system of paid use of resources (2) Land resources: strict implementation of the basic farmland protection system, and protect arable land (3) Water resources: make the sustainable use of water resources is a strategic issue; exert much effort to solve the problems of water shortage and water pollution; strengthen the planning and management of water resources; vigorously promote water conservation measures and establish a water-saving society; reform the water management system and establish a reasonable water price formation system (4) Energy resources: strengthen environmental protection; adjust the structure of coal production and develop clean coal technology; accelerate the exploration, development, and utilization of oil and gas, and actively use foreign oil and gas resources; promote energy conservation and comprehensive utilization of technology (5) Grassland resources and forest resources: encourage the planting of trees and grasses; improve forest coverage

1996–2000

2001–2005

(continued)

Specific content

Planning coverage period

Table 3.1 (continued)

48 3 Historical Changes in China’s Natural Resource Regulatory System

(1) Make resource conservation a basic national policy and build a resource-saving society (2) Achieve sustainable development by setting quantitative targets for improving the efficiency of energy and water resource use, and arable land resource retention (3) Vigorously develop the circular economy, prioritizing conservation over development (4) Prioritize ecological protection and orderly development; strengthen the ecological protection of water sources, land, forests, grasslands, oceans, and other natural resources; and accelerate the establishment of ecological compensation mechanisms (5) Land resources: adhere to the most stringent arable land protection system (6) Water resources: control groundwater exploitation; actively carry out desalination of seawater; strengthen the management of water resource development and utilization (7) Energy resources: strengthen the policy guidance of conservation and efficient use; strengthen oil and gas exploration and development, enhance the strategic reserve capacity of oil, and steadily develop oil substitutes; develop renewable energy (8) Grassland resources: protect natural pastures (9) Marine resources: protect and ensure rational use of fisheries resources

2006–2010

(continued)

Specific content

Planning coverage period

Table 3.1 (continued)

3.1 Historical Changes in the Philosophy of Natural Resource Regulation 49

Specific content

(1) Strengthen resource conservation and management, vigorously develop a circular economy, promote green development, and build a resource-saving society (2) Improve the price formation mechanism of resource products and the resource and environmental taxation system (3) Set quantitative targets for arable land retention, industrial water conservation, energy consumption reduction, and forest cover improvement (4) Land resources: adhere to the strictest arable land protection system, with saving and intensive, total control as the principle; strict use control; strengthen land use and land-saving responsibilities and assessment (5) Water resources: strengthen water conservation; implement the strictest water resource management system; provide strict water resource protection; strengthen the system of paid use of water resources (6) Mineral resources: implement geological prospecting strategic project; increase exploration efforts; establish mineral resource reserve system; strengthen conservation and management of mine; improve the system of paid use of mineral resources; develop more environmentally friendly mine; strengthen the conservation and comprehensive use of mineral resources (7) Energy resources: promote changes in energy production and utilization to improve utilization efficiency; develop safe and efficient coal mines; promote diversified and clean energy development; increase exploration and development efforts; stabilize oil and gas production (8) Marine resources: promote the development of the marine economy, scientific planning, rational development, and utilization of marine resources (9) Forest resources and grassland resources: prioritize protection and natural restoration; strengthen ecological protection and governance; actively explore the establishment of a market-based ecological compensation mechanism (continued)

Planning coverage period

2011–2015

Table 3.1 (continued)

50 3 Historical Changes in China’s Natural Resource Regulatory System

Specific content

(1) Promote the economical and intensive use of resources and implement the national energy conservation action plan (2) Develop and promote energy-saving technologies and products, and quantitative targets for total energy consumption and total water consumption (3) Strengthen ecological protection and restoration (4) Water resources: implement the strictest water resource management system, based on scientific development, rational allocation, conservation, and efficient use (5) Mineral resources: strengthen planning and control, strict zoning management, total control, and mining access system; establish a national equity gold system for mineral resources; improve the mineral resource taxation system (6) Energy resources: strengthen the exploration and development of onshore and offshore resources in particular, and also open mining rights in an orderly manner; build a modern energy system; actively develop other alternative energy sources (7) Marine resources: expand the blue ocean economy; scientifically develop and protect marine resources (8) Grassland resources and forest resources: innovate the property rights model and encourage social capital to invest in afforestation; expand the return of cultivated land to forest and grass; completely ban commercial logging of natural forests and protect and cultivate forest ecosystems; establish a management system for the total amount of forests, grasslands, and wetlands; explore the preparation of a natural resource asset and liability statement; and implement the exit audit of natural resource assets for leading cadres (9) Biological resources: scientific planning and construction of a biological resource conservation nursery

(1) In-depth implementation of sustainable development strategy; adhere to respect for nature, respond to nature, protect nature; adhere to the prioritization of conservation, protection, and natural restoration (2) Adhere to the system of mountain, water, forest, field, lake, and grass management; implement the rehabilitation and recovery of grassland, forest, river, and lake; improve the system of arable land fallow crop rotation (3) Improve the property rights system and laws and regulations for natural resource assets; strengthen natural resource survey and evaluation testing and registration of rights; improve market-oriented and diversified ecological compensation (4) Water resources: implement national water conservation initiatives; establish a strict water resource constraint system (5) Marine resources: improve the level of marine resource development and protection, and develop the marine economy (6) Biological resources: implement 10-year ban on fishing in the Yangtze River

Planning coverage period

2016–2020

2021–2025

Table 3.1 (continued)

3.1 Historical Changes in the Philosophy of Natural Resource Regulation 51

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amount of natural resources, such as coal, oil, and natural gas, to be extracted or the scale of construction; moreover, quantitative targets were set for the conservation of energy resources. In addition, for the first time, the Chinese government proposed general regulatory targets for forest resources, land resources, and marine resources, but they were relatively general. In the 1991–1995 development plan, the Chinese government still emphasized the rational development and utilization of various natural resources, and continued to include resource conservation in the development plan, clearly pointing out the need to strengthen natural resource management. Tasks and quantitative targets in natural resource-related areas were introduced, and their content gradually increased. In general, in the early stage of the reform and opening up, China’s natural resource regulation focused more on the development and utilization of resources, mainly emphasizing the conservation of energy resources, and began to strengthen natural resource regulation, but the regulatory requirements were not clear enough and an optimal regulatory system was yet to be formed. (3) New stage of reform and opening up: sustainable development In the mid-1990s, the Chinese government gradually realized that one of the main unfavorable factors limiting China’s economic development was the relative shortage of arable land, water resources, and oil and other mineral resources per capita, and the problems gradually began to emerge of resource scarcity and environmental damage from China’s rapid economic development in the early years of the reform and opening up. As China’s reform and opening up enters a new stage of development, a unsystematic economic development method that blindly pursues growth speed and consumes resources and pollutes the environment at the expense of the economy obviously cannot adapt to the development requirements of the new era. After the 1990s, the Chinese government established sustainable development as a basic national strategy. In the field of natural resource regulation, the primary requirement of the concept of sustainable development is to conserve resources and strengthen the conservation and comprehensive use of natural resources, especially mineral resources and water resources, while developing and utilizing them rationally. From 1996 to 2000, the Chinese government mandated the adherence to both conservation and development at the same time while prioritizing conservation. According to the development plan for 2001–2005, sustainable use of water resources was a strategic issue; from 2006, the Chinese government made resource conservation a basic state policy. Second, the status of law in the natural resource regulatory system gradually came to the fore, emphasizing the protection of natural resources according to the law, and China’s natural resource regulation began to develop in a more standardized and strict direction. Another significant feature of China’s natural resource regulation during this period was the introduction of market mechanisms. Since the end of the twentieth century, the Chinese government gradually began to emphasize the need to improve the system of paid use of natural resources and the resource price system, and to improve the price formation mechanism of resource products and the resource and environmental taxation system, among others.

3.1 Historical Changes in the Philosophy of Natural Resource Regulation

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(4) The twenty-first century: building “ecological civilization” and innovative regulation In the twenty-first century, the contradiction between China’s economic development and natural resources has become more and more serious, and the sustainable development of the economy has been largely restricted by the increasing scarcity of natural resources, such as land, fresh water, energy, and minerals. The construction of “ecological civilization” has gradually become the focus of the Chinese government. Subsequently, a new development concept, centered on innovation, coordination, greenness, openness, and sharing, has been introduced, emphasizing the importance of innovative regulatory mechanisms and the use of innovative technologies to strengthen the regulation of natural resources. Guided by the construction of ecological civilization and the new development concept, natural resource regulation has been comprehensively incorporated into the construction of ecological civilization, while the government has started to actively develop a regulatory system with innovative thinking, creating a new situation of natural resource regulation. On the basis of sustainable development, focusing on ecological civilization construction and regulatory innovation has become the core concept of natural resource regulation within this period. This change in regulatory philosophy reflects holistic thinking and systematic regulation of China’s natural resource regulation. Regulation of natural resources, as an important part of the ecosystem, must be part of the construction of ecological civilization. In the development and utilization of natural resources, it is important to focus on the impact on the ecological environment, strengthen the ecological protection of natural resources, and accelerate the establishment of ecological compensation mechanisms. Especially for the supervision of forest resources and grassland resources, the development plan formulated by the Chinese government for 2011– 2015 points out that natural restoration should be the main focus, and ecological protection and governance should be strengthened. In addition, given that all kinds of natural resources are interdependent and inseparable, systematic regulation is more conducive to the protection and rational use of natural resources and adherence to systematic governance of mountains, water, forests, fields, lakes, and grasses. In terms of regulatory innovation, the Chinese government has put forward innovative systems, such as exit audits of natural resource assets for leading cadres, the compilation of a natural resource balance sheet, and the national equity gold system for mineral resources. At present, the core of China’s natural resource regulation is constructing ecological civilization with the goal of realizing sustainable and green development; it emphasizes the important position of the legal system and market mechanism in the natural resource regulatory system, and continuously explores the innovation of the regulation mechanism.

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3.1.2 The Law of Change of Regulatory Philosophy China’s natural resource regulatory philosophy has been enriched in the course of historical changes, from rough regulation at the start to rational exploitation of natural resources, to achieving sustainable development as the goal, and building ecological civilization as the core. The process of its historical changes broadly follows three patterns. (1) Adaptation to the needs of economic development From the perspective of the relationship between natural resources and economic development, natural resources are crucial to economic and social development, among which land resources, grassland resources, and forest resources are the basis for agricultural development, and mineral resources and energy resources provide raw materials and power for industrial development. In the early stage of the reform and opening up, to meet the needs of rapid economic development, China’s natural resource regulatory philosophy focused on resource development and utilization, such as strengthening the exploration of mineral resources and striving to increase their reserves, as well as setting quantitative targets for the total production of energy resources, through which measures were taken to help China’s rapid economic development. (2) Adaptation to economic system reform In the process of reforming the market economy system, the Chinese government has transformed the regulation of natural resources, such as land, minerals, and energy, from being managed according to plans to relying on market mechanisms. Before the reform and opening up, in line with the planned economic system, the Chinese government adopted a unified planned economic management of natural resources, such as land, minerals, and energy; the development and utilization of natural resources was directly organized through government planning, and natural resource regulation was mainly administrative. Under the wave of reform of the market economy system, China’s natural resource regulation has gradually become aligned with the market, and the price system, paid use system, property rights system, and resource taxation system of natural resources have been gradually improved as the market mechanism has matured [3]. (3) Solving real-life problems as the starting point Facing the problems of resource scarcity and ecological environment deterioration in the process of economic development, China’s natural resource regulatory philosophy has gradually changed from one that focuses on exploitation to one that focuses on sustainable development and building ecological civilization. To solve the problem of natural resource scarcity, China’s natural resource regulation philosophy has shifted from ensuring rational exploitation to striving for sustainable development, and resource conservation has been established as a basic national policy to encourage the development of energy-saving technologies. To strengthen

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the protection of the ecological environment, the Chinese government has incorporated natural resource regulation into the system of ecological civilization construction. For example, the supervision of grassland resources has been changed from a livestock orientation to a grassland ecology orientation, while the supervision of forest resources has changed from a timber processing and production orientation to forest ecology protection [4]. Guided by the concepts of new development and ecological civilization, the reform of China’s natural resource regulatory system is aimed at solving outstanding problems in the field of resources, focusing on the four aspects of property rights ownership, ecological protection, resource conservation, and paid use.

3.2 Historical Changes in the Body of Natural Resource Regulation Regulatory bodies are an important part of the natural resource regulatory system, mainly assuming the responsibility of supervising the development and utilization of natural resources in accordance with the legal system, protecting natural resources in accordance with the law, and dealing with illegal acts. Under China’s political system, the role of a regulatory body is usually assumed by specially established government agencies, people’s governments at all levels, and their subordinate units. Since the founding of the People’s Republic of China, the government has carried out eight large-scale government institutional reforms, and the authorities that govern natural resource regulation have undergone radical changes. The formation of the Ministry of Land and Resources in 1998 and the Ministry of Natural Resources in 2018 are the two major changes in the course of the change of the main body of natural resource regulation in China. Generally, China’s natural resource regulatory bodies have been developed from scratch and have excelled at their functions over time, and the institutional settings have shown a path of from fragmentation to unification; the regulatory bodies have gradually become streamlined and their division of powers and responsibilities have become clearer.

3.2.1 Changes in the Main Body of Natural Resource Regulation of Various Types (1) The regulatory body of land resources As shown in Fig. 3.1, the Land Department of the Ministry of the Interior, the Land Use Bureau of the Ministry of Agriculture, the State Land Administration, and the Ministry of Land and Resources were all once the main regulatory bodies of China’s land resources. In the early stage of the founding of the People’s Republic of China, China’s land resources were unified and supervised by the Land Department of the

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Ministry of the Interior, Department of Lands 1949

National Land Authority 1986

1955 Urban Construction Department Land Use Bureau, Ministry of Agriculture

Ministry of Natural Resources 2018

1988 Ministry of Land and Resources

Fig. 3.1 Historical changes in the main regulatory body of land resource

Ministry of the Interior, but with the completion of land reform, land management was gradually decentralized to various departments, with urban land and rural land taken over by the Ministry of Urban Construction and the Ministry of Agriculture, respectively. The involvement of multiple departments was a major feature of land resource regulation in early China, but a series of conflicts arose due to the different starting points of each department and differences in management approaches. The Ministry of Natural Resources, formed in the 2018 government institutional reform, finally unified the regulation of land resources [5]. (2) The regulatory body of water resources The core authority of water resource regulation for a long time after the founding of the People’s Republic of China was the Ministry of Water Resources [6], which historically adopted the process of “abolish–rebuild–abolish again–rebuild again.” The government institutional reform in 2018 optimized the scope of responsibilities of the Ministry of Water Resources by reintegrating its responsibilities for a water resource survey and registration management, water pollution control, agricultural investment project management, and water and drought disaster prevention and control into other ministries. As a result, currently, the regulatory bodies for water resources mainly consist of the Ministry of Water Resources, the Ministry of Natural Resources, the Ministry of Ecology and Environment, and the Ministry of Emergency Management, with each ministry responsible for different areas of water resource regulation (see Table 3.2). (3) The regulatory body of mineral resources Mineral resources are one of the first resource categories for which China established administrative agencies for specialized management. Given that the development and utilization of mineral resources are inseparable from geological exploration, mineral resource regulation and geological exploration are often under the same government agency. As shown in Fig. 3.2, historically, the main bodies for mineral resource regulation have been the Geological Work Plan Steering Committee, the Ministry of Geology, and the Ministry of Geology and Minerals. The 1998 government agency reform transferred the administrative functions of the Ministry of Geology and

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Table 3.2 Water resource regulatory bodies and corresponding responsibilities Government agencies

Key responsibilities

Ministry of water resources

Ensure the rational development and utilization of water resources Guide the protection of water resources Responsible for water conservation work, etc.

Ministry of natural resources

Water resource survey and registration management

Ministry of ecology and environment Prepare water function zoning, outfall setting management, watershed water environmental protection Emergency management department

Responsible for drought and water disaster prevention and control

Minerals and the National Mineral Resource Commission to the Ministry of Land and Resources. In 2018, all the responsibilities of the Ministry of Land and Resources were integrated and transferred to the Ministry of Natural Resources, and the responsibility for mineral resource regulation was subsequently transferred to the Ministry of Natural Resources. Currently, the Ministry of Natural Resources is responsible for the supervision of mineral resources, and the main relevant competencies include geological and mineral exploration management, mining rights management, and mineral resource protection supervision [7]. (4) The regulatory body of energy resources China’s energy resource regulator can be traced back to the establishment of the Ministry of Fuel Industry at the founding of the People’s Republic of China and the Ministry of Electricity Industry in 1955. After many changes (see Fig. 3.3), the National Energy Administration is now responsible for the regulation of China’s energy resources [8]. (5) The regulatory body of forest resources As shown in Fig. 3.4, historically, the regulatory bodies for forest resources in China have been the Ministry of Forestry and Reclamation, Ministry of Forestry, Ministry Geological Work Program Steering Committee 1950

Department of Geology and Minerals 1982

1952 Geology Department

Ministry of Natural Resources 2018

1998 Ministry of Land and Resources

Fig. 3.2 Historical changes in the main regulatory body of mineral resource

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3 Historical Changes in China’s Natural Resource Regulatory System Ministry of Fuel Industry, Ministry of Electric Power Industry

Energy Department 1988

Early days of the founding of the People’s Republic of China

1982 Energy Committee

2008 National Energy Administration

Fig. 3.3 Historical changes in the main regulatory body of energy resource

Ministry of Forestry and Reclamation 1949

Forestry Industry Department

1951 Ministry of Forestry

1956

State Forestry Administration 1998

1970 Ministry of Agriculture and Forestry

2018 State Forestry and Grassland

Fig. 3.4 Historical changes in the main regulatory body of forest resource

of Forestry Industry, Ministry of Agriculture and Forestry, and the State Forestry Administration. From 2018, the State Forestry and Grassland Administration has been be responsible for the regulation of forest resources. To strengthen the unified supervision of various types of nature reserves, the State Forestry and Grassland Administration has been added to the National Park Administration and is under the jurisdiction of the Ministry of Natural Resources. Currently, China’s forestry work is under the supervision of the State Forestry and Grassland Administration. The forestry authorities at all levels are responsible for the protection, restoration, and utilization of forest resources within their administrative areas and for investigating and punishing illegal acts that damage forest resources in accordance with the law. In addition, auditing authorities supervise the auditing of state-owned forest resource assets in accordance with relevant state regulations [9]. (6) The regulatory body of grassland resources Grassland is the material basis for livestock development. For a long time, the main purpose of the Chinese government in regulating grassland resources was to improve the productivity of grasslands to obtain greater economic benefits, and thus, the supervision of grassland resources was vested in the agricultural department or the agriculture and livestock department. In recent years, the concept of regulating natural

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resources in China has shifted from development and utilization to ecological protection, and grassland resources are no longer under the supervision of the agricultural and livestock departments. To coordinate the unified supervision of natural resources, such as forests, grasslands, and wetlands, the Chinese government has reintegrated the responsibilities of the State Forestry Administration and the grassland supervision responsibilities of the Ministry of Agriculture, and formed the State Forestry and Grassland Administration in 2018 to centralize and unify the management of forestry and grassland resources [9]. (7) The regulatory body of marine resources At the early stage of the founding of the country, China did not establish a special marine resource regulatory agency, and the regulatory focus was also concentrated on marine biological resources; thus, the regulatory agencies in this period were management departments responsible for marine fisheries, such as the Fisheries Division under the Ministry of Agriculture in 1950, the General Administration of Fisheries Management established in 1953, and the Department of Fisheries Administration established within the Ministry of Fisheries in 1957. In July 1964, the establishment of the State Oceanic Administration was an important milestone for China’ evolution of marine resource regulation in China. Its main task was to carry out marine investigation and scientific research. Subsequently, the scope of responsibilities of the State Oceanic Administration expanded and it gradually became the highest authority in the regulation of marine resources, overseeing the regulation of national marine resources. In the 1998 government reform, the State Oceanic Administration was transferred to the management of the Ministry of Land and Resources, and the China Marine Surveillance Headquarters was established to investigate and deal with acts that harm marine resources. With the reform of the national market economy system and the construction of ecological civilization, the regulatory object of marine resources is no longer limited to biological resources, but focuses more on the protection of marine resources and the marine environment, unified supervision of all natural resources within the marine system, and the vigorous development of the marine economy. The Ministry of Natural Resources formed in 2018 not only unifies the ownership of natural resources, but also clarifies that all kinds of natural resource should be managed as a whole and solves the problem of overlapping regulatory authority. Currently, the regulatory authority of China’s marine resources is assigned to the Ministry of Natural Resources [5], which includes the Department of Marine Strategic Planning and Economy and the Department of Sea Area and Island Management, which are responsible for overseeing the implementation of marine strategic planning and the development of the marine economy; supervising marine development, utilization, and protection; and organizing the formulation and implementation of annual utilization plans for marine natural resources. (8) The regulatory body of biological resources The regulatory subjects of biological resources generally overlap with those of forest resources, grassland resources, and marine resources, mainly because organisms

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must depend on forests, grasslands, and the sea for their existence. According to the Wildlife Law, the protection of terrestrial and aquatic wildlife is the responsibility of the State Forestry and Grassland and Fishery Departments, respectively, and the government forestry, grassland, and fishery departments at all levels are in charge of wildlife protection within their administrative areas. Currently, the State Forestry and Grassland Administration has a Department of Wildlife Protection, which is responsible for supervising and managing the protection, rescue, management, and utilization of terrestrial wildlife nationwide [9].

3.2.2 The Changing Pattern of Regulatory Bodies Based on the change history of various natural resource regulatory bodies in the previous section, the overall change of natural resource regulatory bodies in China shows a pattern from fragmentation to unification. (1) Before the reform and opening up: split regulation The setting of administrative agencies is inseparable from the changes of socioeconomic system; from 1949 to the time of the reform and opening up, China’s economic system was a highly centralized planned economic system, and the natural resource regulatory agencies set up during this period were characterized by division and rule. Different industrial and economic departments were set up according to the properties of resources, products, and production technologies, and natural resources, such as land, minerals, water flow, forests, energy, grasslands, and oceans, were regulated by different administrative agencies. Specifically, the departments related to natural resource management established after the founding of the People’s Republic of China mainly included the Department of Geography under the Ministry of the Interior, the Steering Committee of Geological Work Plan under the Financial and Economic Committee, the Department of Fuel Industry, the Department of Heavy Industry, the Department of Agriculture, the Department of Forestry and Reclamation, and the Department of Water Resources. In 1956, when China entered the period of socialist transformation, because some economic management departments managed too many industries and had too much work, several regulatory agencies were split: the Ministry of Fuel Industry was subdivided into the Ministry of Coal, the Ministry of Petroleum, and the Ministry of Electricity; the Ministry of Heavy Industry was divided into the Ministry of Metallurgy, the Ministry of Chemical Industry, and the Ministry of Construction Materials; and the Ministry of Forestry Industry was established from the Ministry of Forestry. During this period, the establishment of mutually separated regulatory bodies gave rise to many management difficulties. First, the existence of many regulatory bodies meant that planning and implementation rights belonged to different government departments, which easily caused disconnect between policy formulation and implementation. Second, based on different interests, each regulatory body was responsible only for matters within its own jurisdiction, and the development, utilization,

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and protection of natural resources did not form a unified whole. Third, the division of authority and responsibility among multiple agencies was unclear, leading to the shifting of responsibilities among various departments, and resulting in difficult supervision, chaotic supervision, and the absence of regulators. Under the situation of multi-regulatory body management, cross-functional duplication and regulatory blindness existed among various government departments, and the organic links among natural resources were artificially fragmented. This was not conducive to the effective protection of the ecosystem as a whole. Before the reform and opening up, another characteristic of China’s natural resource regulatory institutions was unified ownership and hierarchical management, that is, the state was the main owner of all natural resources and entrusted the central government to exercise ownership authority on behalf of the state; then, the central government delegated regulatory authority to ministries and commissions at all levels and local governments. This multi-layered delegation and agency model brought high supervision costs while improving the effectiveness of supervision. To overcome the drawbacks of fragmented regulation by various departments and adapt to the changes in the objectives of natural resource regulation, after the reform and opening up, the Chinese government began to gradually abolish the relevant regulatory agencies and realize centralized and unified regulation. (2) After the reform and opening up: gradual shift to unified supervision The process of unification of China’s natural resource regulatory bodies can be divided into three stages: the removal of overlapping agencies, the formation of the Ministry of Land and Resources in 1998, and the formation of the Ministry of Natural Resources in 2018. In 1979, the General Bureau of Geology of the State Planning Commission was transformed into the Ministry of Geology, separating geology and exploration according to the principle of specialization and division of labor. In 1988, the Ministry of Coal Industry, the Ministry of Nuclear Industry, and the Ministry of Petroleum Industry were abolished and the Ministry of Energy was re-established; the Ministry of Urban and Rural Construction and Environmental Protection was abolished and the Ministry of Construction was established; and the Ministry of Water Resources and Electricity was abolished and the Ministry of Water Resources was established. In 1993, the Ministry of Energy and the China National Coal Corporation were abolished and the Ministry of Electricity and the Ministry of Coal were established. In 1998, the Ministry of Land and Resources was formed by the Ministry of Geology and Minerals, the State Land Administration, the State Oceanic Administration, and the State Bureau of Surveying and Mapping, which is responsible for the investigation, planning, evaluation, protection, and rational use of natural resources, such as land, minerals, and oceans. The Ministry of Land and Resources coordinates the authority to supervise natural resources, such as land, minerals, and sea, and has put in place centralized and unified management from land to sea and from land to minerals. In addition, the Ministry of Land and Resources has a number of powers to draw up relevant laws and regulations, issue regulations on natural resource management, formulate relevant plans, and manage mineral resource prospecting rights and

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mining rights; these powers can well solve the drawbacks of unclear authority and responsibility as well as fragmented administration. In 2018, the Chinese government reorganized the Ministry of Natural Resources and the State Forestry and Grassland Administration under its management by reintegrating the overlapping responsibilities of various departments in natural resource management, ecological protection, and pollutant prevention and control. This reorganization solved such problems as the lack of natural resource owners and overlapping spatial planning; realized the overall protection, systematic restoration, and comprehensive management of mountains, waters, forests, fields, lakes, and grasses; and enabled China’s natural resource regulators to gradually realize a centralized, unified, and integrated setup. The change process of natural resource regulatory bodies from division to unification reflects the integrity and coordination of the natural resource system. The unification of regulatory bodies solves the problems of fragmented natural resource regulation and overlapping regulatory rights, while making the natural and artificial environments integrate, which is conducive for the realization of the regulatory goal of building ecological civilization [10].

3.2.3 Current Regulatory Body Under the current government structure, the main body of natural resource regulation in China has not been fully unified. The Ministry of Natural Resources provides centralized and unified leadership for the regulation of natural resources, while water resources are regulated by the Ministry of Water Resources and some of the regulatory responsibilities for grassland and forest resources are under the State Forestry and Grassland Administration. In addition, the China Geological Survey is in charge of some of the competencies related to mineral exploration, the National Energy Administration exercises regulatory competencies for energy resources, and the National Audit Office is in charge of work related to exit audits of natural resources. More detailed responsibilities of these regulatory bodies are shown in Table 3.3. As the core body of natural resource regulation in China, the Ministry of Natural Resources is responsible for managing the State Forestry and Grassland Administration and the Geological Survey, and its 20 functional departments are responsible for exercising various powers of natural resource regulation (see Fig. 3.5) [5]. For example, the Department of Natural Resource Ownership is responsible for establishing a statistical system for natural resource assets and undertaking the work of natural resource assets value assessment and assets accounting, etc. The Department of Arable Land Protection Supervision is responsible for formulating arable land protection. The Department of Arable Land Protection and Supervision is responsible for formulating policies on arable land protection, supervising and managing the designation, occupation, and replenishment of permanent basic farmland, and undertaking the management of arable land occupation and replenishment, etc.

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Table 3.3 The main bodies and key responsibilities of natural resource regulation in China Regulator

Key responsibilities

Ministry of Natural Resources [5]

(1) Survey and detection evaluation of natural resources (2) Unified registration of natural resource rights (3) Work on the reimbursable use of natural resource assets (4) Ensure the rational exploitation of natural resources (5) Establish a spatial planning system and supervise its implementation (6) Coordinate the ecological restoration of the national space (7) Organize and implement the strictest system of arable land protection (8) Manage the geological exploration industry and national geological work (9) Responsible for the management of mineral resources (10) Oversee the implementation of marine strategic planning and the development of the marine economy (11) Supervise and manage marine development, utilization, and protection (12) Mapping and geographic information management work (13) Promote the development of science and technology in the field of natural resources (14) Carry out international cooperation in natural resources, etc.

Ministry of Water Resources [6]

(1) Responsible for safeguarding the rational development and utilization of water resources (2) Organize and implement the strictest water resource management system, implement unified supervision and management of water resources, and provide guidance on the paid use of water resources (3) Guide the protection of water resources and prepare and implement water resource protection plans (4) Responsible for water conservation work, guidance and back-order water-saving society construction work, etc. (continued)

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Table 3.3 (continued) Regulator

Key responsibilities

National Energy Administration [8]

(1) Draft laws and regulations related to the regulation of energy resources (2) Develop industrial policies and industry standards for natural resources, such as coal, oil, and gas (3) Responsible for the comprehensive use of energy resources and energy conservation (4) Regulate commercial oil and gas reserves (5) Organize and promote international cooperation in energy resources and coordinate the development and utilization of energy resources abroad

State Forestry and Grassland Administration [9]

(1) Regulate forestry and grasslands and their ecological protection and restoration (2) Regulate forest resources, grassland resources, wetland resources, and terrestrial wildlife resources (3) Supervise various types of nature reserves (4) Oversee desertification control efforts

China Geological Survey [7]

(1) Organize and implement the national geological survey and prospective evaluation of mineral resources (2) Organize and implement mineral exploration work and geological surveys (3) Carry out international exchange and cooperation related to geological survey and mineral exploration

Audit Office [11]

(1) Implement exit audit of natural resource assets for leading cadres (2) Provide direct audits and audit reports on the management of national natural resources

From the perspective of the hierarchical division of regulatory bodies, the current natural resource regulation is led by the central government, which formulates regulatory work rules and specifies regulatory targets, objectives, and recourse measures. Then, local governments and authorities play the main role of natural resource regulation, implementing various regulatory policies and putting natural resource regulation into practice.

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State Forestry and Grassland Administration China Geological Survey Office of the Ministry of Natural Resources Integrated Department of Natural Resources Department of Legislation Natural Resource Survey and Monitoring Division Department of Spatial Land Use Control Ministry of Natural Resources

Department of Ecological Restoration of Territorial Spaces Natural Resource Development and Use Division Department of Territorial Spatial Planning Department of Spatial Land Use Control Department of Ecological Restoration of Territorial Spaces Department of Arable Land Protection Supervision State Forestry and Grassland Administration Mining Authority Mineral Resource Protection Supervision Division Marine Strategic Planning and Economics Division Division of Maritime and Island Management Marine Early Warning and Detection Division Department of Territorial Mapping Geographic Information Management Division Office of the Inspector General of Natural Resources Fig. 3.5 Agencies under the Ministry of Natural Resources and internal agencies

3.3 Historical Changes in the Basis of Natural Resource Regulation In the natural resource regulatory system, the regulatory basis is the specific and standardized form of regulatory philosophy. The laws, regulations, departmental rules, and government documents formulated and promulgated by Chinese governments at all levels are the core basis for natural resource regulation in China. In 1982, the

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constitution clearly stipulated that natural resources belong to the state, which guarantees the rational use of natural resources, and prohibits any organization or individual from destroying natural resources. In 1984, China’s first single law on natural resources, the Forestry Law’, was introduced. Subsequently, the Chinese government promulgated numerous laws, regulations, and government documents related to the regulation of natural resources, and the construction of the legal system for the regulation of natural resources has entered a period of fast-tracked development [2].

3.3.1 Changes in the Regulatory Basis of Various Types of Natural Resources (1) Historical changes in the basis of land resource regulation Since ancient times, China has been a country dominated by agricultural production, and many revolutions in history have been closely related to the land system; therefore, the reform of the land system has been an issue to which the Chinese government has attached extra importance at all times. The legal systems related to the regulation of land resources mainly include the Land Administration Law, the Regulations for the Implementation of the Land Administration Law, the Urban Real Estate Management Law, the Law on Taxation of Arable Land Occupancy, the Law on Rural Land Contracting, and the Law on Prevention and Control of Soil Pollution. Since the founding of the People’s Republic of China, the Chinese government has promulgated up to 200 policy documents related to land resources, covering all levels of overall planning, approval, transfer, and use control of land resources (see Fig. 3.6). Since its deliberation and adoption in 1986, the Land Administration Law has undergone four amendments; this law is the core legal basis for regulating the supervision of China’s land resources. The third amendment to the Land Administration Law in August 2019 introduced innovations in breaking down legal barriers to the entry of collective business construction land into the market, reforming the land acquisition system, and improving the residential base system. These changes have shifted the Land Management Law in the direction of reforming the ecological civilization Land Management Law 1986

Rural Land Contract Law 2002

1994 Regulations on the Protection of Basic Farmland Urban Real Estate Management Law

2018 Soil Pollution Prevention and Control Act Law on Arable Land Occupancy Tax

Fig. 3.6 Historical changes in the main basis of land resource regulation

3.3 Historical Changes in the Basis of Natural Resource Regulation

67

system. According to the Land Management Law and its implementing regulations, land in urban areas is owned by the state; land in rural areas and suburban areas is collectively owned by farmers; and residential bases, self-owned land, and selfowned hills are collectively owned by farmers. The relevant department of natural resources at or above the county level supervises and inspects violations of land management laws and regulations. For urban land and rural land resources, the Chinese government has enacted the Law on Urban Real Estate Management and the Law on Rural Land Contracting, respectively. The Urban Real Estate Management Law was considered and adopted in 1994, and after several amendments, provides a legal basis for the acquisition of land use rights for real estate development sites within the scope of state-owned land, as well as its grant, allocation, and transfer. The Rural Land Contract Law, which was considered and adopted in 2002, regulates the determination, use, and supervision of rural land resources, and provides for a contract management system for rural land in China. Land resources, such as basic farmland and arable land, are an important foundation for agricultural development and sustainable socio-economic development. To rationalize the use of land resources and protect arable land and basic farmland, the Chinese government issued the Regulations on the Protection of Basic Farmland in 1994 and considered and adopted the Law on Taxation on the Occupation of Arable Land in 2018. The government protects the rational use of arable land resources and basic farmland resources through legislative protection and the levy of taxes and fees. (2) Historical changes in the basis of water resource regulation Since the founding of the People’s Republic of China, laws and regulations related to water resource regulation include the Water Law, the Water Pollution Prevention and Control Law, and the Water and Soil Conservation Law. In addition, the Chinese government has issued a series of government documents on water resource regulation, including the Opinions on Implementing the Strictest Water Resource Management System and its supporting assessment standards, the Water Pollution Prevention and Control Action Plan, and the pilot water resource tax reform (see Fig. 3.7). According to incomplete statistics from government websites, there are 16 policy documents related to water resource regulation, mostly after 2010. The Water Law is the core law for water resource regulation in China. To reasonably develop, utilize, conserve, and protect water resources, prevent, and control water hazards, and achieve sustainable use of water resources, the Chinese government formally enacted and introduced the Water Law in 1988. After three amendments and revisions, detailed provisions have been made for the planning, development, utilization, conservation, protection, and management of water resources. According to the provisions of the Water Law, water resources belong to the state, which has the following responsibilities: implement a system of water abstraction permits and paid use of water resources; implement a management system combining basin management and administrative area management of water resources; enforce water conservation; establish a system of protected areas for drinking water sources; implement a system of river sand mining permits; prohibit the fencing of lakes and

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Water Pollution Prevention and The strictest water resource management Control Law considered and passed system 1984

2013

1988 Water Law considered and adopted

Water resource tax reform pilot 2016

2015 Water Pollution Control Action Plan

Fig. 3.7 Historical changes in the main basis of water resource regulation

reclamation of rivers; implement a system of total control and quotas for water use; implement a system combining total water consumption control and quota management; and implement a system of metering charges and progressive price increase over quotas. Water resource regulation includes both the regulation of water resources itself, construction of water conservancy facilities, and water pollution prevention and control. China considered and passed the Law on Water Pollution Prevention and Control as early as 1984, but did not prioritize water pollution prevention and control. Since the reform and opening up, China’s water resource environment has been seriously damaged, and according to the 2013 China Water Resource Bulletin issued by the Ministry of Water Resources, the water resource crisis caused by water pollution in China is very serious. In this context, the Chinese government issued the Opinions on Implementing the Strictest Water Resource Management System in 2013, and set a very stringent water resource management system for each province, autonomous region, and municipality directly under the central government to implement. Corresponding standards were set for assessment. Subsequently, on April 2, 2015, the Chinese government issued the Water Pollution Prevention and Control Action Plan (Water 10), which is the clearest and most specific guiding action program for water pollution prevention and control in China’s history. The second amendment to the Water Law in 2016 provided important legal safeguards for the implementation of the Water 10 plan by developing a public participation system. A water resource tax is an important system for water resource regulation. According to the Notice on Comprehensively Promoting Resource Tax Reform issued on May 10, 2016, China would carry out a pilot water resource tax reform, first in Hebei, adopting a water resource fee as a tax approach, including surface water and groundwater in the scope of taxation, implementing quantitative and quantitative taxation, and appropriately raising the tax rate for high water-consuming industries, over-planned water use, and groundwater withdrawal in areas with excessive groundwater extraction. At present, pilot implementation has been carried out in nine provinces and municipalities.

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(3) Historical changes in the basis of mineral resource regulation The Mineral Resource Law and its implementing regulations are the core legal basis for the regulation of mineral resources in China. According to the website of the State Ministry of Natural Resources, there are 296 policies and regulations on mineral resource management, including 50 policy documents related to mineral resources. Considered and adopted in 1986, the Mineral Resource Law, amended twice in 1996 and 2009, has developed a relatively sound regulatory system for the exploration, development, utilization, and protection of mineral resources. According to the Mineral Resource Law, the ownership of mineral resources belongs to the state and is exercised by the State Council on behalf of the state; exploration and exploitation of mineral resources must be applied for and approved, and prospecting rights and mining rights must be obtained in accordance with the law, and registered. The state implements a unified block registration management system for the exploration of mineral resources, and the exploitation of mineral resources must be approved for a mining license to be obtained. A system of obtaining prospecting rights and mining rights for a fee is implemented. Mining mineral resources incurs resource taxes and resource compensation fees in accordance with the provisions. In addition, except for special circumstances, prospecting rights and mining rights may not be transferred. In addition to the Mineral Resource Law and its implementing regulations, numerous development plans, departmental regulations, and industry codes have been promulgated by the Chinese government in response to the problems in the process of mineral resource regulation at different times to improve the legal system for the regulation of mineral resources. These documents include the Outline of China’s Technical Policy on Comprehensive Utilization of Resources promulgated in 2010; the Implementation Opinions on Accelerating the Construction of Green Mines promulgated by the Ministry of Land and Resources and six other departments in 2017 to promote the implementation of the national mineral resource plan and strengthen the construction of ecological civilization and green development in the mining industry; and the Letter on Accelerating the Implementation Opinions on the Comprehensive Improvement of Open Pit Mines jointly promulgated by the Ministry of Natural Resources and the Ministry of Ecology and Environment in 2019. In addition, the Chinese government has formulated more detailed management measures for mineral resource exploitation, transfer of tenure, and mineral resource fees, such as the Measures for the Administration of the Transfer of Prospecting and Mining Rights, the Measures for the Administration of the Registration of Mineral Resource Exploitation, the Measures for the Administration of the Registration of Mineral Resource Exploration Blocks, and the Regulations for the Administration of the Collection of Mineral Resource Compensation Fees.

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The Resource Tax Law is an important basis for the paid use system of natural resources. At present, the objects of China’s resource tax mainly include energy minerals, metal and non-metal minerals, water and gas minerals, and salt. (4) Historical changes in the basis of energy resource regulation Among energy resources, coal resources and oil and gas resources are the basic resources that drive economic and social development and provide the power for construction. They also form the core of regulation by the Chinese government. (a) Coal resources To ensure the rational development and utilization of coal resources, the Chinese government has promulgated numerous regulatory policies at different levels. According to the government policy document library, there are more than 100 hundred government policy documents related to the regulation of coal resources. Among them, the Coal Law promulgated in 1996 is the core legal basis for coal resource regulation, while the Measures for the Administration of Coal Production Licenses and its implementation rules, the Strategic Action Plan for Energy Development (2014–2020), and the Opinions on Promoting the Healthy Development of the Coal Industry, promulgated by the Chinese government, provide the regulatory basis for coal resources from various aspects. improvement. In addition, to strengthen the supervision of township coal mines, the Chinese government issued the Regulations on the Administration of Township Coal Mines in 1994. The regulations stipulate that township coal mining coal resources should follow the principle of equal emphasis on development and protection, and applicants must apply for a mining license and a coal production license in accordance with the regulations. (b) Oil and gas resources The foundational law for the legal regulation of China’s oil and gas resources is the Energy Law, which has not yet been promulgated. The National Energy Administration issued a draft for public comment in 2020, but is still in the revision and improvement stage. The draft Energy Law released by the National Energy Administration stipulates that the competent energy authorities and relevant departments should assume the responsibility of supervision and management, and play their role through prior supervision and standing supervision, with the main focus of supervision being energy supply guarantee, fair opening of the pipeline network, safety reserves, and emergencies. In addition, the latest Mineral Resource Law stipulates that the competent department of natural resources should supervise the circulation and management of mineral resource mining rights, payment of mining taxes and fees, market opening and optimization of business environment, and ecological restoration of mining areas. Specific management rules for the oil and gas resource market, such as registration of prospecting rights, registration of mining

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rights, trading of mining rights, and management of oil prices, are generally regulated in detail through implementation rules or management measures. At present, most regulatory policy documents in China’s oil and gas resources sector are mainly ministerial regulations or administrative guidance, and the level of legal effect is generally low. Taking Sino–foreign cooperative exploration and development as an example, the Catalogue of Industries Encouraging Foreign Investment (2019) published by the National Development and Reform Commission encourages foreign investment in the exploration and development of oil and gas resources; in addition, the Chinese government has promulgated the so-called Two Regulations, namely, the Regulations on Foreign Cooperative Exploitation of Onshore Petroleum Resources and the Regulations on Foreign Cooperative Exploitation of Offshore Petroleum Resources. The latter regulations set out specific requirements for the application of exploration licenses for foreign cooperative exploration and exploitation of oil and gas resources. An important aspect of energy resource regulation is to conserve energy and improve the efficiency of energy utilization. In this regard, the National People’s Congress in 2007 revised the 1997 Energy Conservation Law, with the aim of promoting energy conservation for the whole society, improving the efficiency of energy use, and promoting the overall coordinated and sustainable development of the economy and society on a legal basis; and the rational use and conservation of coal, oil, natural gas, biomass and electricity, heat, and other types of energy to make specific provisions. According to this law, energy conservation is the basic state policy, the state implements both conservation and development, placing priority on the former in the energy development strategy, and energy conservation management is performed by the department in charge of energy conservation supervision. (5) Historical changes in the basis of forest resource regulation To protect, cultivate, and reasonably utilize forest resources; accelerate the greening of the country; guarantee forest ecological security; build ecological civilization; and realize the harmonious coexistence between humankind and nature, the Chinese government enacted the Forest Law in 1984, and subsequently amended it three times. The Forestry Law and its implementing regulations are the core basis for the regulation of forest resources in China. The Forestry Law and implementing regulations stipulate that forest resources belong to the state, and that the protection, cultivation, and utilization of forest resources should respect nature, follow nature, and adhere to the principles of ecological priority, protection priority, conservation integration, and sustainable development. The state implements the target responsibility system for the protection and development of forest resources and the assessment and evaluation system, and establishes a system of compensation for forest ecological benefits. The state implements a system of registration and licensing of forests, trees, and forest land in accordance with the law, and the use of forest land for logging should be carried out within a reasonable range and approved by the competent authorities. Forestry authorities at all levels supervise and manage the protection, restoration, utilization, and renewal of forest resources.

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(6) Historical changes in the basis of grassland resource regulation The Grassland Law is the core basis for grassland resource regulation. There are numerous administrative regulations, policy documents, and local regulations with relatively low level of effectiveness related to grassland resource regulation, such as the Grassland Ecological Protection Subsidy and Incentive Policy. Given that China’s grassland resources are concentrated in some provinces, such as Inner Mongolia, Gansu, Qinghai, Xinjiang Uygur Autonomous Region, and other large provinces with grassland resources, and the development status of grassland resources varies from place to place, the regulation of grassland resources must be adapted to local conditions, and the legal basis for regulation is mainly based on local regulations. According to incomplete statistics, the Chinese government has promulgated more than 100 grassland laws, regulations, and policies since the reform and opening up, accounting for a relatively large number of local regulations, especially in the western provinces, which have promulgated the largest number of policy documents. The content is mainly related to grassland management and ecological protection. (7) Historical changes in the regulatory basis of marine resources Ocean-related laws include Marine Environmental Protection Law, Fisheries Law, Sea Island Protection Law, and the Law on Exploration and Development of Resources in Deep Seabed Areas (see Fig. 3.8). In addition, the government policy document library shows that the Chinese government has promulgated more than 50 policy documents related to marine resources. Although the Marine Environmental Protection Law mainly emphasizes the protection and improvement of the marine environment and is less concerned with contents directly related to the regulation of marine resources, the Marine Environmental Protection Law also plays an important role in protecting marine resources, because the marine environment and marine resources are inseparable. By contrast, the Fisheries Law is more specific and focuses on the protection, enhancement, development, and rational use of fisheries resources. The core regulatory purpose of the subsequent Law on Protection of Sea Islands is to reasonably develop and utilize the natural resources of sea islands to promote sustainable economic and social development. This law also stipulates that the competent marine authorities and their sea surveillance agencies, and relevant departments of people’s governments at or above Marine Environmental Protection 1982

1986 Fisheries Law

Sea Island Protection Law 2009

2016 Law on Exploration and Development of Resources in the Deep Seabed Area

Fig. 3.8 Historical changes in the main basis of marine resource regulation

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the county level have regulatory responsibilities. The Law on Exploration and Development of Resources in Deep Seabed Areas, which was considered and adopted in 2016, provides a legal basis for the promotion of deep-sea scientific and technological research and resource investigation for the purpose of protecting the marine environment and promoting the sustainable use of resources in deep seabed areas; it stipulates that the competent government marine department is responsible for the supervision of resource exploration and development and resource investigation activities in deep seabed areas. (8) Historical changes in the basis of biological resource regulation In China’s legal system, the legal system specifically for the regulation of biological resources mainly includes the Fisheries Law, the Law on the Protection of Wild Animals, the Implementing Regulations on the Protection of Terrestrial Wild Animals, the Implementing Regulations on the Protection of Aquatic Wild Animals, and the Regulations on the Protection of Wild Plants. Adopted in 1988, the Wildlife Protection Law forms the core for the regulation of biological resources. This law stipulates that wildlife resources belong to the state, and the state implements the principles of prioritizing protection, regulating utilization, and strictly supervising wildlife; the government forestry, grassland, and fishery authorities are in charge of the protection of terrestrial and aquatic wildlife nationwide; and detailed punishment provisions are provided for illegal acts, determining administrative or criminal liability. Biological resources mostly depend on grasslands, forests, and oceans, and thus, there are several references to the requirements of biological resource regulation in other natural resource regulation laws. According to statistics from the Chinese government policy document library, there are more than 60 policy documents related to biological resources, such as the Action Plan for the Conservation of Aquatic Biological Resources in China promulgated in 2009 and the Program for the Protection of Aquatic Biodiversity in Key Basins promulgated in 2018, which make the legal system for the regulation of biological resources more complete (Table 3.4).

3.3.2 The Changing Law of Regulatory Basis From the change process of various natural resource regulatory bases considered in the previous section, it is evident that China’s natural resource regulatory legal system has gradually improved through the process of continuous revision and that various laws, regulations, systems, and policy documents at different levels together constitute the regulatory legal system. (1) Problem-oriented The legislation based on natural resource regulation in China has not developed overnight, and almost every law has undergone several amendments. Based on the

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Table 3.4 Current major natural resource regulatory laws in China [1, 2, 5–9] Legal name

Latest revision date

Water Law

July 2, 2016

Land Management Law

August 26, 2019

Forestry Law

December 28, 2019

Regulations on the Implementation of the Forestry Law

March 19, 2018

Mineral Resource Law

August 27, 2009

Coal Law

November 7, 2016

Grassland Law

June 29, 2013

Resource Tax Law

August 26, 2019

Law on the Protection of Sea Islands

August 27, 2009

Marine Environmental Protection Law

April 24, 2017

Wildlife Protection Law

October 26, 2018

Implementing Regulations on the Protection of Aquatic Wildlife

December 7, 2013

Implementing Regulations on the Protection of Terrestrial Wildlife

February 6, 2016

Regulations on the Protection of Terrestrial Wild Plants

October 7, 2017

Law on Soil and Water Conservation

December 25, 2010

Regulations on Nature Reserves

October 7, 2017

Basic Farmland Protection Regulations

January 8, 2011

Land Reclamation Regulations

February 22, 2011

current situation of natural resources at different times, the Chinese government has continuously improved regulations and laws with the aim of solving the problems in natural resource regulation. For example, the Water Pollution Prevention and Control Law was introduced to solve the problems of water resource destruction and water environment pollution, and the Resource Tax Law was promulgated to improve the system of paid use of resources [12]. (2) Taking into account local autonomy China’s natural resource regulatory system has gradually unified the various regulatory bodies while fully reflecting the principle of respecting local autonomy. China’s natural resources are widely distributed, and the level of regulation and status of resources vary from place to place; thus, adopting exactly the same standards as the basis for regulation may reduce the efficiency of regulation. China’s natural resource regulation is based not only on laws, but also on rules, regulations, and policy documents formulated by local governments and various regulatory departments. A multi-effective legal system with laws as the platform and local autonomy is conducive to improving regulatory efficiency. (3) Regulatory focus All types of natural resource regulation laws and regulations are based on seven key areas of natural resources: source ownership establishment, development and

References

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utilization, resource conservation and protection, paid use system, production and operation, regulatory bodies and their responsibilities, and punitive measures.

3.4 Summary This chapter combed the evolution of China’s natural resource regulatory system since the founding of the People’s Republic of China from three aspects: regulatory philosophy, regulatory body, and regulatory basis. Based on the induction of regulatory philosophy, body, and basis in different periods, we analyze the evolution pattern of China’s natural resource regulatory system. First, regulatory philosophy, the core guiding ideology of natural resource regulation, is constantly changing and gradually being enriched. With the development of China’s economy and the change of social problems faced by government, it has experienced the process of extensive supervision to developing and utilizing natural resource reasonably, and finally to realizing sustainable development. In the twenty-first century, the core of China’s natural resource regulatory philosophy is to construct ecological civilization to meet the needs of green development and sustainable development. Second, regulatory basis, which is composed of laws, regulations, and government documents at different levels of effectiveness, is the specific and standardized form of regulatory philosophy. Under the guidance of regulatory philosophy, China’s natural resource regulatory legal system is constantly improving, providing a reliable basis for regulation. Third, regulatory body, which is usually assumed by the Chinese government and its subordinate institutions at all levels, is the maker and implementer of supervisory law and policies. From 1949 to now, China’s natural resource regulatory body has transformed from no regulation to its current excellent level. Through several government institution reforms, the supervisory institutions have shifted from segmentation to unity. The current executive department of China’s natural resource regulatory is the Ministry of Natural Resources. As a result, the division of supervisors’ duties and powers have been clarified and the establishment of supervisory institutions has gradually been streamlined.

References 1. People’s Daily Online, http://www.people.com.cn/ 2. Central People’s Government of the People’s Republic of China, http://www.gov.cn/ 3. Shuzhong G, Hong Z, Yulong Y. Natural resource regulation on regional economic development in China: Concepts, framework and practices. Journal of Resources and Ecology, 2013, 4(1): 1–10. 4. Van Putten IE, Cvitanovic C, Fulton E, Lacey J, Kelly R. The emergence of social licence necessitates reforms in environmental regulation. Ecology and Society, 2018, 23(3).

76 5. 6. 7. 8. 9. 10.

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Ministry of Natural Resources of the People’s Republic of China, http://www.mnr.gov.cn/ Ministry of Water Resources of the People’s Republic of China, http://www.mwr.gov.cn/ China Geological Survey, https://www.cgs.gov.cn/ National Energy Board, http://www.nea.gov.cn/ National Forestry and Grassland Administration, http://www.forestry.gov.cn/ Yang Q, Song D. How does environmental regulation break the resource curse: Theoretical and empirical study on China. Resources Policy, 2019, 64: 10148. 11. Audit Office of the People’s Republic of China, http://www.audit.gov.cn/ 12. Wang Y, Chen X. Natural resource endowment and ecological efficiency in China: Revisiting resource curse in the context of ecological efficiency. Resources Policy, 2020, 66: 101610.

Chapter 4

International Comparison of Natural Resource Regulatory Systems

The supervision system of natural resources in different countries varies greatly owing to differences in land area, population environment, natural resource endowment conditions and distribution, regulatory regime, and economic development level in different countries. The United States, Japan, and Russia have different natural resource endowment conditions, and their regulatory models and systems of natural resources also have their own characteristics. All three countries have a relatively long history of natural resource supervision. Having enacted several reforms of the regulatory system, they have already had longer experience in the regulation of natural resources than China. The analysis of the governance experience of these countries is of great significance for the improvement and reform of China’s natural resource regulatory system. This chapter takes the United States, Japan, and Russia as examples to systematically study the development history and current status of their natural resource regulatory systems.

4.1 Development History and Status Quo of the Natural Resource Regulatory System in the United States 4.1.1 Distribution of Natural Resources With rich mineral, forestry and agricultural resources, the United States has an important position in the world. In terms of total mineral resource reserves, the United States ranks first in the world and is one of the most important holders and exporters of coal and mining resources [1]. The country is rich in coal, oil, natural gas, iron ore, potash, phosphate, sulfur, and other mineral resources. The United States also accounts for a large percentage of the world’s reserves of molybdenum, vanadium,

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 T. Ding and M. Song, Natural Resource Regulation in China, Contributions to Public Administration and Public Policy, https://doi.org/10.1007/978-981-99-5593-0_4

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tungsten, gold, silver, uranium, boron, and other minerals. In addition, the distribution of mineral resources in the United States is concentrated, shallow burial, with good mining conditions. The United States has abundant forest resources. Domestic boreal forests are mainly distributed in the overseas states in the north of the United States: the vast temperate forests of Alaska; and the lush tropical forests of Puerto Rico and Hawaii. There are more than 17,000 native plants and tree species in the United States, and more than 5000 in California alone. Forests cover one-third of the total land area. The United States has fertile land, vast pastures, and abundant water resources, which provide very favorable conditions for its industrial and agricultural production and development. According to the Food and Agriculture Organization of the United Nations, by the end of 2019, the land area used for crops and livestock in the United States was about 406 million hectares, and the arable land area was 160 million hectares, accounting for about 16.04% of the country’s land area. With unique natural conditions and modern production methods, the United States accounts for about one-fifth of the world’s grain output, and ranks first in the output of large agricultural and pastoral products, such as wheat, corn, soybeans, cotton, and meat.

4.1.2 Ownership of Land and Resources According to the laws of the United States, land resources refer to land resources, minerals, water, forests, and oceans, etc. After hundreds of years of reform, the private system of resources in the United States has been optimized. Land in the United States is owned by private individuals, the federal government, local governments, and Native Americans. Given that the ownership of land and resources in the United States is decentralized, the actual supervision process is independently managed according to ownership. Private land is operated and managed independently by land owners. The federal government is mainly responsible for the management of national parks, federal government offices, land assigned to each state and county, and minerals, forests, water, beaches beyond 3 miles of the coastline, and minerals on the seabed [2]. All federal land in the United States is generally referred to as public land, accounting for about 31% of the country’s land; public land is owned by the Ministry of the Interior for such functions as water resource administration management. The state government is mainly responsible for the management of state parks and the land of state government agencies and dispatched county and city agencies, as well as minerals, forests, water resources, and so on; in addition, with the federal government, state governments own beaches and sea minerals beyond 3 miles of the coastline, all comprising about 10% of the national land. Land owned by city governments, including urban roads, greenery, and public facilities, accounts for about 1% of the country’s land.

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As most of the land and resources in the United States are private, private ownership of land determines that the supervision of natural resources in the United States often involves issues related to the ownership of natural resources, which inclines the US property rights system to focus on the protection of private rights. Even if the federal government or local government require private land to build roads, schools, and other public facilities for the national or social public interest, the consent of the landowner must be obtained, and the transaction and purchase must be carried out through the market. Although local governments in some regions still have partial reservations about property and land use, the United States attaches great importance to protecting the rights of landowners under the law, such as rent, distribution, and disposal of land, as well as rights to transfer, mortgage, and inherit land. Private land infringement and land ownership disputes are rare in the United States, as landowners have clear boundaries with land ownership and private property is strictly protected by law.

4.1.3 Development History of Natural Resource Regulatory System (1) Land resources The management of land resources in the United States has evolved over hundreds of years since the founding of the country. The United States has a vast area of agricultural land, and the changes in agricultural land policies are inseparable from the evolution of other land use policies. Therefore, taking the supervision of agricultural land of the US government as the main object of analysis, the supervision of land resources in the United States is divided into the following stages. First stage (founding of the United States to the 1930s): when the United States became independent, the Homestead Act of 1862 gave every adult immigrant in the Western Territories 160 acres of land to settle and operate freely. In the following decades, a number of laws were gradually introduced to revise the Homestead Law, and the area of donated land continued to expand. The US constitution gave the states control over land use, and by 1820, local governments owned most of the land. During this period, a large amount of public land was disposed and transferred. These policies were ostensibly designed to protect the interests of ordinary residents and urban middle class residents, but the real beneficiaries of these programs were mostly speculators and developers. Second stage (1930s to 1970s): in the early twentieth century, US cities were densely populated, and the government had to strictly regulate land use and identify land that did not meet actual uses and regulations. The US government uses a zoning system for land use control, which indicates areas reserved for agricultural land or agricultural uses. However, even with these measures, the total living area in the United States doubled in the decades from the 1940s to the 1970s, two-thirds of which was agricultural and other rural land.

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Third stage (1970s to mid-1990s): some land use changes affect the biodiversity of the land, changes natural productivity, and even lead to the complete loss of the abovementioned capabilities of the land in severe cases. In addition, the environmental pollution problems caused by improper use of land make it impossible for the US government to ignore land management. As a result, the US government enacted laws to strictly control the conversion of farmland to land use. This type of management can permanently protect agricultural land forms, promote the restriction of development activities to planned sites, and compensate landowners. To protect agricultural land, the government bought development rights from land owners, where the payment amount refers to the difference between the development value for non-agricultural use and the production value for agriculture. After the land was purchased by the government, it was restricted for agricultural use [3]. Fourth stage (mid-1990s to present): there are clear differences between the markets and use of land in urban and built-up areas versus rural areas. The public policy of rural land should focus on protecting the productive potential of resources so as to meet domestic agricultural demand in the future. The spatial expansion of urban land has inevitably impacted agricultural land. Under the pressure of domestic agricultural development and the increasing demand of agricultural land protection, the government has had to reconsider the significance and necessity of protecting agricultural land. In this stage, the focus of land resource management began to shift from development to protection, and the policy gradually became flexible. (2) Water resources The history of US management of water resources over more than 100 years shows that the system moved from decentralization to centralization and then back to decentralization. At present, the United States implements a decentralized management model combining federal and state, basin and local. The history of water management in the United States can be traced to after the Revolutionary War. This section roughly divides the regulation of water resources in the United States into the following stages. First stage (after the War of Independence to 1930): in this stage, the management of water resources focused on development, construction of water conservancies, development of domestic industry, agriculture, and transport, so as to achieve the purpose of consolidating national defense and ensuring national sovereignty. During this period, the first federal water law in the United States was promulgated in 1901. In 1902, the US Bureau of Reclamation was established and the Reclamation Act was promulgated, giving the country sovereignty over water resources. In 1928, against the background of the New Deal implemented by Franklin D Roosevelt, the Flood Prevention Act brought a boom in water conservancy construction in the United States. Second stage (1930–1970): during these decades, the management of water resources in the United States entered the stage of target development and comprehensive watershed management. The government solved the social employment problem through water conservancy construction and drove the development of the national economy. Instead of blindly constructing water conservancy projects, it began to pay

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more attention to economic benefits, and at the same time encouraged local governments to participate in water conservancy construction. In 1933, the Tennessee Valley Agency was established. The enactment of the Water Resources Planning Act of 1965 set the conditions for state water resource planning and improved the federal government’s efficient management of water resources. Third stage (1970–1990): around the 1970s, the US government began to pay attention to the consumption and management of water resources. In view of the increasingly serious agricultural water pollution, the Environmental Protection Act passed in 1970, and a series of laws and regulations, such as the Water Conservancy Control Act and Dam Safety, emphasized the importance of water resource protection. At the same time, strengthening management of non-engineering measures and water education not only promoted the rapid development of environmental protection movement, but also played a practical role in optimizing national water consumption and per capita water consumption. Fourth stage (1990–present): in this stage, the government no longer blindly built new water conservancy projects, but has focused on existing water conservancy projects, attached importance to the restoration and protection of wetland and watershed ecosystem functions, and gradually managed water resources with the concept of sustainable recycling. Future regulation of water resources in the United States will pay more attention to ecological functions. Under the premise of ensuring water quality, more attention should be paid to whether the ecological indicators can meet the comprehensive development of the entire river basin ecosystem. (3) Marine resources Due to the long coastline and abundant marine resources in the United States, marine resources occupy a pivotal position in the national economic assets of the United States. The US government has long attached great importance to the supervision of marine resources. After the 1960s, the United States established state and local marine affairs management agencies in coastal states, forming a top–down marine management agency—a regulatory system led by government agencies and managed by federal, state, and local governments. The marine administrations of the federal and state governments of the United States carry out decentralized management of marine affairs. The marine living resources and marine non-living resources within 3 miles of the coastline are managed and developed by the state government, while the beaches and seabed minerals beyond 3 miles of the coast are mainly managed and exploited by the federal government. To regulate Marine resources, the United States has formulated a series of laws and regulations. For example, the Bureau of Ocean Energy Management formulates policies to promote energy and economic development and takes into account the impact of the human environment in coastal areas according to the provisions of the Outer Continental Shelf Land Law. The Law on the Management of Coastal Areas and the Law on the Management of Coastal Zones protect the coastal environment and provide management measures to deal with conflicts between the living needs of residents in coastal areas and industrial and commercial objectives. The Underwater

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Land Act establishes the right of marine management departments of coastal states to manage resources within 3 miles of coastlines, and establishes the principles of use and control of underwater resources. The Marine Conservation, Research and Nature Reserves Act provides for the protection of marine areas of ecological and recreational value. To improve the management efficiency of marine resources, in addition to promulgating laws and regulations, the US government has formulated planning documents on marine planning. In the late 1990s, the Coastal Ocean Monitoring Plan (1998– 2007) was issued. In 2009, the Memorandum on the Development of US Ocean Policy and Implementation Strategies was implemented, and it proposed that marine spatial planning should fully consider the protection of marine, coastal, and great lake resources as well as the sustainable use of marine resources. In 2016, the US Congress approved the 2017–2022 Plan, which envisages 11 potential lease sales in all or part of four Outer Continental Shelf Planning Areas. (4) Forest resources The United States is extremely rich in forest resources, which has promoted the rapid development of the American forestry industry. As one of the largest exporters of wood and paper products in the world every year, even if annual wood consumption remains high, domestic forest resources are still well protected, which is attributed to the sound supervision system for forest resources of the United States. The history of its forest resource management goes back more than 100 years to 1891. The passage of the Forest Reserve Regulations marked the road to legalization of the supervision of forest resources in the United States. According to the different utilization and management methods of forestry resources by the US government in different periods, the supervision of forest resources in the United States is divided into the following three stages. First stage (end of the nineteenth century to the 1920s): during the outbreak of the First World War, the United States blindly pursued profit maximization to meet the consumption of military materials, resulting in large-scale development of forest resources. In this stage, forests were cut down in large numbers, causing great damage to the national forest resources. Second stage (1920s to 1960s): against the background of the Second World War, the federal government strengthened its intervention in the country’s industry and agriculture, and forest resources entered the stage of being protected while being continuously exploited for national economic development. The promulgations of regulations on Multiple Utilization and Sustainable Production of Forests in 1960 marked the transformation of the management concept of forest resources in the United States from continuous development and production to pursuit of economic and ecological benefits [4]. In this period, the comprehensive utilization rate of wood increased and wood preservative technology improved. Third stage (1960s to 1990s): in this stage, the capitalist economy developed rapidly, and industrial development brought to the fore a series of problems for the environment as people became more conscious of environmental protection. Meanwhile, a lot of environmental protection organizations and environmental protection

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laws were gradually standardized, not only for forest resources, but also the protection of wildlife and habitats, which were increasingly valued. Forests were no longer just big factories for lumber production, but also places for US citizens to visit and utilize. Fourth stage (twenty-first century to present): under the wave of global environmental protection, the protection of forest resources in the United States has entered the stage of sustainable utilization. On the one hand, through the combination of the agroforestry ecosystem and land management, the utilization rate of existing land has greatly improved. On the other hand, the economic benefits have been maximized. The US government has been actively seeking a healthy way to preserve forest reserves, protect biodiversity, and better coordinate economic, social, and ecological relationships.

4.1.4 Current Situation of Natural Resource Regulation (1) Regulatory agencies and responsibilities Natural resource management departments in the United States include the Department of the Interior, the Department of Agriculture, and the Department of Commerce, among others. The Ministry of the Interior manages resources relatively comprehensively, managing 480 million acres of public land, including national parks and national wildlife reserves. Based on the legislation and strategic planning of natural resources in the United States, the Department of the Interior has established an organization and task division according to different tasks, with 10 bureaus under it (as shown in Fig. 4.1). These 10 bureaus work around five types of business, each of which is responsible for managing and supervising a specific type of natural resources. To improve the living environment of wild animals and plants, the efficiency of resource utilization, and the strength of ecological protection, the Fish and Wildlife Administration and the National Park Administration were established. The Bureau of Ocean Energy Management, the Bureau of Safety and Environmental Enforcement, the Bureau of Surface Mining reclamation, and the Executive Board were established to promote the development and management of energy and mineral resources in the United States, improve the national economy, create jobs, generate revenue for the government, and provide energy security. The Bureau of Indian Affairs and the Bureau of Indian Education were established to promote the economic development of the Alaskan islands and coordinate the related affairs of native people; The Bureau of Land Management was established to make full use of federal lands and to coordinate land use for state affairs and land resources needed for outdoor recreation by residents. The Bureau of Reclamation and the Geological Survey were established to manage water resources and technology.

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4 International Comparison of Natural Resource Regulatory Systems Minister of the Interior

Deputy Minister Assistant Deputy Secretary for Fish, Wildlife, and National Parks

Assistant Undersecretary for Indian Affairs

National Park Service

Bureau of Indian Affairs

Fish and Wildlife Service

Bureau of Indian Education

Assistant Deputy Secretary for Land and Mineral Management

Bureau of Land Management Office of Surface Mining Reclamation and Enforcement

Assistant Undersecretary for Water and Scientific Management

Assistant Undersecretary for Island Affairs Management

United States Geological Survey

Island Affairs Office

Bureau of Reclamation

Office of International Affairs

Bureau of Ocean Energy Management Bureau of Safety and Environmental Enforcement

Fig. 4.1 Organizational chart of the US Department of the Interior (Source US Bureau of Land Management website)

In addition to the 10 bureaus, the Ministry of the Interior has also set up several offices, which are responsible for dealing with major emergencies, formulating corresponding policies, and realizing internal and external coordination. The Office of Policy Management and Budget is responsible for formulating and analyzing policy, promoting management reform in the Department of the Interior, coordinating work across bureaus and offices, and ensuring standardization and efficiency throughout the department. The Office of the Chief Information Officer is responsible for issuing mandates and working with stakeholders to implement policy guidance on information management standards and best practices. In addition, the Department of the Interior has established a separate Office of Natural Resource Revenue to collect and manage natural resource revenue. Natural resource management in the United States is not entirely the responsibility of the Department of the Interior. For example, the Ministry of Agriculture is also involved in the management of national forests and mineral resources and fire prevention of wasteland. The Ministry of Commerce and the Ministry of the Interior formulate management measures for fisheries and endangered wild animals. The Army Corps of Engineers is responsible for the planning, design, construction management, and operation and maintenance of hydraulic projects. The mode of coordination and cooperation among various departments constitutes a relatively optimal natural resource supervision system in the United States, which plays an important role in the effective management and utilization of natural resources and harmonious coexistence between US citizens and the natural environment.

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The concept of natural resource management in the United States follows the principle of “protection first and moderate development,” which means that management departments not only take responsibility for ecological protection and supervision, but also undertakes the important task of using natural resource assets to generate income. Under the premise of not posing a threat to public safety or destroying the original ecosystem functions of protected areas, natural resource management can moderately carry out leisure, tourism, and other business activities using public land and offshore areas, and moderately develop resources, generate income for governments at all levels, and solve various social employment problems. In terms of strategic planning for domestic natural resources, the Ministry of the Interior has put forward the 2018–2022 Strategic Plan, which defines the responsibilities and tasks of the Ministry of the Interior, as well as the strategic planning framework, which provides strategy guidance for the implementation of tasks and daily activities of various bureaus and offices. The Commonwealth Land Policy and Administration Act of 1976 provides for comprehensive management of public land. Accordingly, the US Department of the Interior sets out visions for each agency in this strategic plan: (a) the Bureau of Ocean Energy Management manages the energy and mineral resources of the outer continental shelf to promote sustainable energy use while ensuring national security; (b) the National Park Service actively works with partners to protect natural and cultural resources, promote outdoor recreation for citizens, and protect the resources and cultural values of national forest parks for the enjoyment of present and future generations; (c) the Bureau of Indian Affairs is responsible for providing technical and financial support to native Americans and indigenous Alaskans to help develop native reservation areas; and (d) the Bureau of Land Management actively establishes and strengthens cooperative relationships with state, local, and private landowners to better realize resource sharing and environmental protection. The plan consists of six mission areas, 21 objectives, and 34 strategies that guide the department’s mission for a period of nearly 5 years. (2) Characteristics of natural resource regulation The United States carries out natural resource regulation in accordance with the ownership of land and resources of the separation of independent management, paying attention to the protection of private land ownership. The function of the market to achieve optimal allocation of resources is relatively developed. Various natural resources have a sound legal system for supervision. The development of the trading market has laid a good social foundation. The review so far of the development history of several natural resources and the analysis of regulatory agencies in the United States shows that the mainstay of natural resource supervision in the United States is mainly undertaken by the federal government and local governments. Under this regulatory system, the natural resource management functions of state governments are relatively independent, which is conducive for obtaining the benefits of a single natural resource and making the management of such resources scientific, rational, and professional. The management of natural resources in the United States is a combination of resource management and ecological management, emphasizing the rational use

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of resources, environmental protection, and ecological balance in the process of resource utilization and management. The US Department of Natural Resource Management follows the principle of “protection first and moderate development,” paying attention to integration and comprehensive resource management. This concept differs from the traditional single pursuit of sustainable maximum yield of ecosystem resource utilization, which has been explored by the US government for decades of its management history. This mode is suitable for the development needs of today’s society.

4.1.5 Experience of US Natural Resource System Regulation for China Like the United States, China’s natural resource regulatory system has undergone several major changes in its philosophy and practice. The United States, as one of the countries with a relatively complete natural resource supervision system in the world today, can offer lessons for China’s natural resource supervision and sustainable use of natural resources. Although China’s land ownership system is quite different from that of the United States, the strict protection of land property rights in the United States is worthy of attention. Only by clear division of property rights first can rights be protected. China should make a clear division of land property rights, and improve the corresponding legal system to protect them, so as to greatly reduce the contradiction between land expropriation and land demolition in China. China should also actively use scientific technology to improve the efficiency of resource management. With the need for social development, resource management should be transformed from a single category of natural resource management to comprehensive and systematic management, including the concept of multiple applications (an interdisciplinary management approach). The scientific techniques include natural resource surveys, evaluation, ecosystem monitoring, and comprehensive utilization technical guidance. For example, to protect and restore coastal habitats, the United States has incorporated ecosystem assessment services, such as carbon sequestration technologies, into its current environmental regulations; while fisheries management decision makers are given such information as seasonal and spatial closures, annual quotas, and stock rebuilding plans to establish rigorous, science-based systems to detect changes in fish populations, productivity, and catches [5]. China should give full function to the government for regulating the use of natural resources. While China’s government has obvious differences from the US government, the grading management and decentralized management of natural resources in the United States could be very good ideas for China. Control of natural resources by the national government and local governments could formulate a clear and reasonable division of labor. In this process, attention should be paid to the division of

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powers and responsibilities of local governments at all levels. However, the United States has very developed property rights transactions. It mainly relies on the market to regulate the supply and demand relationship of different resources, and the government does not participate directly in management. This suggests that China could strengthen the use of economic and legal means for regulation while adhering to its original administrative means.

4.2 Development History and Status Quo of Japan’s Natural Resource Supervision System 4.2.1 Distribution of Natural Resources Japan’s geographical characteristics determine the state of its land resources. As an island country in the eastern Pacific Ocean, Japan has a coastline of 33,899 km and numerous ports, which not only bring abundant fishery resources to Japan, but also promote its development of marine transport and marine energy development, laying a good foundation for the development of the national economy. Japan is rich in mineral resources, but its total mineral reserves and per capita reserves are low. With the exception of a few mineral resources, such as coal, natural gas, and sulfur, domestic industries rely on imported raw materials. Forests cover 69% of Japan’s land area, making it one of the most forested countries in the world. The rich forest resources have brought a wide variety of plant species to Japan. There are about 5560 species of plants growing locally. Although this is slightly less than countries with tropical rain forests, Japan has rich biodiversity compared with many other developed countries. Japan is not large in area, but its geographical location determines its vast area from a subtropical to a subcold zone, with large altitude difference, numerous islands, and diversified natural environment, providing unique conditions for Japan’s biodiversity. Japan’s fishing resources are very rich. Hokkaido and the Sea of Japan are well known among the world’s big fishing grounds, and have more than 700 kinds of fish, with high production of such seafood as tuna and sardines.

4.2.2 Ownership of Land and Resources After the Meiji Restoration, the Japanese government, by promulgating a series of laws and regulations, pushed the original feudal land ownership in the country to capitalist land ownership, and transformed land ownership into private ownership. Japan’s current land ownership forms are relatively diverse, mainly state ownership, public ownership, individual ownership, and legal person ownership. State-owned and public land (owned by local governments) accounts for 37%, while private land

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(owned by individuals and businesses) accounts for 63%, according to the Land Agency’s white paper on land. For state-owned and public land owned by local governments, more importance is attached to the protection of ecological environment and natural resources than for private land, because most of the former consist of mountains, rivers, forests, and coastal lands, which are related to the interests of Japanese people. For example, 90% of Japan’s state-owned forest areas are owned by the central government and designated as shelterbelts, playing an important role in land security. In addition, to protect the public interest, the Japanese government has set certain restrictions on the use of private land, such as clear regulations on tree felling, forest development, afforestation, basic living standards of people in forest areas, and use and dosage of water resources.

4.2.3 Development History of Natural Resource Management (1) Water resources Much of Japan falls in subtropical monsoon areas with abundant rainfall, but owing to high population density, the per capita rainfall is very low, and owing to the narrow feature of many of Japan’s rivers, abundant rainfall does not bring much advantage to Japan’s water resources. As the annual water consumption in Japan has been increasing with every year, the Japanese government has been paying attention to the management of water resources, which can be divided into the following stages. First stage (late nineteenth century to 1950s): after the Meiji Restoration, the Japanese government promulgated the River Law in 1896, which clarified that the ownership of rivers is public, and the state has the right to use and dispatch water resources. In the following decades, several revisions were made according to changes in the national water resource situation, and the Water Resource Development Promotion Law was formulated. Second stage (1950s to 1970s): in this period, Japan’s industrial economy developed rapidly. The Japanese government vigorously implemented a reservoir dam project in this period and adopted such measures as development of groundwater to meet the demand for water resources by industry, but there was no emphasis on the conservation and management of water resources or the formulation of pollution control measures [6]. At the same time, due to the length and footprint of intensive water projects, there were fewer and fewer areas in the country suitable for dam construction, making this approach unsustainable. In addition, the consequences of excessive exploitation of groundwater without attention to treatment emerged, leading to such problems as subsidence and salinization of land across the country. Third stage (1970s to end of the twentieth century): in the 1970s, the Tap Water Source Law and the Water Pollution Prevention and Control Law were promulgated, requiring local governments to regularly test the water quality of public water resources within their jurisdictions and report the results to the state for publication.

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When an enterprise did not meet drainage standards, the government had the right to stop discharge and issue penalties. In the 1980s, due to the impact of urbanization, the flow of urban rivers sharply decreased, and the increase of flow in urban areas began to attract attention in Japan. The Tokyo government was the first in Japan to replenish the main stream with reclaimed water to restore water flow and aquatic environment [7]. After decades of treatment, by the end of the 1990s, the underground water level in the Tokyo area had recovered about 20 m compared with that in the 1960s. During this period, Japan’s water resource environment was significantly improved. Fourth stage (twenty-first century to the present): in 2000, the New National Comprehensive Water Resource Plan was formulated to meet the needs of the contemporary circular economy and build a sustainable water resource system. In 2012, Japan officially regarded water resource management and its utilization technology as one of three key advantageous areas for future national development, alongside medical care and automobiles. (2) Land resources Japan has implemented capitalist private ownership of individual land in modern times. Against the background of rapid economic growth in Japan, rapid concentration of urban populations, and rapid development of domestic industry and commerce, Japan’s leadership has long recognized the necessity of land resource management. In terms of land ownership management, the Japanese government issued the Civil Law in 1896, stipulating that land was regarded as immovable property and changes of land ownership should be registered. In 1899, the Real Estate Registration Law stipulated that a real estate registration system should be implemented in Japan. Changes involving land ownership, the status of the property, disposal, and change of land ownership had to be registered with the national statutory registration authority. Subsequently, in the early 1950s, the government carried out a large-scale and longterm land survey, mainly to obtain a comprehensive understanding of the ownership, use, area, and use status of the land; this was completed only at the end of 1995. Currently, when the land owner changes, it is necessary to go to the registration office to change the registration and to submit an application for review to the Legal Affairs Bureau, which makes the change and is responsible for notifying it. In terms of land tax payment, the Meiji government promulgated the Regulations on Land Rent Correction in 1873 and began a 7-year project for land rent correction, which established a unified land rent system across the country and made land rent an important source of tax revenue in early Japan. The main contents of the land rent correction were: to set the land price as the tax standard; to implement a unified tax rate of 3% of the land price, with actual collection increased or decreased according to the harvest situation; to stipulate that local taxes must be paid in currency; and tax payers were transformed from land tillers to landowners. Subsequently, in 1950, the Local Tax Law promulgated by the Japanese government further improved the fixed asset taxation system; it stipulated that individuals and corporate land owners were the tax objects, that taxes were collected by the local government, and that the

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local government needed to register and record the tax according to the annual tax situation. In terms of farmland management: Japan’s land resources are inherently scarce. It has less arable land than countries with the same population size. In an environment with more people and less land, the Japanese government has continuously reformed farmland to improve arable land system, and to promote the transfer and use efficiency of farmland, so as to achieve the purpose of improving the level of agricultural development in the country. First stage (1945–1959): after the Second World War, Japan carried out reform of the agricultural land system. The government purchased land from landowners and resold it to landless farmers, and clarified the legality of land transactions. Through land reform, Japan established the yeoman farming system and limited the area of family land to 3 ha. These measures were confirmed by legal provisions through the promulgation of the Farmland Law. Development stage (1960s–1980s): the promulgation of the Basic Agricultural Law in 1961 relaxed restrictions on the circulation of farmland and became an important turning point in the decline of the amount of arable land in Japan. During this period, the government promoted the circulation of farmland and encouraged the separation of ownership and management rights of farmland by amending the Farmland Law and enacting a series of laws and regulations, including the Law on the Promotion of the Use of Farmland [8]. Third stage (1990s to the present): in the 1990s, Japan formulated and implemented the New Basic Law of Agriculture, among others, to guide the flow of agricultural land to the transfer of operators who could improve the efficiency of land use and actively improve the level and results of agricultural management. Since the beginning of the twenty-first century, the Japanese government has taken further measures to relax the transfer of agricultural land, encouraging and introducing nonagricultural production legal persons to participate in the transfer of agricultural land, leasing, and agricultural operation. (3) Forest resources Japan’s land resources are relatively scarce. Most land is mountainous, and only a small part of the country consists of plain areas. The terrain is complex, and Japan located in a seismic zone, with earthquakes occurring frequently. Thus, the Japanese government attaches great importance to the management and protection of forest resources, as forests not only contribute large output value to the national economy, they also improve Japan’s ecological environment and protect biodiversity. After the end of the Second World War, Japan invested a lot of labor, material resources, and finances to restore damage to forests from deforestation during the war. The wartime ruined forests were gradually restored in the 1950s. Subsequently, the growth of the Japanese economy increased demand for forest products, and encouraged the large-scale exploitation of natural forests. As Japan’s forestry resources gradually could not meet the domestic demand for timber, the Japanese government began to relax restrictions on log imports in 1960, and by 1969, timber imports accounted for 51% of domestic timber consumption, compared with only

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13% in 1960. In this context, the Basic Law of Forestry promulgated in 1964 was intended to develop the domestic forestry industry and improve the productivity and competitiveness of the country’s forestry industry by increasing the salaries of forestry practitioners. During this period, the Japanese government’s management of forest resources was more inclined to industrial policies than protection policies. After the 1980s, the pace of Japan’s economic development slowed, and pressure on domestic forestry and related industries was alleviated. Reduced timber consumption led to lower domestic timber prices [9]. At the same time, the appreciation of the yen further reduced the cost of timber imports, and the Japanese government’s management of forest resources entered a stage of protection. In the late 1980s, the large-scale post-war restoration through afforestation in the southwest region began to be logged. However, since 1975, state-owned forest management has been deteriorating, and the management system has been weakened. At the same time, Japanese citizens have increased their awareness of environmental protection and paid more attention to forest and environmental issues. As a result, since the late 1980s, watershed forestry policies aimed at diversifying forest protection and forest management objectives have been implemented. Since the 1990s, global climate and environmental issues have received wide attention from the international community. Treaties related to forests, climate, and biodiversity have been signed by many countries in the international environment, and Japan has played an important role in international environmental protection affairs. In 2016, Japan amended five forestry-related laws, including the Forest Law, and added and adjusted regulations, such as those for the management of forestry cooperatives and the legal logging of natural forests, aimed at protecting forest resources while maintaining the balance between supply of and demand for domestic forest products. A sound management system and legal system have enabled Japan’s forest management and production to be based on laws and maintain stable development. (4) Marine resources Japan’s management of marine resources differed from that of the United States, which set up such departments as the Bureau of Ocean Energy Management. The Japanese government carried out a large-scale reform of the administrative structure in 2001, which reorganized and merged departments related to marine resource management. Before that, marine affairs were managed in a decentralized manner by the former Ministry of Transport, the Ministry of Agriculture, Forestry, and Fisheries, and the Ministry of International Trade and Industry. After the administrative restructuring in 2001, the following departments mainly assumed responsibility for the supervision of marine resources: the Cabinet is officially responsible for investigating the scope and geological conditions of the continental shelf around Japan to ensure the full development and utilization of marine resources and mineral resources in the waters of Japan; the Ministry of Land, Infrastructure and Transport is responsible for marine meteorological surveys, maritime transport, marine safety, and coastal zone management; the Ministry of Education, Culture, Culture, Science, and Technology is responsible for research programs and policies related to marine

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exploration technology; and the Ministry of Agriculture, Forestry, and Fisheries is responsible for the administration of fishery resources and the fishery industry. In addition, the Ministry of Economy, Trade, and Industry, the Ministry of the Environment, and other departments are responsible for other affairs, but it is not difficult to see that because of the lack of a large-scale comprehensive administrative agency specializing in the management of marine affairs, the maritime-related departments are very complex, and prone to jurisdiction conflicts, while the situation of unequal rights and obligations aggravates coordination between departments [10]. Therefore, in the context of such organization and management, it is necessary to set up various coordination agencies: in 2002, the Cabinet of Japan established the Liaison Committee for the Investigation of the Continental Shelf within the Ministry of Agriculture, Infrastructure, Transport, and Tourism, the Ministry of Environment, and other administrative departments, which have been reorganized and merged since 2001. With widespread global concern for marine resources, environment, and security, as well as Japan’s continuous problems with neighboring countries on such issues as island sovereignty and resource development, disputes over maritime rights and interests have intensified, and the original decentralized management system for maritime affairs has become unsuitable for the marine environmental problems facing Japan. In the twenty-first century, the Japanese government has been seeking a comprehensive marine management system that suits its national conditions. The Basic Ocean Law was passed in 2007. The implementation of this law marked the completion of Japan’s institutional setup and the introduction of a legal system for the establishment of a maritime power.

4.2.4 Current Situation of Natural Resource Supervision (1) Regulatory agencies and responsibilities The implementation of Japan’s natural resource regulatory system is mainly managed by the following four central-level departments: the Ministry of Land, Infrastructure, Transport, and Tourism, the Ministry of Economy, Trade, and Industry, the Ministry of Agriculture, Forestry, and Fisheries, and the Ministry of the Environment. The Japanese government has implemented a modern comprehensive administrative management system that is classified according to its geographical location, natural resource endowment conditions, resource ownership structure, and other national conditions, as well as the attributes of channels for obtaining economic natural resources. Among the many natural resources in Japan, the government lists land resources, water resources, and marine resources as basic resources, which are supervised by the Ministry of Land, Infrastructure, Transport, and Tourism. These resources are closely related to national urban and rural construction, other spatial planning, transport and other infrastructure construction. The Ministry of Land, Infrastructure,

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Central Natural Resource Management Agency Ministry of Land, Infrastructure, Transport, and Tourism

Ministry of Economy, Trade, and Industry

Ministry of Agriculture, Forestry and Fisheries

General Policy Bureau

Energy saving and new energy sector

Internal Bureau: Rural Promotion Bureau

Bureau of Land Policy

Ministry of the Environment Environmental Promotion and Resource Circulation Office Internal Bureau

Resources, Fuel Department

Forestry Bureau Natural Environment Bureau

Bureau of Land and Construction Electricity and Gas Sector

Fisheries Office Nuclear Regulatory Commission

Metropolitan Bureau

Water Resources Department

Bureau of Water and Atmospheric Environment

External Bureau

Regional Environment Office

Maritime Bureau Center for Biodiversity

Fig. 4.2 Organization structure of Japan’s centralized department of natural resource supervision (Source Japan Natural Resources and Energy Agency website)

Transport, and Tourism was formed from the merger and reorganization of the original Hokkaido Development Department, the Land and Resources Department, the Ministry of Transport, and the Ministry of Construction. It is responsible for the development and utilization and protection of land resources with respect to land resources, formulating land policies, managing urban and rural planning as well as real estate industries, maintaining water conservancy facilities in rivers and the country in terms of water resource management, and preventing natural disasters, and is responsible for maritime transport and the development of marine industries in marine resource management (the specific departments are shown in Fig. 4.2). In 2001, the Japanese government carried out a large-scale reform of government functional departments, and the Ministry of Economy, Trade, and Industry was established from the original Ministry of International Trade and Industry. The restructured Ministry of Economy, Trade, and Industry has improved its work efficiency by optimizing its organizational structure. The Ministry of Natural Resources and Energy is an external bureau under the Ministry of Economy, Trade, and Industry and plays an important role in Japan’s natural resource supervision. It is responsible for formulating mineral resources and energy policies, balancing resource supply and demand, energy conservation management, new energy development, and construction of domestic electric power and nuclear energy, among other things, and has independence in the implementation of the administrative functions. The government assigns basic resources, such as land, water, and ocean, to the Ministry of Land, Infrastructure, Transport, and Tourism, and assigns such resources

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as grassland, forests, and aquatic products to the Ministry of Agriculture, Forestry, and Fisheries. The Japanese government has long attached great importance to the use efficiency and circulation of agricultural land. The Rural Development Bureau under the Ministry of Agriculture, Forestry, and Fisheries is responsible for managing agricultural land and formulating rural revitalization policies to improve the level of rural economic development. The Ministry of Economy, Trade, and Industry has set up the Forestry Department, Agriculture, Forestry, and Fisheries Technology Research Association, and Fisheries Department. The Forestry Department is responsible for planning and managing forests and grasslands nationwide, while the Fisheries Department is responsible for coordinating coastal fishery facilities and the formulation of fishery policies. The Agriculture, Forestry, and Fisheries Technology Research Association is responsible for food safety research on agricultural and aquatic products. The three foreign bureaus are independent in terms of finance and personnel appointments. The Ministry of the Environment is responsible for environmental protection and coordination of resource protection affairs among various departments by setting up internal bureaus, such as the Natural Environment Bureau, and is responsible for national biodiversity protection and recycling of renewable resources by setting up external bureaus, such as the Center of Biodiversity. (2) The characteristics of natural resource regulation in Japan Waters, land, and oceans can be used as a basis for dividing space. As spatial carriers, land, water, and oceans are concentrated in the unified planning and management of the Ministry of Land, Infrastructure, Transport, and Tourism, focusing on providing services for optimizing the spatial structure of land and promoting urban and rural construction and infrastructure construction. Most countries in the world are accustomed to adopting a centralized management model for land spatial planning management, and Japan’s integration of water and watershed distribution into spatial planning considerations is worth learning from for China. In terms of resource management, Japan has adopted a management model in which resource, industry, and ecological management go hand in hand. Japan is a developed country in the post-industrial stage, and its government attaches great importance to the impact of resources on the ecological environment. As early as the 1980s, the Japanese government began to transform from a resource-based management mode of heavy consumption and exploitation of resources to an ecological management mode of heavy protection. Regardless of which administrative department a certain resource is assigned for supervision, there is a corresponding protection agency. For example, the Ministry of Land, Infrastructure, Transport, and Tourism has a Department of Environmental Policy under the relevant ministries and departments, and the Ministry of Economy, Trade, and Industry has a Department of Radioactive Waste Management under the Department of Resources and Energy. These environmental agencies and the Ministry of the Environment complement and cooperate and coordinate with each other, and jointly contribute to the protection of Japan’s ecological environment.

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4.2.5 Relevance of Japan’s Natural Resource System Supervision for China Japan’s history of natural resource management is one of ecological protection without resource management. In the process of resource management, China should develop and utilize various ecological resources with a long-term vision, and attach importance to the harmonious development of humankind and nature and ecological balance. China should accelerate the pace of large-scale land construction, geological environment restoration and management, and coastal and island restoration, and should put green development into practice. In the process of reforming the resource management agency, China’s newly established Ministry of Natural Resources has integrated spatial planning, such as urban and rural planning, functional zoning, and land use. Since ancient times, China has placed emphasis on the impact of land and oceans when dividing administrative regions, which is one of the factors considered by Japan in the spatial planning of water and watershed distribution; Japan’s experience is worthy of consideration by Chinese government departments.

4.3 Development History and Status Quo of Russia’s Natural Resource Supervision System 4.3.1 Distribution of Natural Resources Russia is located in the northern part of Eurasia, with an area of 17.098 million square kilometers and a vast territory. It is one of the countries with the largest land areas in the world. Russia has unique natural conditions: it has among the world’s highest amounts of natural resources in forests, water, coal, and natural gas. Forests cover 867 million hectares, accounting for 50.7% of the country’s land area, and ranking first in the world. The forest volume is 80.7 billion cubic meters. Russia’s annual water flow reaches 4270 cubic kilometers, ranking second in the world. The most prominent freshwater resource is the Baikal Sea in Siberia, the largest freshwater reservoir in the world, with a water storage capacity of 23.6 trillion cubic meters, equivalent to the sum of the five Great Lakes in North America, and accounting for 20% of the freshwater resources on the Earth’s surface. The Russian Federation has an extensive range of mineral resources and is very rich in reserves. The Karelia and Kola peninsulas in the northwest of the Russian Plain are rich in iron, nickel, mica, and other minerals. Large areas, such as the Russian Plain and Siberia, include the largest iron ore mines in the world. The reserves of natural gas, nickel, diamond, iron, oil, copper, and other resources are among the top in the world. However, reserves of tin, tungsten, and mercury, among others are very

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small and insufficient for domestic use. Russia’s world-class industrial system has developed from its rich reserves and varieties of minerals and energy sources.

4.3.2 Ownership of Land and Resources After the collapse of the Soviet Union in 1991, the former Soviet Socialist Republic was transformed into the Russian Federation, and Russia transformed from a socialist country to a capitalist country. Land reform began in the 1990s. Prior to this, state ownership was broken down into various land ownership, such as state property, municipal property and private property. In the decade following the collapse of the Soviet Union in 1991, the form of land transfers in Russia was determined by the president and the government. After the Putin government came to power, the Russian Federation Land Law in 2001 and the Agricultural Land Transfer Law in 2002 governed the Russian land privatization system, including agricultural land, and strictly established land buying and selling procedures; it also established Russia’s private law system and land transfer system. During this period, all state land, including agricultural land, was privatized, but the land could be sold, leased, transferred, and mortgaged through state cadastral statistics, and a land transfer market could be established [11]. Today, Russia has formed a state-dominated mixed market for public–private land transfers. Lease, purchase, and sale are the main forms of land transfer, among which lease plays a prominent role. Taking the circulation of agricultural land as an example, whether leased or sold, the land has a very high ratio of state ownership. In the private sector, transparency is low, mainly resulting from the leasing of land from citizens to agricultural enterprises (legal persons). This form of lease is primarily an oral agreement with no contract or documentation. As with land, most of Russia’s mineral resources, water, oceans, forests, and other natural resources are owned by the state. Although the ownership of natural resources in Russia includes state property, collective property, collective action property, and civil property, the state can still strictly control the ownership of natural resources creating a unique way of controlling ownership of natural resources in Russia that is largely controlled by public power.

4.3.3 Development History of Natural Resource Management (1) Water resources Russia is rich in water resources and has one of the largest natural freshwater reserves in the world. The total natural freshwater reserves reach 60 trillion cubic meters, and there are more than 2 million lakes and more than 3 million rivers. Although Russia

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has rich water resources, it still faces problems, such as uneven distribution of water resources, major water pollution, and serious floods. The Russian government’s awareness of water resource supervision can be traced back to the Soviet period. The Special Decree on Underground Resources promulgated in 1920 and the Russian Soviet Federal Socialist Republic Land Code promulgated in 1922 marked the government’s first focus on the management of water resources. In the decades after Russia joined the Soviet Union, the Sanitary Protection Agreement on the Moscow-Volga Canal and the Outline of the Water Conservancy Law of the Soviet Union and the Union Republics were successively promulgated, establishing the prototype of Russia’s legal system on water resource supervision. During this period, the Russian government vigorously built water conservancy projects, and its attitude toward water resources retained focus on the development and utilization of resources. Because the legal guarantee system had not been fully established, the laws related to the protection of water resources were not effectively implemented. However, during the Soviet era, to alleviate the uneven distribution of domestic water resources and solve the problem of agricultural irrigation in water-deficient areas, Russia built some large-scale water transfer projects, such as the Volga-Moscow Water Transfer Project, and the Naren River-Syr darya Water Transfer Project. After the collapse of the Soviet Union in 1991, the Russian government gradually became aware of the need to protect water resources, and began to carry out systematic and integrated management of the development, utilization, and protection of water resources [12]. The Code of the Russian Federation, adopted in 1995 and implemented in the same year, plays a pivotal role in the regulation of water resources in Russia and serves as a cornerstone in guiding the establishment of the Russian water resource legislative system. It clearly demarcates the ownership of water resources in Russia, and stipulates the use management and protection measures of water resources. In addition, Russia has issued strategies and plans for the scientific use of water resources on the current situation and characteristics of water resources. In March 2003, the Russian Water Ministry issued a policy on the sustainable use of water resources, with the aim of using water resources safely and efficiently without harming the environment. In recent years, the relevant Russian authorities have developed the Handbook on Sustainable Water Resource Management, whose main objective is to establish a series of mechanisms to promote and encourage the safe and efficient use of water resources. In addition to the emphasis placed on water resources in terms of legislation, Russia has also established a licensing system to strictly control the allocation of water resources and the main body of water use, established a nationwide water information database to monitor the quality of water and the operation of water buildings, and in 1999, formulated a provisional management measurement for water prices to alleviate financial pressure arising from water resource protection. Overall, sustainable utilization is still the theme of water resources protection by the government. (2) Land resources

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With a total land area of 17.9 million square kilometers, Russia is the country with the largest land area in the world. Russia has a vast territory but a small population density, and thus, the Russian government has long attached great importance to the management of land resources. In the second half of the nineteenth century, Russia entered the early stage of capitalism, and after two land reforms, the land system underwent tremendous changes. In the first agrarian reform, in 1861, Tsar Alexander II announced the abolition of serfdom, but in practice retained feudal land relations. In the second agrarian reform, in November 1906, the Tsarist government passed such laws as Several Supplementary Decisions on the Existing Decree on Peasants’ Land Possession and Land Use, which aimed to establish a kulak system and alleviate the scarcity of land in the central region as well as strong disparities between local farmers and landowners. In summary, the main role of these two agrarian reforms was to provide equal land rights for farmers. However, because Russia had not yet established a sound guarantee mechanism for the implementation of the law at that time, the reform was limited by a number of conditions, and thus, was not implemented. Before the October Revolution, the Russian landowner system continued to dismantle feudalism and make a transition to capitalism difficult. However, the outbreak of World War I and the October Revolution disrupted this reform process and completely changed the direction of the Russian agrarian legal system. On October 26, 1917, the Land Ordinance was promulgated, stating that the property of all owners should be abolished without any compensation. All land would be owned by the state and become the property of all the people. Since then, a number of land regulations have been promulgated to speed up the “nationalization of land” in Russia. In 1970, the Soviet government promulgated the Land Law. Specific provisions were made on state land ownership, land finance, land concession procedures, compensation for land expropriation, land management, land allocation, and land ownership dispute resolution procedures. In 1990, before the collapse of the Soviet Union, the government began to carry out land reform, and the land ownership system changed from a single state ownership system to a pluralistic mixed ownership system, thereby establishing the Private Ownership System of Land in Russia. Today, Russia has a state-led mixed market for public–private land transfers. In general, the Russian government has relatively liberal management of land resources. In terms of land circulation, a certain market scale has been formed, and state citizens and enterprise units can sell, lease, and transfer their land in the market. (3) Forest resources Before the collapse of the Soviet Union, the State Forestry Commission and the Ministry of Forestry Industry were established, and other member states established corresponding institutions for forest management, although some countries established only forestry departments or forest committees. The system was characterized by forest classification. According to the different uses of forestry resources, forestry and industry were managed separately.; The State Forestry Commission was responsible for the management of forest resources, formulated forestry protection policies

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and guidelines, and did not directly operate forestry production; while the forestry industry was directly managed by the Ministry of Forestry Industry and large forest industrial enterprises. After the collapse of the Soviet Union, the Russian government continued to follow the principle of classified management, and in the forestry industry, the Russian State Forestry Industry Company was established. It was given government functions, coordinated the activities of forestry industry enterprises throughout the country on behalf of the state, and adjusted investment allocations and technological transformation between enterprises, among other roles. In terms of forestry, the Central Forestry Bureau formulates laws and regulations on the utilization and supervision of forests nationwide. The Russian Federal Forest Service, one of the most important forestry agencies, controls nearly 94% of the forest land. The Forest Basic Law governs forest management in the market, allowing for leases and auctions; it opened up a new frontier through the shift from government control to market control and brought competition and countless commercial opportunities [13]. The Federal Forest Service also transformed from an independent controller to a competitive forestry company. In 1995, Russia’s entire logging system accelerated the establishment of marketization, and completed transformation of various enterprises to private ownership across the industry. In the same year, in line with the spirit of the times, the system drafted amendments and supplements to the Forest Law, which protected orderly and reasonable force and regeneration, and provided a legal basis for protecting forests. After 2000, the Russian government gradually participated in the supervision of forest resources, but the management method evolved to decentralized and hierarchical management. The federal government is responsible for formulating fundamental laws and institutions in the field of forest resources, while local governments are responsible for formulating specific forest management measures, as well as allocating use rights and forest management rights, and changing the forest planning system. The reformed forest planning system is divided into three levels. First, the federal government sets the basic framework for forestry policy and sectoral plans. Second, on this basis, local governments formulate local forest plans, which stipulate basic policies for forest utilization, conservation, and renewal, and submit them to the federal government for approval. Finally, as the most basic forest management department, the forest management district formulates detailed and specific management plans according to the policies formulated by superior managers and submits them to the local government for approval before implementation.

4.3.4 Current Situation of Natural Resource Supervision (1) Regulatory agencies and responsibilities The administrative system of the Federal Government consists of the Federal Ministry, the Federal Bureau, and the Federal Agency. The Federal Ministry is responsible for formulating State policy and revising laws and regulations at the

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macro level; the Federal Office focuses on administrative and economic management, and is mainly responsible for coordination between superior and subordinate levels; the Federal Agency focuses on state ownership and social services, and is mainly responsible for social supervision. In the area of natural resource management, the Russian Federation has a classified management model, which delineates other resources into the five categories of land, minerals, construction land, agricultural land, and energy, to be managed by the Ministry of Natural Resources and Environment, Ministry of Energy, Ministry of Agriculture, Ministry of Economic Development, Construction, and Housing Public Affairs, and five other ministerial federal agencies. Among them, the Ministry of Natural Resources and Environment has the widest scope of jurisdictional affairs, and according to the three-level administrative management system of ministry–bureau–agency, there are 10 divisions, 3 bureaus, and 2 departments (the specific departments are shown in Fig. 4.3); these are responsible for the management of implementation, supervision, and other affairs. The Ministry of Natural Resources and Environment has the broadest range of functions in the management of natural resources. Its regulatory framework encompasses various types of natural resources. The Ministry of Natural Resources and Environment is responsible for the formulation of policies on mineral resources, oil and gas geology, water resources, forestry resources, woodlands, animals and their habitats, and the supervision and evaluation of the living environment, hydrometeorology, ecological monitoring, etc. (2) Characteristics of natural resource regulation The structure of the Russian Natural Resource Agency is simple and its functions are clear. In the actual supervision of natural resources, the decision-making, implementation, and supervision links are separated from each other, and the three levels of the Federal Ministry, the Federal Bureau, and the Federal Agency check and cooperate with each other to ensure macroscopic, operational, and equitable management of natural resources. At the same time, given the differences in natural resources, the Ministry of Natural Resources and Environment has implemented a professional classification management and established special management of minerals. The agencies for forestry resources and water resources are independent of each other, but all fall under the unified leadership of the Ministry of Natural Resources and Environment. Russia adopts an integrated management model for natural resources. The Russian government has tried many times to explore a natural resource regulatory system suitable for its national conditions, to form an existing management system. While the right to use natural resources has been handed over by the Federal Bureau to the users of resources, it also obtains benefits from resource development, and this part of the income is used for national public welfare activities, such as the operating costs of resource recycling and expenditure on environmental protection. In summary, Russia’s natural resource regulation is a comprehensive management model in which government and market management coexist, and natural resources play the role of both resources and, importantly, capital.

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Affairs and Personnel Management Division Economic and Finance Division

Legal Division

Bureaus within the ministry

Ministry of Natural Resources and Environment

International Cooperation Division Department of Environmental Protection and National Policy Geology, Mineral Utilization , and National Policy Division Forest Resource Management National Policy Division Federal Service for Hydrometeorology and Environmental Monitoring Water Resources Management and National Policy Division Division of Hunting Economy Management and State Policy

Federal Service for Supervision of Natural Resource Management

Directly subordinate organs of the ministry

Federal Agency for Hydrometeorology and Environmental Monitoring Underground Resources Utilization Agency of the Russian Federation Federal Water Resources Agency

Russian Federal Forestry Service

Fig. 4.3 Organizational chart of the Russian Ministry of Natural Resources and Environment (Source Official website of the Russian Ministry of Natural Resources and Environment)

4.3.5 Experience of Russia’s Natural Resource System Supervision for China From the Russian experience, China should develop management functions in the direction of integration. In 2018, to facilitate comprehensive planning of the supervision and spatial planning of domestic natural resources, the Chinese government established the Ministry of Natural Resources, laying a realistic foundation for the unified research, planning, supervision, and restoration of natural resources. At the same time, it is necessary to correctly handle the relationship between the national government and local governments. The effective management of natural resources depends on the effectiveness of the implementation of decisions. As part of the Chinese government’s highest concept of service unification, it scientifically defines the authority of the national government and local government, clarifies the division of powers, fully mobilizes the initiative of national and local governments, and gives greater autonomy to provincial and subordinate institutions. Except where the law clearly stipulates that it must be centrally managed by the national government, local

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governments are given certain functions to improve the effectiveness and timeliness of resource management. Resource management must be combined with ecological protection. Resources and ecology are interdependent and inseparable. The success of Russia’s natural resource regulatory system lies in the fact that the government has always placed the development of natural resources and the protection of the environment in an equally important position [14]. In view of the integrity and relevance of resource use and ecological protection, the administrative departments of the Chinese government were reorganized and merged in 2018. The newly established Ministry of Natural Resources mainly exercises the function of economic resource management, while the Ministry of Ecology and Environmental Protection focuses on environmental protection functions.

4.4 Summary Over the past century, the concepts and methods of natural resource management in countries around the world have been constantly changing and deepening in response to the need of the hour. In today’s world of increasingly high globalization and closer connections among countries, uneven distribution of resources, and frequent occurrence of environmental problems worldwide, the concept of sustainable life cycles should meet the development needs of human society. This chapter analyzes the current situation and development history of the natural resource regulatory system in the United States, Japan, and Russia, and summarizes the evolution of their regulatory systems as follows. The three governments have gradually begun to pay attention to the supervision of domestic natural resources, from the original continuous development and utilization to the introduction of relevant constraining policies and regulations, and then to investing a lot of labor and material resources for protection and coordination. Natural resources are a country’s most important public resource and an important source of national wealth. Natural resources are an important area of public administration in a country. As the overall representative of the state, the government should pay attention to the institutional, basic, and public welfare nature of natural resource management. Most countries in the world have systematic natural resource management systems. The process of natural resource regulation has begun to focus on the comprehensive and systematic nature of resources. The integrity and systematization of natural resources determine that all activities, such as the development, use, and protection of various resources, are interrelated and mutually influential. At the same time, the functional interaction between resources is a manifestation of resource integrity and resource systematization; in other words, the destruction of resources causes other resource functions to decline. Maintaining and improving the overall service functionality of the resource system is an important resource management objective.

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Concepts, means, and methods of managing natural resources have shifted from tradition to modernization. With the development of global resources and environmental problems and the development of science and technology, the management of natural resources has undergone great changes. Strengthening research on natural resources and applying more science and technology and artificial intelligence to natural resources would help promote sound and information-based management of global natural resources. By comparing the regulatory models of the three countries, this chapter provides policy recommendations for the Chinese government for regulating of its own natural resources. The Chinese government has also been exploring a path of green natural resource supervision that is in line with its national conditions, maximizes resource utilization efficiency, and pays attention to ecological protection.

References 1. Khan I, Hou F, Le HP. The impact of natural resources, energy consumption, and population growth on environmental quality: Fresh evidence from the United States of America. Science of the Total Environment, 2021, 754: 142222. 2. Sellars RW. A very large array: Early federal historic preservation—The Antiquities Act, Mesa Verde, and the National Park Service Act. The George Wright Forum. George Wright Society, 2008, 25(1): 65–120. 3. Norse D, James C, Skinner BJ, Zhao Q. Agriculture, land use and degradation. An Agenda of Science for Environment and Development into the 21st Century, 1992: 79–89. 4. Benson MH, Garmestani AS. Can we manage for resilience? The integration of resilience thinking into natural resource management in the United States. Environmental Management, 2011, 48(3): 392–399. 5. Weiskopf SR, Rubenstein MA, Crozier LG, Gaichas, S, Griffis, R, Halofsky, J.E., Whyte, KP. Climate change effects on biodiversity, ecosystems, ecosystem services, and natural resource management in the United States. Science of the Total Environment, 2020, 733: 137782. 6. Komatsu H, Kume T, Otsuki K. Water resource management in Japan: Forest management or dam reservoirs? Journal of Environmental Management, 2010, 91(4): 814–823. 7. Takeuchi H, Tanaka H. Water reuse and recycling in Japan—History, current situation, and future perspectives. Water Cycle, 2020, 1: 1–12. 8. Dawson AH. Land use policy and control in Japan. Land Use Policy, 1985, 2(1): 54–60. 9. Yamaguchi R, Aruga K, Nagasaki M. Estimating the annual supply potential and availability of timber and logging residue using forest management records of the Tochigi prefecture, Japan. Journal of Forest Research, 2014, 19(1): 22–33. 10. Comitini S. Marine resources exploitation and management in the economic development of Japan. Economic Development and Cultural Change, 1966, 14(4): 414–427. 11. Lazhentsev VN. Natural resource economy and territorial organization of the economy of the Arctic and the North of Russia. Kontypyglobalbnyxtpancfopmacin: politika, Յkonomika, ppavo, 2021, 14(4): 40–50. 12. Baranov AO, Pavlov VN, Tagaeva TO. Analysis and forecast of the state of environmental protection in Russia. Environmental and Resource Economics, 1997, 9(1): 21–42. 13. Qu C, Wen-Bin D, Yun G. Russia forest resource management. Malaysian Journal of Sustainable Agriculture, 2017, 1(2): 12–14. 14. Henry LA, Douhovnikoff V. Environmental issues in Russia. Annual Review of Environment and Resources, 2008, 33: 437–460.

Chapter 5

Accounting and Pricing Methods for Natural Resources

The previous chapters introduce the historical changes in China’s natural resource regulatory system, comparing and learning from the regulatory experiences of other countries. In this chapter, we focus on the content of natural resource accounting and pricing. There has been a longstanding debate on whether natural resources have value, and only in recent years has it been accepted that they do, but there is still no widespread consensus on how to measure them, meaning that natural resource asset valuation, accounting, and pricing remain unclear. This chapter starts by discussing the evolution of the natural resource accounting system, clarifies the connotation of natural resource asset value, and constructs a natural resource asset value assessment system that balances efficiency and accuracy.

5.1 Overview of the Natural Resource Balance Sheet 5.1.1 System of Accounting for Natural Resources The balance sheet, as an important accounting tool, has matured as a system after many years of development. It is widely used by governments, enterprises, and other economically responsible entities to record and reflect the financial position of the entity. The natural resource balance sheet, however, is a completely new concept. The natural resource balance sheet was proposed by the Chinese government in 2013 for the management of natural resource assets, mainly to reflect verifiable natural resource assets owned and the natural resource liabilities that can be borne by an area being assessed at a certain point in time [1]. In general terms, a prescribed method is used to account for all natural resource assets and liabilities in an area, and the results are then aggregated into a statement. This statement (in a table format) reveals the total amount of natural resource assets and their changes at a particular point in time, and reflects the costs and ecological benefits of the resources and environment required in the process of economic development, providing an important basis for © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 T. Ding and M. Song, Natural Resource Regulation in China, Contributions to Public Administration and Public Policy, https://doi.org/10.1007/978-981-99-5593-0_5

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environmental and development decisions, natural resource monitoring, and early warning. The accounting of natural resources originated from the System of National Accounts (SNA). The traditional SNA had some shortcomings. In the mid-twentieth century, when accounting for various economic indicators, the SNA recorded only the consumption of human-made capital without considering the consumption of resources and the environment; therefore, it could not reflect the role of natural resources in economic prosperity. In the 1980s, when the SNA was revised, and in 1993, the United Nations, the International Monetary Fund, and the World Bank jointly proposed the System of Environmental-Economic Accounting (SEEA) and promoted pilot work in several countries. After several developments, the current international accounting system, mainly the System of National Accounts (SNA) (2008) and the SEEA Central Framework (2012), was established [2]. The SNA (2008) has three accounts: asset–liability accounts, current accounts, and accumulation accounts. Meanwhile, natural resources are explicitly classified as an asset, including land resources, mineral resources, water resources, energy reserves, non-nurturing biological resources, and other resources. The SEEA Central Framework (2012) sets up a more complete environmental-economic accounting account that includes not only the physical volume of natural resources but also the value volume (monetary asset accounts). The innovation of the latter system is that it reflects in detail the sources and uses of natural resources through the constant equation (source of assets = use of assets), which provides a clearer picture of the use of each type of natural resource. The SEEA Central Framework is more comprehensive than previous accounting systems, and has quickly become an important reference guide for many countries for making resource, environmental, and economic decisions. Some Western countries have since further developed and improved the framework by combining the SEEA with, for example, the Integrated Economic and Environmental Satellite Accounts, IEESA, an environmental and economic accounting framework established in the United States, which emphasizes the interaction between the economy and the environment; the Canadian System of Environmental and Resource Accounts, CSERA, a framework pioneered by Canada, which for the first time examines natural resources in terms of both assets and liabilities; and the National Accounting Matrix Including Environmental Accounts, NAMEA (2016), developed by the EU, which uses a national economic accounting matrix to divide the accounts into three main categories: national accounting accounts, environmental material accounts, and environmental thematic accounts. Western countries also have relatively rich experience in compiling natural resource balance sheets. For example, Norway, one of the first countries in the world to carry out natural resource accounting, first proposed the accounting method for forest resources and mineral resources, that is, using physical quantities as the unit of measurement for extraction and trade accounting, reserve accounting, and consumption accounting; followed by the United States, Japan, Canada, and Australia, which learned from the Norwegian experience and carried out accounting and balance sheet preparation for natural resources. The United States classifies natural resources as national assets and adopts the value approach to measurement,

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with specific accounting accounts with four major categories: initial value of natural resources, consumption value of natural resources, revalued natural resources, and closing value of natural resources. Canada adopts physical quantity as the unit of measurement, accounting not only for the stock of natural resources, supply, and use of energy, but also for environmental quality and environmental protection. Australia is a world leader in the accounting and practice of natural resources, and since 2009, has regularly published a national balance sheet based on the SNA (2008), which presents natural resources as assets in the national balance sheet, and uses both physical and value accounting. In addition, based on the SEEA Central Framework (2012), Australia has developed water and land resource accounts, which have since been widely used by various countries [3]. In terms of natural resource liabilities, Australia has proposed the provision of a reasonable valuation of environmental protection expenditure, environmental pollution, and resource consumption as well as accounting for the consumption of various types of natural resources in the balance sheet. Thus, it is evident that the accounting of natural resources in various countries is basically based on the SNA (2008) and SEEA (2012) systems, with appropriate improvements for taking into account the basic national conditions of each country to consider the stock and flow of natural resources [4]. In China’s System of National Economic Accounting (China’s SNA), natural resources are included in the economy as part of non-current assets, mainly comprising four major categories: forest, mineral, land, and water resources. Each category is recorded in separate subsidiary tables to provide a scientific basis for the implementation of sustainable social development strategies. Since then, China has proposed a green GDP accounting system and developed natural resource accounting. In the year of 2013, China formally proposed compiling a natural resource balance sheet and carried out pilot work in several provinces and cities in 2015. Although China has undertaken a number of exploratory activities in natural resource accounting, the management of natural resource accounting in China is still at a preliminary stage.

5.1.2 Accounting Elements of the Natural Resource Balance Sheet (1) Natural resource assets Natural resource assets are a class of assets formed through the realization of the value of natural resources, but not all natural resources can be assetized [5]. For example, mineral resources whose physical value cannot be determined cannot be recognized as mineral resource assets; among water resources, evaporated water resources or polluted water resources cannot be recognized as water resource assets; additionally, some natural resources cannot be recognized as assets owing to current technical limitations, for example, the part of ecological function value of forest resources that purifies air and nurtures water cannot be accurately measured.

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Both the SNA (2008) and SEEA Central Framework (2012) clearly state that only natural resources that generate economic benefits can be considered natural resource assets. In addition, unlike other physical assets, natural resource assets are owned by the state. Therefore, combining the studies of many scholars, we define natural resource assets as natural resources or economic events that are owned or controlled by the state, that can bring economic benefits to subjects in the process of development and use, and that can be physically measured in monetary value under current circumstances [6]. (2) Natural resource liabilities Natural and ecological liabilities not only result in a loss of function and quality, but also have an impact on environmental security and sustainable development, which is difficult to measure in simple terms of value. In the SNA (2008), it is argued that there is no such non-financial liability for natural resource liabilities; in the SEEA Central Framework (2012), although environmental protection expenditure and natural resource consumption are covered, no clear definition of natural resource liabilities is given. In this section, we combine the studies of many scholars to provide the following definition of natural resource liabilities: Natural resource liabilities are the cost of environmental management and resource restoration through the excessive consumption of various natural resources over a period of time by social production activities in the region of the administrative subject. According to this definition, the accounting of natural resource liabilities generally includes three parts: excessive consumption of resources, environmental pollution, and ecological damage [7], the main elements of which are: excessive loss costs that should be paid to restore the over-consumption part of natural resources when they are over-consumed, that is, ecological restoration costs; and environmental treatment costs that should be paid to repair the damage to the natural environment and the ecosystem caused by human production activities when the quality of natural resources is degraded, such as the various types of environmental protection funds invested by the government. (3) Net natural resource assets In the traditional balance sheet, assets less liabilities are the owner’s equity, also known as net assets, and reflect the original input, capital appreciation, and retained earnings of economic entities. By analogy, the net assets of natural resources refer to the government’s original input, capital appreciation, and retained earnings of natural resources [8]. Therefore, here, we use the accounting equation (assets − liabilities = net assets) to measure and account for the net assets of natural resources, reflecting the total natural wealth owned by a region, and further analyze the changes in net assets at the beginning and end of the period to assess the maintenance and use of natural resource assets by the region’s managers. It is then possible to assess the ecological performance of the area’s managers by analyzing the changes in net assets at the beginning and end of the period.

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5.1.3 Accounting Methodology for Natural Resources In fact, the preparation of a natural resource balance sheet can be seen as a measurement process, in which the level of development of natural resource accounting technology often determines the reasonableness and scientificity of the measurement results. With the rapid development of various types of science and technology, natural resource asset and liability evaluation techniques will continue to be improved and the speed of data updating greatly enhanced, all of which will promote the continuous development and maturity of natural resource balance sheets. Due to the special nature of natural resources, when measuring and accounting for them, most use a combination of physical and value methods [9] to reflect the changes in natural resources from multiple perspectives. (1) Physical quantity approach The physical accounting of natural resources is a description of the stock of relevant natural resources at a given point in time. There are many different types of natural resources on the planet, and many of them have certain specific characteristics. Different natural resource assets should be measured using specific physical units of measurement and methodological techniques in accordance with their properties, so that their physical quantities can be more fully and accurately accounted for. Benefiting from improved technical levels of resource surveys, the methods of physical quantity surveys have also greatly improved, such as the mature use of satellite remote sensing, GPS, and other measurement methods. These improvements have made it much less difficult to accurately obtain physical quantity data of various resources, such as the inventory and transformation data of land resources and forest resources, and the development of remote sensing technology have benefited deep well drilling and made the exploration of mineral and marine resources more feasible. All these developments have enabled us to obtain more accurate data on natural resources and thereby meet the basic requirements of a natural balance sheet. Table 5.1 provides a brief summary of the methods used to measure the physical volume of natural resource assets. In the mid-1980s, Finland proposed a framework for accounting for forest resources, which included air pollution, regional exploitation of forests, and carbondioxide coagulation, etc. In the same period, the Norwegian statistics department produced the first physical natural resource accounts, which were divided into physical resources, such as mineral resources and biological resources, and environmental resources, such as air and water. In the 1990s, Mexico further improved the accounting content, mainly including the stock and flow of water resources, forest resources, land resources, petroleum resources, and other resources, and also accounting for the shift from physical to value quantities for some resources. Mexico subsequently calculated the cost of environmental degradation and net accumulation of environmental assets on this basis, and accounting for both, gradually developed an advanced and robust framework.

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Table 5.1 Physical measures of mainstream natural resources Natural resources Physical measurement method Land resources

GPS/RS/GIS; survey and inventory method; statistical data method; scenario simulation method (CLUE); agricultural ecological area method; bearing capacity and ecological footprint method, etc.

Water resources

GPS/RS/GIS; survey and inventory method; actual measurement method, equal rainfall line method; volumetric method; mining experiment method; hydrologic process simulation method, etc.

Mineral resources

GPS/RS/GIS; survey and inventory method; regional value estimation method; volumetric measurement estimation method; abundance estimation method; deposit simulation method; comprehensive estimation method, etc.

Forest resources

GPS/RS/GIS; survey and inventory method; gas exchange method; radioactive tracking method; landscape index method; harvesting method; sample location method, etc.

Ocean resources

GPS/RS/GIS; survey and inventory method; flux (tidal flow energy) method; survey and census method; fishing method; deep detection (drilling) method, etc.

Environmental resources

GPS/RS/GIS; survey and inventory method; landscape index method; environmental capacity, etc.

China’s physical accounting of natural resource assets began in 2003, with the first four categories of resources, that is, land, forest, water, and mineral resources. (2) Value method Value accounting can further improve the natural resource accounting system, which refers to the quantification of the physical value of natural resources on the basis of physical accounting and the selection of corresponding methods according to the property characteristics of natural resources. However, at the present stage, natural resource value can be realized in various forms, and there is no universally accepted method for natural resource value accounting in various fields, and thus, a unified standard natural resource value assessment system has not been formed yet. For example, some scholars use the income method to measure natural resource assets and liabilities; the net present value method is used in the two major systems of SNA and SEEA, that is, the future income of natural resources is discounted as its valuation value. Up to now, the more commonly used methods have been the market approach, willingness-to-pay approach, cost approach, shadow price approach, revenue reduction approach, net price approach, and marginal social cost approach, etc. The amount of natural resource value obtained by choosing different value accounting methods is likely to be significantly different, as the market approach is the most objective method to reflect the value of natural resources. Therefore, in this section, we introduce several of these methods, classified according to whether the resources are traded in the market:

5.1 Overview of the Natural Resource Balance Sheet

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(a) Natural resources directly traded in the market For some highly marketed natural resources, the fair value method should be used for measurement, taking the fair value of their transactions as the reference price for the valuation of natural resources, and selecting an appropriate discount rate to discount them in combination with existing prices, development costs, and other factors to calculate the present value of natural resource assets or liabilities. For natural resources that do not have mature markets or are less marketed, but have more mature markets for their finished products, such as mineral resources, the resources are often measured and accounted for using the net price method in accounting. Both methods are market based and can reflect the value of resources more objectively and fairly; they are easily accepted by everyone, but there are fewer categories of natural resources with mature trading markets for themselves or their finished products, and thus, the scope of application of these two methods is limited. (b) Natural resources not traded in the market For water resources and marine resources, which do not have a mature trading market, their value measurement methods are relatively complex and difficult. At present, the alternative market method, fuzzy mathematical comprehensive evaluation method, and willingness to pay method are generally used to account for this type of natural resource [10]. The alternative market approach is to seek some similar and more marketable alternative asset to indirectly estimate the value of an asset being valued for which there is no market price. Alternative market approaches can be divided into four categories, namely, the asset value approach, consequence deterrent approach, wage differential approach, and travel cost approach. Meanwhile, the consequence deterrent approach is generally used to account for natural resource values and is mostly used to account for natural resource liabilities. The consequence prevention method is used when environmental degradation leads to an impact on the economic development of the local area, and the state often needs to take protective measures or other methods to prevent a negative impact. Generally, the government prioritizes improving the environment by adopting effective measures corresponding to environmental degradation to ensure the development of the economy, but if the environmental degradation has reached a very serious level, or is even irreversible, the government can compensate for the environmental damage only by increasing other inputs or expenditures to mitigate or eliminate the impact of the environmental damage. The change in the monetary value of inputs or expenditures can be used to measure the value of the environment itself. The fuzzy comprehensive evaluation method is based on the affiliation theory of fuzzy mathematics, converting qualitative evaluation into quantitative evaluation, and using fuzzy mathematics to make comprehensive evaluation of objects subject to multiple factors. For some problems with strong uncertainty and that are difficult

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to quantify, the fuzzy comprehensive evaluation method can yield better results than other methods. Natural resource value evaluation is affected by multiple factors, is closely related to the environment, economy, and social system, and is an extremely complex process. Thus, the fuzzy mathematical method is appropriate for the accurate evaluation of natural resources. In practice, the fuzzy mathematical comprehensive evaluation method is mostly used for the preparation of water resource value scale. The factors affecting water resources are complex and diverse, for example, rainwater increases the total amount of water resources: while water may enter the atmosphere through evaporation and become rain again, on the one hand, it can also form groundwater for human use through infiltration, on the other. These factors make it difficult to determine the composition of water resources, which in turn affects the value of water resources and their finished products. The fuzzy mathematical comprehensive evaluation method can effectively improve the measurement accuracy of water resources. The willingness-to-pay method is a hypothetical market method; this method starts with the assumption that there is a market for transactions, and a direct survey is conducted to understand the willingness to pay of the respondents (parties in the hypothetical market); it generally refers to the maximum value the parties are willing to pay for improving the environment or the minimum value of expected compensation for environmental degradation [11]. The respondents can assess the utility of the natural resources themselves as a value that should be paid or compensated more as a result of changes in natural resources. The common bootstrap evaluation techniques in the willingness-to-pay method include questionnaire and payment card methods, which can be applied to almost all types of natural resources owing to their simplicity and convenience, but their drawbacks are also relatively obvious. The hypothetical market, due to its subjective nature, lacks a real market feedback mechanism, and the final results obtained may distort the real value considerably, therefore, when using the willingness-to-pay method, one should try to keep deviation within a suitable range. Finally, when accounting for the value of natural resources, the same type of natural resources may be measured using a combination of multiple valuation methods to improve the scientific nature of the accounting values. The following Table 5.2 provides a summary of the methods for accounting for the value of natural resource assets.

5.1.4 Principles of Compilation of the Natural Resource Balance Sheet The balance sheet of natural resources can be regarded as a new part of accounting to a certain extent, but its “special characteristics” are also more obvious. Thus, its accounting should not only follow traditional accounting principles, but also be combined with the characteristics of natural resources themselves [12]. The

5.1 Overview of the Natural Resource Balance Sheet

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Table 5.2 Value quantity accounting method of mainstream natural resources Natural resources

Value measurement method

Land resources

Market method (market comparison method and long-term trend method of market price); income method (income reduction method and income multiple method); etc.

Water resources

Shadow price method; residual value method; fuzzy comprehensive evaluation method; production function method; characteristic pricing method; mathematical planning model method; selection cost method; etc.

Mineral resources

Market method; marginal social cost method; net price method; income present value method; El-Serafy method; sustainability price method; reset cost method; etc.

Forest resources

Comprehensive method; expected income capitalization method; substitution method (engineering cost method, market value method, cost–benefit method); etc.

Ocean resources

Income reduction method; alternative market method; achievement reference method; value method; willingness survey method; travel cost method; conditional value method; etc.

Environmental resources

Market valuation method; cost method; maintenance cost method; net price method; etc.

balance sheet of natural resources should be prepared according to the following three principles. (1) Physical first, then value Physical accounting is the basis for the preparation of the natural balance sheet, which reflects the flow stock status of natural resources in the form of accounts. Meanwhile, value accounting is based on the results of physical accounting, choosing a suitable conversion method to unify different forms and types of natural resources into the same metric system, reflecting the value of natural resources and their changes in the region at a certain point in time, with serving national economic accounting and facilitating state personnel making the relevant decisions. The accuracy and completeness of physical quantity data determine the rationality of value accounting to a certain extent, and therefore, in the preparation of natural balance sheet, we choose to prioritize the preparation of physical quantity statements ahead of the preparation of value statements. (2) Stock first, then flow All statistics of natural resource assets at a specified point of time are called natural resource stock, which is often used to assess the resource issues at that moment and to compare natural resources between different regions. Meanwhile, natural resource flow reflects the changes of natural resources in a certain period of time, and is a refinement and update of the stock accounting. It aids identification of the dynamic relationship between regional economic growth and natural resource changes. Stock

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accounting and flow accounting are interrelated and interchangeable. Because flow accounting is more complicated, in practice, priority is generally given to the preparation of natural resource inventory statements, followed by natural resource flow statements. (3) Classification first, then integration Natural resource classification accounting classifies natural resources according to categories, and then carries out physical and value accounting. Meanwhile, comprehensive accounting requires exploring a unified metric and converting various types of resources into a comprehensive table, which is a more complex and difficult process. Therefore, combined with the current level of research, in practice, priority is often given to preparing a classification table of various natural resource assets, and then continuously improving and exploring to prepare a comprehensive table of natural resources.

5.2 Accounting Methodology for Natural Resource Assets and Liabilities 5.2.1 Accounting for Natural Resource Assets There may be significant differences in accounting methods between different natural resource assets. Here, we introduce the practical application of natural resource accounting using several of the more common assets as examples: forest, water, land, mineral, marine, and grassland resource assets. (1) Forest resource assets Forests are the main body of the terrestrial ecosystem. According to the results of the Ninth National Forest Resource Inventory in China, China has 220 million hectares of forest, 17.56 billion cubic meters of forest storage, and 22.96% of forest cover, and forest resources display a good development trend. The natural ecosystem constituted by forest resources plays an important role in guaranteeing national ecological security, but for a long time, people have been used to seeing forest resources as public resources rather than productive assets. However, forests are neither commodities nor products, leading to serious waste of forest resources and even causing ecological environment degradation. Therefore, accounting for forest resources can not only record the consumption and value-added of forest resources, reflecting the value amount of forest resources, but also reduce the vicious circle of forest resource waste, disrupt the traditional concept of forest resource management, and improve the reform and innovation of the forestry economic system. The State Forestry Administration of China has conducted nine forest resource inventories in a 5-year cycle and initiated a study on the compilation of the forest resource balance sheet in 2014. China’s forest resource inventory accounting is

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based on fixed-sample surveys, and the basic information of forest resources is collected using a combination of 3S technologies (RS remote sensing technology, GIS geographic information system, and GPS global positioning system) and modern information collection and processing technologies, such as data warehouse and data mining. The method of forest resource accounting compilation mainly follows the accounting framework of SNA, using the system of accounts method to record the stock and flow of forest resource assets and systematically reflect the impact of forest resource assets on the economic structure. Forest resources are generally categorized in practical accounting into four major categories for accounting: forest land assets, forest tree assets, forest ecosystem services, and forest products [13]. However, due to the current assessment technology and basic data, the study of forest ecosystem services in China includes only 7 categories and 13 functions, such as water-holding and soil conservation, which is far from covering the complete ecosystem services, some individual indicators in these seven categories are not fully accounted for; furthermore, it is still debatable whether some forest products can be defined as assets. Therefore, when preparing the balance sheet of forest resources, only two major categories of assets, forest land assets and forest tree assets, are accounted for. In practice, a forest resource balance sheet is prepared in accordance with the preparation of asset and liability accounts and according to the classification of area and stockpile. Specifically, specific forest resource items can be set on the left side of the balance sheet, and forest land assets and forest wood assets can be subdivided; then, the opening stock, period change, and closing stock can be recorded separately to reflect the stock of forest land resources and forest wood resource assets and their changes. The valuation of forest resource assets is carried out on the basis of physical volume accounts, and thus, appropriate methods are mainly selected for the valuation of forest land resource assets and forest wood resource assets. There are many valuation methods for forest resources and forest land resources. Here, we introduce two widely used methods. 1. Forest land resource assets (a) Annuity capitalization method The annuity capitalization method is mostly used for economic forest land. The forest land assets being evaluated can provide stable annual rent income, and thus, can be treated as annuities, the annual rental income of the forest land is discounted after selecting an appropriate investment return rate, and the value of the forest land assets is finally obtained. The specific calculation formula is as follows: B=

n  Ai p i=1

(5.1)

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B is the value of the forested land asset; Ai is the average annual rent of the ith forested land; P is the rate of return on investment (existing studies in China mostly use 4–5%). (b) Expected value of forest land method Based on the premise of achieving perpetual harvesting, the expected value of forest land is the present value of the proceeds of all rotation periods. This method is mostly used for the valuation of forest land use right assets using the following formula: B=

Au +

u

v=1

u Dv (1 + p)u−v − i=1 Ci (1 + p)u−i+1 U − (1 + p)u − 1 p

(5.2)

Au denotes income from primary logging in year u; Dv denotes income from indirect logging in year v; u is the operating cycle; Ci is the direct input cost in year i; P is the discount rate; and U is the average annual operating production overhead. 2. Forest resource assets In the valuation of forest resource assets, the natural forest has an age grade every 20 years, and the artificial forest has an age grade every 10 years, different methods are applied to assets of different ages grade. Most older over-mature forests, mature forests, and near-mature forests have trading markets and these forest resource assets should be estimated using the market method. Middle-aged forests are estimated using the net present value of earnings method. Young forests have smaller trading markets and the replacement cost method is often suitable for estimation. (a) Market approach The market approach to forest resource accounting mainly comprises the market price inversion method and the current market price method. The market price inversion method is based on the assumption that the forest assets are harvested and sold at the same time on the valuation basis date, and the valuation value is the value of total sales revenue less operating costs and attributable profit, calculated as follows: En = W − C − F

(5.3)

E n is the appraised value of forest assets; W is sales revenue; C is the cost required for production and operation; and F is the reasonable profit estimate from production and operation. The current market value rule is relatively simple. Its formula is as follows: En = K × K b × G × M

(5.4)

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K is the stand quality adjustment factor for the internal structural characteristics of the stand; K b is the price index adjustment factor; G is the unit price of the reference stock; and M is the stock of the forest being evaluated. It should be noted that although China has a forestry trading market, it is not mature and is regional in nature; thus, special attention should be paid to this effect when using the market approach. In practice, the market price is usually referred to as the price from the survey of the China Forest Resource Accounting Research project team. (b) Replacement cost method In forest resource assessment, the replacement cost method refers to the cost required to recreate a piece of forest land identical or similar to the forest land under assessment according to the economic level of production at the time of assessment,. This method is often applied in cases for which there is no reference transaction case. In the specific appraisal, the final result of the replacement appraisal should be multiplied by the comprehensive adjustment factor of the forest stand to obtain the final appraisal value. The formula of the replacement cost method is as follows: En = K ·

n 

Ci (1 + P)n−i+1

(5.5)

i=1

Ci is the current production cost in year i; P is the rate of return on investment; n is the stand age; and K is the stand quality adjustment factor. (c) Income reduction method In the income reduction method, future years’ earnings of the asset under appraisal are discounted and summed up at a suitable discount rate to obtain the final value. This method is mostly used for economic forest appraisal. Its formula is as follows: En =

u  i=n

Ai − C i (1 + p)i−n+1

(5.6)

Ai is the annual income in year i; Ci denotes the annual cost expenditure in year i; and u is the operating period of the economic forest. (2) Water resource assets Water resources are water sources that are currently available or likely to be utilized. Water sources should be of sufficient quantity and suitable quality, and meet the needs of specific utilization at a certain point in time. Water is the source of life; while it can be used as an input in economic production and people’s lives, it also has a great impact on the ecological environment, and its importance cannot be overstated. However, water resource accounting is complex and difficult, because resource, environmental, and ecological attributes must be jointly considered, while

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water resources have mobile, renewable, and random characteristics. Accounting for the preparation of a water resource balance sheet should be appropriate for local conditions and select a suitable value accounting system; this selection is an important yet difficult aspect of water resource accounting. Australia has more experience in the preparation of a water resource balance sheet than other countries; in 2012, Australia established and promulgated the Australian Water Accounting Standard (AWAS) based on the System of EnvironmentalEconomic Accounting for Water (SEEAW) [14]. The system is based on the accrual system, with the regional manager or the owner of the main body of water resources as the accounting subject, and is constructed based on the water rights system to record the changes in water resources under the main body of the water resource statement. The main subjects under this system include government agencies, water resource public utilities, water rights owners for environmental protection purposes, and individuals who use large amounts of water. Water resources and water liabilities are recorded under the premise of clear water rights according to the rules of market economic transactions, and therefore, the system is applicable only to markets in which water rights transactions are more complete. In addition, the main purpose of AWAS is to refine water resource management, making it inadequate for reflecting the mutual influence between economic activities and the environment. China’s water resource accounting and balance sheet compilation is still in the research and discussion stage, and thus, the water resource accounting framework and methodology are still contested. Huzhou is a pilot city for compiling water resource balance sheet in China, the method of compiling Huzhou water resource balance sheet [15] has been widely recognized in China, so the idea of compiling it is used for reference here. Water resource assets can be classified as water assets and water area assets. Water assets are the inherent value of water, including surface water, groundwater, soil water, and other water assets in lakes, reservoirs, rivers, and ponds. Meanwhile, water area assets are mainly expressed as the location of surface water assets, and because they also have the nature of land resources, the value of this part is mainly accounted for in land assets; like water environmental capacity1 indicators, they are not included in the accounting framework for the time being due to current technical limitations. For physical quantity accounting, water assets are mainly based on the water resource bulletin and regional watershed survey results published by the Chinese government, while flow accounting can be divided into natural system water flow changes (ΔWn ) and socio-economic system water flow changes (ΔWs ), which are calculated as follows: ΔWn = R I − R O + P − E + U P

1

(5.7)

Water environmental capacity refers to the maximum load of pollutants in the water body to meet the requirements of water environmental quality, and is also known as the water body load or pollution capacity.

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R I is the inflow of river runoff during the statistical period; R O is the outflow of river runoff during the statistical period; P is the precipitation during the statistical period; E is the evaporation of water resources during the statistical period; and U P is the groundwater recharge of precipitation infiltration. ΔWs = C = O − I

(5.8)

C is the total water consumption; O is the water withdrawal from socio-economic activities; and I is the recharge volume. The total change in water resource flow of the natural system (ΔWn ) and the socio-economic system (ΔWs ) can be obtained during the accounting period. The value of water resource assets is an important part of the water resource value table, and the more widely used value accounting methods are mainly the shadow price method, supply and demand pricing method, fuzzy mathematical model of water resource prices. (a) Shadow price method The shadow price method first requires the determination of a shadow price P ∗ , and then the actual value of the water resource is determined by reference to this price or multiplied by a price adjustment factor. The shadow price P ∗ is often determined through the marginal contribution of surface water to production, and the shadow price method is calculated using the following formula: P = δ P∗ P∗ =

dz dc

(5.9)

δ is the price adjustment factor; z is production revenue; and c is surface water consumption. (b) Supply and demand pricing method The supply and demand pricing method treats water resources as a commodity, and is suitable when the market development is more mature and can form an equilibrium market price. Water resources are treated in line with the basic law of supply and demand of commodities. The calculation formula is as follows:  Q=α·

1 P

E

Pw = P − C

(5.10) (5.11)

Pw is the price of water resources; α is the adjustment factor; P is the price of water; E is the price elasticity factor; and C is the cost and profit of water supply.

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5 Accounting and Pricing Methods for Natural Resources

(c) Comprehensive fuzzy mathematical evaluation method The idea of fuzzy mathematical integrated evaluation method is discussed in depth in Sect. 5.1.3(b), and is not repeated here. With the development of computer technology, the use of the fuzzy mathematical integrated evaluation method for water resource valuation has gradually matured. The value of water assets in the Huzhou water resource balance sheet is calculated using this method. A total of 18 indicators2 are selected to quantify the value of water assets from four dimensions: water quantity, water quality, population, and socio-economic. The calculation formula is as follows: P =V ·S  S=

 2 1 P ∧, P ∧, P ∧, 0 T 3 3

P ∧ = a E/Q − C

(5.12) (5.13) (5.14)

P is the price of water; V is the comprehensive evaluation matrix of water resources obtained by multiple indicators; S is the price matrix; P ∧ is the water price ceiling; a is the adjustment factor; E is the disposable income; and C is the cost and profit of water supply. (3) Land resource assets Land resources refer to the land that can be used by people and that generate economic value under limited technical conditions and time. Compared with the various types of resources introduced above, land resources have the characteristics of fixed location, constant total amount, and variable structure, which are the natural attributes of land resources. In the process of human exploitation of land resources, socio-economic attributes are gradually derived, which are specifically expressed in the scarcity and asset nature of land resources. The scarcity of land resources is determined by their total amount; that is, the area of land resources that can be used in a certain area is limited, and the scope of use includes industrial land, public land, residential land, and other aspects, and once defined, is difficult to change. The asset nature of land resources refers to the fact that after people define property rights and the economic relations of land by setting up 2

The 18 indicators in the Huzhou water resource balance sheet are per capita water resources, unit area water resources, per capita water supply, runoff coefficient, drought index, COD, ammonia nitrogen, total nitrogen, total phosphorus, potassium permanganate, population density, daily comprehensive water consumption per capita, irrigation area per capita, GDP per capita, urban water demand ratio, water consumption per 10,000 yuan of GDP, water resource development utilization rate, and industrial water reuse utilization rate.

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121

a land property rights system, land resources have investment and capital attributes. In addition, the exploitation of land resources has obvious externality; that is, as a factor of production and ecological factor, it must consider the sustainable use needs of people in different times. The purpose of the land resource balance sheet is to record changes in the quantity and quality of land resources over a certain period of time and to assess changes in the function and value of land resources. In terms of specific types of accounting, the value of the five major natural land categories (arable land, forest land, garden land, grassland, and water area) are accounted for separately according to the current Chinese land use classification standards, and the change value of each asset accounting period is counted. Given that the types of land resources may change in utilization, a change matrix can be selected to record the increase or decrease of each type of land resources. In addition, land resources, similar to other resources, mainly consist of physical quantity accounting and value accounting. Physical quantity accounting mainly reflects the status of land resource utilization types, area, and quality. Value accounting mainly accounts for the value of land resources through the direct market method, alternative market method, and hypothetical market method based on the results of physical quantity accounting [16]. The area of land resources itself is highly measurable, and under the current technical system in China, the coverage and data accuracy of land resource survey work have improved overall, and the degree of data standardization and unification has also increased. Thus, the data for physical quantity accounting of land resources is usually based on the statistical results of relevant surveys, such as land resource status survey, cadastral survey, and real estate registration, and be extracted, analyzed, and summarized through classification. Specifically, the quantity accounting of land resources is based on the area data of the first class in the government land survey, and the area of various types of land in the accounting area; the quality accounting is mainly based on the results of urban land classification and agricultural land classification quality survey and evaluation. The physical quality table in the accounting area can be obtained, and the physical quantity table of land resources can be obtained by combining the two, which we do not introduce in detail here. In value accounting, land resources mainly adopt the market value method, which can be divided into macro-accounting, meso-accounting, and micro-accounting according to the scale of accounting. The differences in scales are mainly reflected in the accuracy of using land value indicators and data, which lead to different applications of the accounting results. (a) Macro-accounting method Macro-accounting refers to the administrative unit at the county level and below as the smallest accounting unit. The land prices are the same for all spaces within the administrative area. The amount of land resource value is determined by measuring the average price of land value within the administrative unit, which is mainly used for rapid accounting of land resource assets in a larger area. The calculation formula is as follows:

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Ah =

n 

Pi × Si

(5.15)

i=1

Ah is the total value of land resources in the accounting administrative unit under macro-accounting; Si is the physical volume value of land of category i in the region; and Pi is the average land price for that category of land. Pi is chosen to include the benchmark land price, the monitoring land price, and the transaction land price. The benchmark land price is the basic standard price of urban state-owned land. The basic accounting idea is to estimate the average price of various types of land, such as industrial, upper industry, and residential, according to different land levels and lots. The key point of selecting the benchmark land price for accounting is to integrate benchmark land prices of different levels to form regional average values. It is suitable for areas where benchmark land price coverage is complete and information is updated quickly. The monitoring land price is used to set up monitoring points in specific areas for dynamic monitoring of market land prices. In 2021, China set up a dynamic monitoring network in 105 cities to disclose the prices of industrial, residential, commercial service, and comprehensive land on a quarterly basis. The macro-accounting method based on monitoring land prices is suitable for areas where dynamic monitoring of land prices is carried out and the relevant data are directly available, so that land prices are updated quickly and generally do not require additional corrections. The transaction land price is the fair price agreed upon by both parties in a land transaction, which in most cases is the most objective and fair land price. Transaction land prices are suitable for land asset accounting in areas and land types with relatively active market transactions, but the connotation of market transaction land prices varies significantly. Their application in the macro-accounting method should seek to make the number of transaction sample points sufficient and evenly distributed, and to eliminate individual abnormal transaction prices. (b) Meso-accounting method Meso-scale land asset accounting refers to taking homogeneous areas, that is, areas with similar or relatively consistent natural elements, as the basic accounting unit, and measuring the average prices of different homogeneous areas. This method differs from macroscopic accounting methods in that it can reflect the differences in land prices in different spaces within administrative regions, and helps to refine the analysis and application of accounting results. Its formula is calculated as follows: Az =

m n  

Pi j × Si j

(5.16)

i=1 j=1

A z is the total value of land resource assets under the meso-accounting method; Si j refers to the physical volume value of the class i land in j homogeneous area in the accounting region; and Pi j is the value of land price level corresponding to Si j , which is mostly used to determine the average value of land price by public land

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123

price (mainly the benchmark land price), monitoring land price, or the assessment of transaction land price, parcel appraisal price, statistical analysis, and other methods. In practice, it is necessary to have a high precision spatial vector database of physical volume to employ the meso-accounting method. (c) Micro-accounting method The micro-accounting method takes land as the basic accounting unit, and obtains the accounting results by measuring and aggregating the land price level of each piece of land, which usually contains a variety of detailed information, such as land ownership and utilization. In the value calculation, the batch evaluation method is often used to measure the price of each lot and overlay it with the cadastral information for analysis. Here, we briefly introduce the micro-accounting method based on the benchmark land price correction method: Aw =

n 

Pj × S j

(5.17)

j=1

P j = Pa · (1 ±



Ki ) · K j + D

(5.18)

S j is the physical volume area of the jth land; P j is the corresponding benchmark land  price correction price; Pa is the benchmark land price for a certain level of use; K i is the land price correction coefficient; K j is other correction coefficients; and D is the land development degree correction value. In practicing, appropriate accounting methods can be selected according to the characteristics of the area being accounted for. For example, the variability of arable land in the same region is often small, and macro- or meso-scale accounting methods can be selected to greatly reduce the workload; when the variability of the value of operating construction land in the same region is large, meso- or micro-scale accounting methods usually ensure the accuracy of the data. (4) Mineral resource assets Mineral resources refer to mineral or useful element assemblages with economic significance or potential economic benefits in solid, liquid, or gaseous state; they are naturally endowed on the surface of or inside the Earth’s crust, are formed by geological mineralization, and are an important material basis for the development of social production. The total amount of mineral resources in China is large, but the per capita rate is low, and the strong demand for mineral resources is rigid and likely to continue for a long time. The accounting of mineral resource assets can measure the sustainable support capacity of mineral resources for social production development, and provide information support and decision support for the sustainable use of mineral resources. Mineral resources are non-renewable resources. When accounting for mineral resource assets, only mineral resources that have been proven, are available for use, and can bring economic benefits should be accounted for, and the physical and value

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quantities should be reliably measured. According to the current mineral resource reserve standards in China, mineral resources are mainly in four categories: energy minerals, metal minerals, non-metal minerals, and water and gas minerals. In addition, the recognized mineral resource assets should have a clear accounting subject. China implements the system of obtaining mineral rights for a fee, where the state owns the mineral resources and enterprises obtain the right to use them for a fee. Therefore, when accounting for the value of mineral resources, the whole process of transferring the “ownership” to “use” rights should be considered, including the assets of mineral resource reserves and the assets formed in exploration and development. The main purpose of physical quantity accounting is to reflect the stock and flow of assets. China’s mineral reserves balance sheet uses the physical quantity accounting of mineral resource assets as the measurement basis. The balance sheet is generally prepared using 3S technology, geophysical, geochemical, and other survey methods and technical means along with comprehensive research to achieve higher data accuracy. According to the latest Classification of Solid Mineral Resource Reserves in China, mineral resource reserves are divided into proven reserves and probable reserves, both of which should be included in the physical quantity measurement statistics. When accounting for the value of mineral resource assets, if the mineral extraction enterprise is the main accounting entity, the net present value method is often used as the main accounting method. This method discounts all the future net income of the mineral to the accounting point in time to measure its value. However, because our purpose is to use mineral resource accounting in the natural resource balance sheet, and the main entity is the state or government, we do not discuss the net present value method in detail here. When the government is the main accounting entity, the accounting of the value of mineral reserve assets is mainly based on the results of physical quantity accounting, and the net price method is used for accounting; in other words, the price of finished mineral products in the accounting period is subtracted from the various types of costs in the process of mineral product development to obtain the price of mineral resources. The assets formed in the process of mineral exploration mainly include the ground rent cost and development cost. The ground rent cost mainly refers to the mining right and prospecting right fees charged by the government, while the development cost is all the costs paid in the process of exploration, operation, and storage. These assets are accounted for using the full cost method, and because the assets formed in the exploration process are for finding and collecting mineral resources, all costs are grouped into one cost and capitalized when incurred. (5) Marine resource assets Marine resource assets are assets that exist in the ocean and the submarine crust, and are owned or controlled by the state or government jurisdiction, and are expected to yield benefits or welfare. In recent years, China’s marine science and technology has developed rapidly, and the marine industry has become a new growth point for

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economic development. In 2020, China’s gross marine products reached 80.01 billion yuan, accounting for 14.9% of the GDP of coastal areas, and marine resources have taken an important place in China’s economic development. However, the development of marine resources in China is only in the primary stage. The study of accounting for marine resource assets and the preparation of a marine resource balance sheet could enhance the transparency of marine resource development and utilization, leading to the sustainable utilization of marine resources. In the SEEA (2012) method of classifying environmental resources, marine resource assets are generally classified into four categories: marine biological resources, marine spatial resources, marine mineral resources, and seawater resources. Marine biological resources refer to groups of animals and plants in the ocean that can be harvested for economic use; they are grouped into aquatic animal assets and plant assets. Marine spatial resources mainly include sea mudflats and water bodies. Marine mineral resources include oil and gas resources, coastal sands, etc. Seawater resources include water resources and marine chemical resources (mainly salt assets). The classification of marine resources is extensive, and there are significant differences in the methods used to account for the value quantity of different kinds of marine resources. (a) Marine biological resources The accounting of the value quantity of marine biological resources can be categorized into three parts: direct production value, indirect social value, and ecological value. The production value can be classified according to fish resources, mollusk resources, crustacean resources, marine plants, etc. It is estimated by the market price method by combining the physical quantity data from the marine environmental monitoring center stations or marine aquatic research institutes in different places [17]. Meanwhile, the indirect value of marine biological resources is mainly calculated by the willingness-to-pay survey method and the alternative market method. The willingness-to-pay survey method mainly assesses the ecological value by questionnaire, and the alternative market method converts the ecological value into the social value for accounting purposes. (b) Marine spatial resources The value of marine spatial resources is mainly calculated according to the latest Technical Specification for Sea Area Price Evaluation in China, and the specific calculation methods include the income reduction method, residual method, market comparison method, and cost approximation method. The cost approximation method is more suitable for regions with a less developed sea area trading market and fewer cases of similar sea area trading. Its calculation formula is as follows: P = (Q + D + B + I + T + C) × K

(5.19)

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P is the price of the sea area being accounted for; Q is the acquisition cost; D is the development cost; B is the development interest; I is the development profit; T is the tax; C is the appreciation gain; and K is the correction factor based on use life. When the comparison price selected for the appreciation gain of the sea area is the market price of the sea area with permanent use life, the price obtained needs to be corrected. The correction factor formula is as follows: K =1−

1 (1 + r )n

(5.20)

r is the reversionary interest rate of the accounting sea area and n is the number of years of use of the accounting sea area. Finally, the price obtained is multiplied by the corresponding sea area to obtain the corresponding value. (c) Marine mineral resources The value assessment system applicable to marine mineral resources has not yet been perfected, and currently China mainly uses the market price method to assess their value. In the existing cases, since the end of 2019, China has implemented a bidding, auction, and listing system for the “two rights in one” of marine sand mining rights and sea area use rights; thus, the value of mineral resources can be calculated based on the final transaction price at the Public Resources Exchange. With the further standardization of the right to use marine mineral resources, the final transaction price will reflect their real value more objectively. (d) Seawater resources Seawater resource assets mainly refer to the conversion of water resources into various kinds of energy and numerous chemical resources in seawater. Due to the infinite nature of seawater resources, they are usually not easy to account for and will not be included in the balance sheet of seawater resources. (6) Grassland resource assets Grassland resources are the general term for all grass resources, such as grasslands and grassy hills. China’s grasslands cover an area of about 400 million hectares, accounting for 41% of China’s national land area. China has a large number of wild and companion species of world-renowned high-quality forage grasses. In terms of application value, grassland resources not only provide a large amount of grass and livestock products and promote the development of grass-fed livestock production, but also have important ecological service functions, such as carbon sequestration and oxygen release, which is one of the important components in natural resource assets accounting. Grassland resource assets are mainly divided into three categories: grassland land assets, grassland biological resources, and grassland ecological service resources.

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127

Different indicators and methods are used to account for the value of different categories of grassland resources. (a) Grassland land assets The value accounting of grassland land assets is basically the same as the value accounting of land resources. First, the type of grassland and the area of grassland are selected as the indicators of physical quantity accounting, and on the basis of the results of physical quantity accounting, the value of the corresponding type of grassland assets is accounted for in terms of land rent and compensation standards for land acquisition, etc. The calculation formula is as follows: Gl =

m n  

Ui j · Vi j

(5.21)

i=1 j=1

G l is the value of grassland land assets; Ui j is the area of grassland land is the area of class j grassland land in region i; and Vi j is the standard price of compensation for land acquisition corresponding to Ui j . (b) Grassland biological resources Grassland biological resource value accounting objects are divided into two categories: pasture and other vegetation. On the basis of grassland biological resource accounting by grass type and grass area in kind, pasture resources are valued by the market value method, and other vegetation is valued by the burning value by analogy method. The formula of the burning value analogy method is as follows: Gg =

n  m 

Ui j · Pi j

(5.22)

i=1 j=1

G g is the value of the other vegetation in grasslands of type j in area i and Pi j is the price corresponding to other vegetation. Pi j is calculated as follows:  Hp  Pi j = Ai j − Yi j · · Pm Hm

(5.23)

Ai j is the yield of all vegetation in grassland type j in area i; Yi j is the correH sponding forage yield; Hmp is the ratio of the burning value of standard coal to the burning value of grassland organic matter; and Pm is the price of standard coal. Finally, the value of grassland biological resources can be obtained by summing the value of forage and the value of other vegetation.

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5 Accounting and Pricing Methods for Natural Resources

(c) Grassland ecological service resources The accounting indicators of grassland ecological service resource accounting are grassland oxygen release, carbon sequestration, air purification, and water conservation. The value of grassland oxygen release can be accounted by the alternative cost method; the value of carbon sequestration is mostly accounted by the carbon tax method; the value of air purification is accounted by the cost expenditure method in combination with the emission levy standard; and the value of water conservation is mainly accounted by the shadow engineering method. The estimated value of grassland ecological service resources can be obtained by summing these four types of accounting values. However, grassland far more ecological service functions than these four categories, and there are strong externalities of ecological service functions, making the accounting methods of grassland ecological service values deserving of further in-depth study.

5.2.2 Accounting for Natural Resource Liabilities Accounting for natural resource liabilities is of great significance from many aspects, including resource conservation and utilization and ecological environmental protection. However, owing to the special attributes of natural resources, the concept of natural resource liabilities is quite different from that of liabilities in traditional accounting. First, from the perspective of the accounting subject, the government and the collective are the dominant owners of natural resource use rights and should be debtors as well. Second, the purpose of natural resource balance sheet preparation is to reflect the unreasonable consumption of natural resources by social activities, and thus, the most basic purpose of natural resource liability accounting is the excessive consumption of natural resources by government subjects. Overconsumption of resources is often accompanied by damage to ecology and environment, and thus, accounting of natural resources can be roughly divided into three parts: overconsumption of resources, environmental pollution, and ecological damage. (1) Excessive consumption of resources Resource overconsumption refers to the excessive consumption caused by the unreasonable exploitation of various natural resources in the process of socio-economic development, which includes: “natural overconsumption,” which causes irreversible losses due to short-term overconsumption of natural resources; and “policy overconsumption,” which exceeds the prescribed policy targets. Therefore, similar to the

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process of accounting for natural resource assets, the criteria for “excessive consumption” should be linked to the type and point in time of natural resources, and the excessive consumption of resources should be valued according to the established criteria and then used to compare natural resources at different points in time. Taking water resources as an example, China has established two indicators for water resource management, namely, the water resource development rate and water resource utilization efficiency, to assess the use of water resources, which can be used as an important criterion for accounting for water resource overconsumption. For land resources, the Chinese government has proposed basic data and delineation standards for the ecological protection red line. When the unreasonable use of land exceeds the delineated bottom line or the impairment of land renewal capacity, land resources can be considered as overconsumption. As mineral resources are non-renewable resources, the Chinese government has chosen the comprehensive utilization rate of mineral resources, mining recovery rate, and mineral processing recovery rate as the core evaluation tools to review the rationality of mineral resource development and utilization. These three ratios provide learning value for the standard of mineral resource overconsumption and can be used as the standard of mineral resource overconsumption, whereby mineral resources debt is defined as the loss of resources in the process of mineral resource development denoted by the three ratios below a minimum standard. (2) Environmental pollution In the various socio-economic activities of people, the exploitation of resources often brings about environmental pollution. When the extent of environmental pollution exceeds the ability of the ecosystem to recover, it leads to environmental liabilities. For example, industrial production of sewage and exhaust fumes causes pollution of water, land, and atmospheric resources, damaging the value of natural resource assets. Therefore, accounting for environmental pollution is an indispensable part of the natural resource liability accounting process. Specifically, environmental pollution accounting refers to recording the physical quantity and value of the negative impact of human social activities on the quality of natural resources at a certain time, reflecting the economic loss caused by environmental pollution and the cost of treatment and restoration needed to restore the environment to its original condition. Given the current caliber of environmental statistics and data availability, the practice of accounting for environmental pollution focuses on accounting for air pollutants, soil pollutants, and water pollutants generated by industrial activities and human life. The physical quantities of atmospheric pollution and water pollutants can be accounted for based on the pollution generation, pollution treatment, and pollution emissions data provided by the Ministry of Ecology and Environment. Water pollution accounting includes not only industrial water pollutants accounted for in the discharge permit, but also urban residential water pollution, etc. Atmospheric pollution mainly includes three types of pollutants, namely, sulfur dioxide, soot, and nitrogen oxides. The physical quantity of soil pollutant accounting mainly includes

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industrial solid waste. The specific accounting values can be calculated in accordance with the constant equation of “solid waste emissions = solid waste generation − reuse − disposal.” When accounting for the value of environmental pollution, the value of environmental pollution liabilities is often measured using virtual treatment costs, which are the cost of treating all pollutants in the accounting area according to the current pollution treatment technology. This method is based on the principle that if all pollutants can be effectively used or treated, there will be no environmental pollution, and the corresponding environmental pollution loss indicators are chosen in practice to account for the value of environmental pollution of the corresponding resources. (3) Ecological crowding Ecological crowding refers to a situation in which the service functions of natural ecosystems are weakened or even lost due to unreasonable changes in the use of various resources by people. The functions of ecosystems mainly include ecological supply, ecological regulation, and energy flow. The main content of natural resource liability accounting is to account for the amount of various functions provided by ecosystems in a certain period of time and the amount of changes, and then to reveal the impact of human economic activities on the ecological effects of natural resources. For example, the damage to the soil and water conservation functions of forest resources and grassland resources can be measured by the shadow engineering method; the damage to the water conservation function can be accounted for by the opportunity cost method; and soil erosion in land resources can be calculated by the market value method to express the value of soil ecological damage by calculating the value of soil fertility. The ultimate goal of accounting ecological crowding is to comprehensively account for the quantitative and qualitative changes in the ecological effects of natural resources. Therefore, in future accounting processes, we should gain insight into the resource, environmental, and ecological attributes of natural resources, so as to scientifically measure the multiple service functions of different ecosystems.

5.3 Compilation and Analysis of the Natural Resource Balance Sheet This section takes Hubei Province, China as an example, and selects the water resource data of the province from 2011 to 2020 to compile a table of physical water resources and a table of values. The data are mainly obtained from the Water Resource Bulletin, the Ecological and Environmental Status Bulletin, the China Statistical Yearbook, and statistical data of the National Bureau of Statistics.

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5.3.1 Physical Balance Sheet and Analysis As Table 5.3 shows, the total water resource assets at the end of the statistical period were 175.471 billion cubic meters, with abundant water resources, and a relatively large increase compared with the beginning of the period. The main reason is that the end of the accounting period (2020) was a water-abundant year for Hubei Province, and the total amount of precipitation and incoming water were higher than normal, resulting in faster growth of total water resources. The value of the environmental pollution can be calculated by combining the virtual cost method. The content of the main pollutants in water was reduced year by year during the accounting period, and the water resource environment improved. The value of ecological crowding can be calculated by using energy value analysis to measure the corresponding energy value and then the monetary ratio of energy value. In ecological crowding, the value of flood regulation and storage increases more, mainly due to the increase of precipitation and incoming water in the end of the accounting period (2020). Table 5.3 Physical scale of water resource assets Assets/ Liabilities

Class

Water resource assets

Water liability

Metric

Beginning (2011)

End (2020)

Surface water (billion m3 )

725.42

1734.96

Groundwater (billion m3 )

251.92

381.67

Repeated 219.81 calculation (billion m3 )

361.92

Aggregate value

757.53

1754.71

0

0

0.76

0

Overconsumption of resources Environmental pollution

Ecological crowding

Phosphorus (10,000 tons)

COD (10,000 tons) 64.03

0

Nitrogen ammonia 8.39 (10,000 tons)

0

Aggregate value

73.18

0

Flood regulation and storage (1020 sej)

2357.73

3553.58

Water source supply (1020 sej)

378.29

355.60

Climate regulation (1020 sej)

23.86

57.63

Aggregate value

2759.88

3866.81

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Table 5.4 Water resource balance sheet Classification

Metric

Water resource assets Water liability

Net assets of water resources

Beginning (Billion yuan)

End (Billion yuan)

2560.45

5841.16

Overconsumption of resources

0

0

Environmental pollution

54.51

0

Ecological crowding

814.99

4015.37

Aggregate value

869.5

4015.37

1690.95

1825.79

5.3.2 Value Balance Sheet and Analysis As Table 5.4 shows, the water resource assets, liabilities, and net assets of Hubei Province increased during the accounting period. The net value of water resource assets at the end of the statistical period were 1825.79 billion yuan. The water resource assets of Hubei Province were relatively abundant, and the water supply was sufficient to provide sufficient water resources for economic development. Basic water resource extraction was reasonable, and there was no overconsumption of water resources. Environmental pollution of water resource liabilities improved, indicating that the ecological restoration of water resources was successful. Finally, ecological crowding increased, it was affected by precipitation at the end of the accounting period. Although ecological crowding was affected by precipitation in 2020, the calculation highlights that management should use water resources more rationally, reduce impact on the ecological environment, and achieve high-quality economic development.

5.4 Summary The natural balance sheet, a new concept, is an important theoretical and institutional innovation. China has piloted it in many places. Research on natural balance sheets can clarify the classification and accounting standards of natural resources, and regularly reflect the changes of each type of resources, which can help the government to plan policies of resource use. This chapter introduces the contents of natural resource accounting in the process of compiling natural assets and liabilities statements. Starting from the accounting system of natural assets and taking the government as the main accounting body, this chapter introduces the accounting and pricing methods of six types of resources, namely, forest, water, land, mineral, marine, and grassland resources. Then, this

References

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chapter defines natural resource liabilities and provides accounting methods. Finally, this chapter provides an example of the preparation of the physical and value statements of water resources. The preparation of natural resource balance sheets is an ongoing process of reform and innovation, which requires statistics and accounting of the quantitative value of resources and the quality value of ecological environment. Natural resource balance sheets involve many disciplinary fields and requires coordination and cooperation among many departments. In addition, there is still much room for improvement of various methods in value accounting, especially the accounting method of liabilities. In future accounting of natural resource value, the most suitable accounting method will be selected according to local conditions in combination with the development of science and technology in order to prepare scientific and reasonable balance sheets.

References 1. Feng ZM, Yang YZ, Chen Y. National balance sheets and implications for natural resource balance sheet. Resources Science, 2015, 37(9): 1685–1691. 2. Banerjee O, Cicowiez M, Horridge M, Vargas R. A conceptual framework for integrated economic–environmental modeling. The Journal of Environment & Development, 2016, 25(3): 276–305. 3. Dutta D, Vaze J, Kim S, Hughes J, Yang A, Teng J, Lerat J. Development and application of a large scale river system model for National Water Accounting in Australia. Journal of Hydrology, 2017, 547: 124–142. 4. Dickie I, Neupauer S. Natural capital accounts: nations and organizations. Journal of Environmental Economics and Policy, 2019, 8(4): 379–393. 5. Borucke M, Moore D, Cranston G, Gracey K. Accounting for demand and supply of the biosphere’s regenerative capacity: The National Footprint Accounts’ underlying methodology and framework. Ecological Indicators, 2013, 24: 518–533. 6. De Groot R, Brander L, Ploeg S, Costanza R, Bernard F, Braat L. Global estimates of the value of ecosystems and their services in monetary units. Ecosystem Services, 2012, 1(1): 50–61. 7. Pan T, Feng ZM, Liu YJ, Zhang J. Liability accounting method and case in the preparation of natural resources balance. Scientific and Technological Management of Land and Resources, 2019, 36(2): 74–84. 8. Ewert AW. Natural resource management. The Human Dimension. Routledge, 2021. 9. Boumans R, Roman J, Altman I. The multiscale integrated model of ecosystem services: Simulating the interactions of coupled human and natural systems. Ecosystem Services, 2015, 12: 30–41. 10. Smith VK. Nonmarket valuation of environmental resources: an interpretive appraisal. Land Economics, 1993, 69(1): 1–26. 11. Kovacs KF. Integrating property value and local recreation models to value ecosystem services from regional parks. Landscape and Urban Planning, 2012, 108(2-4): 79–90. 12. Feng ZM, Yang YZ, Li P. From Natural resources accounting to balance-sheet of natural resources asset compilation. Bulletin of Chinese Academy of Sciences, 2014, 29(4): 449–456. 13. Taye FA, Vedel SE, Jacobsen JB. Accounting for environmental attitude to explain variations in willingness to pay for forest ecosystem services using the new environmental paradigm. Journal of Environmental Economics and Policy, 2018, 7(4): 420–440. 14. Pedro-Monzonís M, Jiménez-Fernández P, Solera A, Jiménez-Gavilán P. The use of AQUATOOL DSS applied to the System of Environmental-Economic Accounting for Water (SEEAW). Journal of Hydrology, 2016, 533: 1–14.

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15. Yang YZ, Chen Y, Song XY. Compilation of a water resource balance sheet for Huzhou City. Resources Science, 2018, 40(5): 908–918. 16. Pérez-Soba M, Petit S, Jones L, Bertrand N, Briquel V. Land use functions. A Multifunctionality Approach to Assess the Impact of Land Use Changes on Land Use Sustainability. Springer, Berlin, Heidelberg, 2008: 375–404. 17. Cabana D, Ryfield F, Crowe TP. Evaluating and communicating cultural ecosystem services. Ecosystem Services, 2020, 42: 101085.

Chapter 6

Realization and Reform of Property Rights of Natural Resources Assets

China has vast territory and abundant natural resources. However, its resource-based economic growth model has caused damage to natural resources, which is reflected in the loss of natural resources, the non-standard registration content of the confirmation of rights, and an unsound circulation mechanism. Due to the imperfection of the existing property rights system of natural resource assets, natural resources have developed in a disorderly manner and over time have been damaged. Therefore, there is an urgent need to improve the property rights system of natural resource assets, use the system to protect the ecological environment, improve the efficiency of resource allocation, ensure the reasonable use of resources, and enhance the property rights of natural resources. Therefore, the reform of the property rights of natural resource assets are worth considering and exploring.

6.1 Concept of Property Rights System of Natural Resource Assets This section examines the concept, characteristics, and categories of natural resource assets in China, and analyzes the realization and reform of the property rights of natural resource assets based on the connotation of natural resources.

6.1.1 Connotation and Basic Attributes of Natural Resource Assets Natural resource assets do not consist of all natural resources, but refer to the physical assets in the state of natural resources. Natural resources must meet the following conditions to be called natural resource assets, as detailed in the following Fig. 6.1. © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 T. Ding and M. Song, Natural Resource Regulation in China, Contributions to Public Administration and Public Policy, https://doi.org/10.1007/978-981-99-5593-0_6

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Fig. 6.1 Conditions satisfied by natural resource assets

The basic feature of natural resources is scarcity. Natural resource assets must meet this feature, otherwise they cannot be called natural resource assets in strict sense. Natural resources in the natural state have usefulness, and can generate benefits and wealth for people. At the same time, the value of wealth needs to be evaluated in the market before it can finally be realized. Property rights are helpful for the sustainable development of natural resource assets. The main body of property rights can guide the rational exploitation and use of natural resources. Whereas the boundary of property rights is clear, the boundary of the property rights of natural resources is indistinct. This leads to unclear rights and interests of assets and even income, and the natural resource cannot become a natural resource asset. Natural resource assets have many attributes, as shown in the following Fig. 6.2. First, natural resource assets are in a natural state, which is different from fixed assets, such as housing, equipment, tables, and chairs. Natural resource assets are basic assets that are closely related to the survival and development of a country and nation. However, natural resource assets are exclusive in use. In other words, only one entity has the right to use a natural resource asset, and other entities cannot obtain a corresponding right to use the natural resource asset, because the space cannot overlap to a certain extent. In addition, rigid demand is an important feature of natural resource assets. It is caused by the existence of a group of contradictions, such as rapid population growth and increasing scarcity of natural resources. Natural resource assets have weak substitutability. Generally, natural resource assets, such as water, soil, mineral, energy, and biological assets, are irreplaceable; even if they can be replaced, the process is gradual and limited. At the same time, the weak substitutability of natural resource assets leads to their value preservation and

Fig. 6.2 Properties of natural resource assets

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appreciation. For example, both forest resource assets and mineral resource assets have strong value preservation. Finally, the uneven distribution of natural resources in various places makes it regional [1].

6.1.2 Classification of Natural Resource Assets There are various ways to distinguish the categories of natural resource assets, as shown in Table 6.1. Most natural resources are public. In fact, with reform and development in China, public and private natural resource assets are constantly emerging. However, it is difficult to determine what drives this process. All natural resource assets should have a clear subject of classification, and otherwise should be excluded. Based on the physical nature of natural resource assets, in view of the unique spatial characteristics of land, land resource assets are the foundation of natural resource assets. Most other natural resource assets are formed by relying on land resource assets and cannot be independent of land resource assets. In terms of the nature of use, public welfare resource assets are not for the purpose of generating economic benefits, but to meet the daily needs of the public. Therefore, it is necessary to strictly prohibit the non-public welfare use of public welfare resource assets. According to the location characteristics of natural resource assets, in-situ resource assets, such as land resource assets, cannot be moved. However, natural resource assets that are not in place, such as water assets, can be moved. Non-original resource assets are of great significance to the assessment of the overall situation of natural resources in a certain region and should be the subject of focus. From the perspective of the characteristics of the division of ownership of natural resource assets, the boundaries of proprietary resource assets are clear and can be divided, while the opposite holds for shared resource assets. Proprietary resource Table 6.1 Classification of natural resource assets Classification method

Category

Nature of subject

Public, private, common (mixed), and ownerless natural resource assets

Physical nature

Land, water, mineral, biological, ecological, and comprehensive resource assets

Nature of use

Public welfare, non-public welfare, and quasi-public welfare resource assets

Location characteristics

In situ, mining, or non-in situ natural resource assets

Ownership segmentation features

Proprietary and shared resource assets

Action size

Strategic and non-strategic resource assets

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assets are allocated by the market under the supervision of the government, while shared resource assets are uniformly disposed of by the government. Finally, given the different categories of natural resource assets, their roles are also different. Strategic resource assets are closely related to the national economy and people’s lives, and are the most active and important resource assets, which are difficult to obtain from the international community. In the reform of the property rights system of natural resource assets, the focus should be on strategic resource assets, mainly including natural resource assets, such as forest, water, and farmland. The classification of natural resource assets is conducive for the adoption of differentiated management measures, and can aid reform of the property rights system [2].

6.1.3 Definition of Property Rights of Natural Resource Assets in China Property rights derive from the theory of property rights put forward by Kos and William. Scholars in the field of economics define property rights as the right to choose a variety of uses for a specific economic project that is compulsorily realized by the society. In the legal field, property rights are very popular in Germany, China, and other countries with a civil law system, and are also very popular in countries of with a common law system. At present, the theoretical consensus on property rights is to take ownership as the core, including the rights of management, use, income, and other rights. Some scholars consider property rights to be the general solution to the problem of property ownership, while limiting the use of goods, including property ownership, management, use, income, transfer, and other rights. Other scholars consider the ownership of natural resources to refer to a combination of the rights to hold, develop, and use natural resources. In summary, the property rights of natural resources are centered on the ownership of natural resources and cover the rights of use, transfer, income, and management. Moreover, not all natural resources with “exclusive right, segmentation possibility right, and boundary measurement possibility right” can be established as property rights, although non-property rights can be claimed.

6.2 Theoretical Basis for Building the Property Rights System of Natural Resources Assets There are still many problems with the establishment of the property rights system of natural resources in China. Therefore, to complete the property rights system of natural resources in China, we need to analyze the theoretical basis for its establishment.

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139

6.2.1 National Ownership Theory of Natural Resources There are two schools of the theory of state ownership of natural resources: the theory of property rights and the theory of public rights. The theory of property rights originates from property law. According to the theory of property rights, the ownership of natural resources retained is equal to the property rights stipulated in the civil law. The use and management of relevant property by both parties in a transaction are exclusive. According to the theory of property rights, natural resources are owned by the state, and the state has the absolute right to manage, transfer, and use natural resources. According to the theory of public rights, public rights are owned by the whole society. The state ownership of natural resources refers to the constitutional right to decide who uses the resource, how to use it, and how to distribute interests according to the will of all citizens. According to the theory of public rights, natural resources are not owned by the state, but by the whole society. The state controls only the management of natural resources. The state makes use of its functions, clarifies the right to use natural resources, and manages the exploitation and utilization of natural resources in a unified manner, so that the income of natural resources can be shared by all people and used for public expenditure and social welfare [3].

6.2.2 Asset Management Theory of Natural Resources The asset management of natural resources was first inspired by William Petit’s book, A Treatise of Taxes and Contributions, in which he stated that “Land is the father of material wealth, the earth is its mother” in the seventeenth century. From the 18th to the twentieth centuries, many economists increasingly focused on the relationship between the economic market and natural resources. Based on their views, the market, the so-called “invisible hand” can solve the problem of the lack of natural resources. The solution entails in raising the price of natural resources in the economic market to reflect its scarcity so as to achieve a reasonable allocation of natural resources. From 1980 to 1990, research on the asset management of natural resources in various countries matured, and the asset management of natural resources was included in the scope of economics. Through the introduction of natural resource asset management theory, the marketization of natural resource property rights and the marketization of use rights have developed rapidly, with good results. The asset management theory of natural resources has been shown to be conducive for the protection of the rights and interests of resource owners, the rational use of natural resources, and the steady development of the natural resource economic market, indicating that the asset management of natural resources has significantly improved the utilization efficiency of natural resources [4].

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6.3 Research on the Property Rights System of Natural Resource Assets—Taking Forest Assets as an Example The resource dependent economic growth model formed in China for a long time will continue to damage the ecological environment and natural resources. In addition, the fundamental reason for the destruction of natural resources and the disorderly exploitation and utilization of natural resources is the imperfection of the property rights system of natural resources. Therefore, it is imperative to improve the property rights system of natural resources, use the system to protect the ecological environment, increase the efficiency of resource allocation, ensure the rational use of resources, and enhance the property rights of natural resources. It is common knowledge that forest resource assets have not only economic value but also special ecological value. However, the management of forest resource assets in China remains unsatisfactory, with loss of forest resources, non-standardized registration of confirmation of rights, and imperfect circulation mechanism. This phenomenon has seriously damaged China’s forest resource assets and reduced the income derived from China’s forest resource assets. Therefore, this section takes forest resources as an example to study the relevant content of the property rights system of natural resource assets in China [5]. China’s relevant policies have made provisions for the establishment and improvement of forest resource property rights system. To further study the ownership system of forest resource assets, this section analyzes the content of the property rights system of forest resources (assets) based on three aspects, namely, rights confirmation registration, transfer, and income distribution.

6.3.1 Registration of Confirmation of Rights (1) Issuance of measures for the registration of unified confirmation of rights of natural resources (trial) Due to the changing social environment, people are pushing for stronger requirements for environmental quality. In the process of promoting reform and opening up, China has made some adjustments in the supervision of natural resources to promote the development and protection of natural resources. Taking into account the balance of rights and responsibilities of the Ministry of Natural Resources and strengthening supervision, to better promote the construction of the ownership system of natural resource assets, at the end of 2016, the measures for the unified registration of the confirmation of rights of natural resources (trial) (hereafter, “the measures”) were issued, clarifying the scope and standards of the registration of the confirmation of rights. According to the measures, in addition to mineral resources, such resources as seashore, wasteland, grass, mountains, forests, water flows, national parks, natural reserves, and wetlands need to be registered for the confirmation of rights. In addition

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to the provisions on the registration object, the measures also classify the registration of confirmed rights and real estate registration. In other words, the implementation of the measures makes the unified registration of forest resource assets more standardized and comprehensive. (2) Content of confirmation registration in the property rights system of forest resource assets China’s Forest Law provides in principle for the registration of the confirmation of forest resource rights. In addition, the implementation regulations of the Forest Law provides more detail for the registration of the ownership and use right of forests, forest land, and trees. The Forestry Department of the local government at or above the county level is responsible for registering the forest resources and issuing certification. In addition, the type of logging and the processes of logging are explained. As far as the relationship between natural resource registration and real estate registration is concerned, it is well known that both involve the registration of a specific thing. The registration object of the confirmation of forest resource asset rights is China’s forest resources, including forests, forest land, and trees, while the registration object of real estate registration is mainly forest and forest land. However, there are also differences between the two registration types. The common feature is that the registration of forest resource rights confirmation is based on real estate registration, which is mainly reflected in the registration object. Specifically, their registration contents are different. The real estate registration of forest resources mainly records the ownership and current use of forest land resources and forest resources, but the confirmation of rights registration investigates and records the existence and specific location distribution of forest resources. In addition, the real estate registration records the natural status, ownership status, and changes of forest resources, while the confirmation of rights registration includes only natural status and ownership status. As for the registration procedure, the real estate registration is an act of registration confirmation by the real estate registration bureau according to the application of the parties, while the forest resource registration confirmation is an act of active registration by the registration authority. (3) Implementation procedures of the unified registration system for the confirmation of forest resource rights According to the relevant regulations, the implementation procedures of the system mainly include the following steps. As we see in the Fig. 6.3, first, clearly define the scope of registration of confirmed rights; that is, determine the scope of forest resources that should be included in the unified registration of confirmed rights and the registration scope of specific forest ecological space. Only when the registration scope is clear can the follow-up work be carried out in an orderly manner. Second, pre-allocate registration units. After determining the scope of forest resources and forest ecological space registered via the unified confirmation of forest

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Fig. 6.3 Implementation procedures of the registration system for confirmation of rights

resource rights, the next step is to plan the forest resources registered in units based on different types of forest resources and the principle of concentration and adjacency. Third, release the registration notice. After the first two steps are completed, the state-owned forest resource assets in the registration unit need to be registered for the first time. The local government must give notice of opening the first registration of forest resources, and the specific contents should include the scope of registration, division of registration units, and registration period, among other matters. Fourth, carry out resource investigation. In the resource survey, each department needs to cooperate to investigate the natural status, ownership status, and public management of forest resources in each pre-planned registration unit through special data analysis and processing, on-site investigation, on-site verification, departmental demonstration, etc., using real estate data. However, due to the dynamic nature of forest resource assets, it is difficult for each province to formulate a set of efficient technical routes to carry out a forest resource survey. Fifth, complete the registration and custodianship. The entry of this information into the database is the last step of the unified registration of forest resources. The registration authority is responsible for recording the relevant registration items in the forest resource register. It is imperative that when a unified forest resource registration system is registered, it is connected effectively to the real estate registration database and that there is unified management of the two sets of information [6].

6.3.2 Transfer Circulation In the property rights system of forest resource assets, the circulation of forest resource assets can be transferred from a place with low marginal value to a place

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with high marginal value, so as to maximize the value created by forest resource assets. Therefore, the transfer of forest resources (assets) is indispensable in the reform of the property rights system. The laws and regulations on the circulation of forest resources in China are shown in Table 6.2. (1) Scope of transfer The circulation of forest resources should be carried out on the basis of not damaging the forest resources, and this behavior should contribute to the better development of forest resources. Therefore, the Forest Law strictly stipulates the scope of the transfer of forest resources, including timber forest, economic forest, fuel forest, etc. Relevant policies indicate that the right to use forest resources can be transferred, excluding public welfare forests with specific ecological functions. (2) Content of transfer The circulation of forest resources refers to the act of transferring all or part of the use rights of forests, forest land, and trees from one party to another according to the laws and regulations. The whole process follows the principles of lawfulness, openness, voluntariness, equality, and integrity, and the circulation behavior should protect the forest resources and not damage the forest resources. The form of transfer of this right is to transfer it to the public, which is usually completed by local governments or forestry departments through auction [7]. (3) Transfer mode In China, there are various forms of forest resource circulation, such as transfer, exchange, leasing, equity investment, and subcontracting. Moreover, all forms are based on laws and regulations with various definitions and focuses. Because the authorities have not provided a catalog with a uniform circulation, all regions have adopted a local approach according to their own conditions. Most of the distribution forms of forest land use rights are covered by various policies and regulations. Some policies and regulations recognize only two forms of lease and mortgage: the most flexible and the commonly used. These two forms are not allowed by law, which to a certain extent limits the circulation efficiency of forest resources. Table 6.2 Laws and regulations on forest resources Number

Laws and regulations on the circulation of forest resources

1

Forest law

2

Land administration law

3

Rural land contract law

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6 Realization and Reform of Property Rights of Natural Resources Assets

Fig. 6.4 Income flow of forest resource assets

6.3.3 Income Distribution In addition to their specific ecological functions, forest resources have economic value, which is mainly derived from the process of forest resource owners exercising their rights. In a broad sense, the public has the right not only to use state-owned forest resources, but also to use collectively owned forest resources. The income flow of forest resource assets is as follows. As shown in the Fig. 6.4, in China, the state is the owner of state-owned forest resources. After the transfer procedures are completed, the local forestry bureau acts as an intermediary to transfer the forest resources by way of bidding and auction, and the proceeds are owned by the state. For collectively owned forest resources, only when more than two-thirds of village representatives approve an application filed with the relevant departments can they be circulated by means of bidding, auction, etc., and the proceeds are owned by the collective. For forest resources owned by others, the circulation is unrestricted and the income obtained belongs to individuals [8]. In addition, the state, collectives, and individuals can obtain loans as a source of income by pledging their own forest resources.

6.4 Problems in the Property Rights System of Forest Resource Assets in China 6.4.1 Registration of Confirmation of Rights (1) No uniform standard for contents of the registration of confirmation of rights The ninth article of the measures stipulates that the contents be registered in the natural register, and that forest resources, as one of the natural resources, must also comply with the provisions of the measures. Some regulations of relevant departments on the registration content include but are not limited to the ownership of forest

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resources and the subject of rights; they also include the type, quantity, and quality of forest resources. The restrictions on other registered items of forest resources are relatively clear, but the standards related to the type, quantity, and quality of forest resources are insufficient. First, according to the necessary conditions of the natural resource register, when registering forest resources, it is necessary to fill in specific forest resource categories. However, according to the current law of China, the types of classification are different. The details are shown in Table 6.3. The Forest Law has higher effectiveness and more classification of forest resources than other laws. The implementation regulations classify and improve forests, trees, and forest land. Therefore, it is necessary to clearly fill in the types of forest resources in the process of registration. The second condition relates to the quantitative registration of forest resources. Different from the registration of trees in forest resources, the quantitative registration of forest resources requires that the forest must be in pieces, with complete ecological functions and a complete biological chain. Therefore, in the process of forest resource registration, there is not only quantity registration, but also the problem of forest area; specifically, there is no unified standard for the calculation of forest area, resulting in inaccurate forest quantity. At the same time, China is rich in land and material resources, with diverse topography, and different situations in different regions. It is difficult to unify the calculation standards, and it is not possible to calculate the registered amount of forest resources accurately. The final condition concerns the quality statistics of forest resources. Depending on the type and environment of forest resources, the quality and evaluation system of forest resources are also different. In the process of forest resource registration, it is impossible to detect the quality of forest resources with uniform quality standards. Therefore, in the process of quality registration of forest resources, for practical use, it is necessary to formulate unified quality inspection standards according to different types and regions, so as to make the quality registration of forest resources more accurate. (2) Unclear boundary of forest resource ownership According to the objective facts, both groups and individuals have different views on the ownership and use rights of forest resources. At the same time, China’s forest resources include not only forests and trees, but also forest land. In the process of forest resource forest land management, such problems as joint management and insufficient management occasionally occur. For example, the Ministry of Forestry Table 6.3 Classification of forest resources Law

Types of forest resources

Forest law

Timber forest, economic forest, fuel forest, shelter forest, and special purpose forest

Regulations for the Implementation of the forest law

Tree land, bamboo land, and shrub land

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designates a piece of land as forest land and issues a forest ownership certificate, while the Ministry of Agriculture designates the same land as agricultural land and issues a land contract management right certificate, leading the two departments to issue competing certificates. For example, in the process of unified registration of forest resources, some forest land has been registered as real estate, which results in overlapping survey results. (3) Imperfect supporting measures for the confirmation and registration of forest resource rights With the passage of time, forests grow and may be cut down. During the registration process of forest resources, the status and ownership of forest resources may change. For these changes, the registration authority of forest resources does not have relevant supporting policies. Therefore, to further improve the forest resource rights recognition and registration system, the registration authority must take measures to respond to the changes in forest resources, or risk the confirmation and registration of forest resources lagging behind. (a) Incomplete registration information management When forest resources are registered, the specific information is revealed in the process of preliminary investigation and subsequent registration. Due to the previous implementation of the real estate registration system in China, some forest resources were registered in the real estate register before the confirmation registration, and the confirmation of registered forest resources in the later stage is dependent on the real estate registration. However, due to the different data standards of forest resources stored in different regions, different departments produce different results when extracting the data in the database. If the specific information about forest resources extracted from previous registration is not standardized, it would lead to the loss of credibility for its continued existence, or even lose its authority. Therefore, to facilitate the later stage of better management of forest resources, the integrity and reliability of all data and information of forest resources should be ensured when forest resources are registered. (b) Mismatches in qualifications of registration authority staff In China, there is no designated person responsible for the confirmation and registration of forest resources. At present, China does not require administrative staff to have legal qualifications, but need have only the corresponding basic knowledge. In the process of confirming the registration of forest resources, the relevant staff not only need to register the basic information of forest resources, but also need to register the owners of forest resources in accordance with the provisions. For the registration of owners, it is necessary to distinguish not only state-owned and collective ownership, but also different levels of government and collective ownership. Therefore, the work of the forest resource registration authority requires a high level of professionalism. If the staff of the forest resource confirmation registration authorities do not have the necessary qualification certificates, unnecessary disputes would

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arise during the confirmation registration. At present, as the staff of the administrative authorities in China are not suitably qualified, unnecessary disputes are bound to arise.

6.4.2 Transfer (1) Imperfect circulation mechanism of forest resource assets Although the value of forest resources is enhanced after the transfer, the current forest resource transfer mechanism in China is not optimal, mainly reflected in the following aspects. (a) Conflicts between laws on the flow of forest resources In addition to domestic laws and guiding policy documents of the Chinese government, local governments and forestry authorities have also formulated policies for the transfer of forest resources adapted to regional conditions. The First conflict concerns whether public welfare forests can be transferred. According to the measures, public welfare forests are defined as key protected forests and special purpose forests with important ecological value. See Table 6.4. The second conflict concerns the conditions that the transferee of the forest resource transfer should meet. The transfer of forest resource assets is related to the sustainable development of forest resources. See Table 6.5. The third conflict concerns the minimum circulation cycle of forest resources. This cycle is related to the income of the transferee and the follow-up management of forest resources. Different from the common market transactions, the transfer of forest resources involves various issues, including the term of the forest resource transfer contract, mining life, etc. If these problems are not handled properly, unnecessary disputes can easily arise. See Table 6.6. Table 6.4 Relevant regulations on whether public welfare forest can be transferred Laws and policy regulations

Relevant regulations on public welfare forests

Forest law

No regulation on the circulation of public welfare forests

Opinions of the state forestry Administration on regulating the operation of the collective forest right circulation market

Transfer prohibited but may be conducted by way of subcontracting, leasing, and equity investment

Measures of Hunan province on the circulation Can be transferred with approval of the of forest resources relevant government Administrative measures of Liaoning province Transferable on ecological public welfare forests Regulations of Hubei province on the circulation of forest resources

Non-circulation

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Table 6.5 Provisions on conditions for transferees Laws and policy regulations

Provisions on conditions for transferees

Forest law

Nothing

Rural land contract law

Able to conduct agricultural operations; peasant household

Decision on accelerating forestry development

Various social subjects

Measures of Hunan province on the circulation of forest resources

No special restrictions

Measures of Sichuan province for the administration of the transfer of collective forest rights

Have corresponding civil capacity; able to conduct forestry production and operations; foreign investors need to prove their identity and meet credit conditions

Table 6.6 Minimum term for conversion Laws and policy regulations

Minimum term for conversion

Law on contracted management of rural land

No regulation

Regulations of Jiangxi province on the transfer The transfer period of a forest land use right is of forest resources 15–70 years Measures of Hunan province on the circulation There is no minimum term for conversion; the of forest resources interval of forest land transfer should be no less than 2 years

Furthermore, if the forest resource transfer process is complicated and produces barriers to entry, it would, to a certain extent, lead to an unsmooth transfer process, which would not be conducive to the market playing an important role in resource allocation. (b) Non-standardized transfer mode of forest resources There are various ways to transfer forest resources, but the transfer procedures are not standardized. At present, the transfer of forest resources requires a contract to be signed; for example, the regulations of Jiangxi Province on the transfer of forest resources stipulate that the transfer of forest resources requires a signed transfer contract, but the Rural Land Contract Law does not clearly stipulate this. In addition, the regulations provide for the content of the forest resource transfer contract to “be agreed by the transferor and the transferee.” Therefore, there is no operational standard in the process of forest resource transfer. This is the inevitable result of China’s expedient and rapid private transfer of forest resources, low cost of private transfer, and weak legal awareness of people. Private transfer of forest resources across the country is the most common manner of transfer. As of December 2013, only 4.6 million hectares of forest resources were transferred through the forest resource trading platform, accounting for one-third of the total area transferred; the remaining two-thirds was transferred privately.

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There are no laws, restrictions, and formal procedures to be followed for private transfers. Text contracts are not uniform, the terms are incomplete, or may even lack key information of forest resources. For some private transfers, there is no text contract, only oral agreements. Such transfers may damage the rights and interests of the right holders and cause disputes. For example, individual forest farmers might not fully understand the value of a forest and the rights and responsibilities brought by its transfer, and base the decision to transfer forest resources on incorrect assumptions. However, with the increase in the value of forest resources, they have disputed transactions that were not standardized and further traded all their forest resources, bringing great uncertainty to forestry production. (c) Inadequate supervision of forest property transfer market As the competent authority of forest resources, the government must supervise and manage the process of forest resource circulation. However, the necessary services provided by the government for forest resource circulation are not comprehensive, such as inadequate prior review and follow-up supervision. When both the review of forest resources to be transferred and the supervision of the transfer process are insufficient, the forest resources are damaged or sometimes even a forced sale occurs. If the forest resources involved in the circulation are not properly regulated, the use of high-quality forest resources will be altered, become arable land, be used for real estate development, or even become idle. All of these outcomes would lead to the loss of forest resource revenue. (2) Decentralized forest resources with small scale of transfer After the reform of the property rights system of collectively owned forest resources, all forest farmers have been allocated land accordingly and now own the forest land. Forest farmers obtain forest land rights as their own property rights, which enhances their enthusiasm for forestry. However, at the same time, the decentralized production of farmers makes the management of forest resources decentralized and fragmented. In this way, it is difficult for small-scale production and operation to produce a scale effect, without competitive advantage, and the industry is unable to respond to unpredictable market demand in a timely manner. Relevant data show that the forest area involved in circulation in China has increased steadily, but its scale is relatively small compared with the total area of forest with confirmed rights. As of December 2013, the ratio of the total area of forest with confirmed rights in China was 8.11, specifically only 14.6 million hectares. As the second means of the distribution of forest resources, the circulation of forest resource assets is far from the best resource allocation. (3) Unauthorized use of forest land after transfer According to the Forest Law, after the transfer of forest resources, the only forest resource that can transfer is forest land, and the use of forest land cannot be changed. However, because China has abundant forest land and shortages of arable land, it is inevitable that a large amount of high-quality forest land would be converted

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into arable land for use without authorization, which would transform it from highquality forest land to low-quality forest land and damage forest resources. As is well known, cultivating crops on land does not have high ecological value, whereas forest resources have a good ecological effect; crop cultivation can harm the ecological environment by creating imbalance of the ecosystem and even triggering serious natural disasters. However, under the guidance of the policy of returning farmland to forests in China, part of cultivated land has been converted back to forest land, and most of this new forest land comprises pure plantations, with few mixed species; single forests account for the majority of forests and there are relatively few multi-layer forests. In addition, the development cycle of forest trees to maturity is long, which reduces the quality of forest land and damages the ecological environment.

6.4.3 Income Distribution (1) Incomplete circulation system causes lost income of forest resource assets Forest resources generate certain income in the process of transfer. If the system of forest land transfer is not optimal, the income generated in the process is lost. If the government that holds the dominant right to the state-owned forest resources does not strictly perform the transfer procedures, it leads to loss of forest resources; for example, the local government of a city allocates a certain range of sand control forest to enterprises free of charge, which is not in line with the principle of paid use of forest resources and damages state-owned assets. In addition to failing to perform the transfer procedures, some local governments impose a mandatory mortgage on state-owned forest resources, and most of the funds obtained in this way are transferred to the financial department for urban construction or other purposes, and are rarely used for the development of forest resources [9]. In addition, the market price distortion of forest resources in the circulation process leads to the loss of forest resource assets. As China’s forest resource evaluation system is not standardized, the price of transferring forest resource assets is not reasonable, making the price of forest resources deviate from the real level of forest resources, and in the transfer process, its circulation income is lost. (2) Low level of income sharing across society The public is nominally the “owner” of forest resources, but can only enjoy very low income from the circulation of forest resources. According to data collected from the national survey, compensation to farmers for expropriated land accounts for 4% of the income from the bidding and auction of the agricultural land; in other words, if the total income from the sale of the agricultural land is 100 yuan, the farmers who lose the land receive only 4 yuan as compensation. In addition, this kind of income has not been included in the budget, leading to non-fair distribution of circulation income, let alone the sharing of income across society.

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According to the law, the state, collective, and individuals hold China’s forest resources. According to the state-owned theory of natural resources, state-owned forest resources belong to all people, and the state only exercises the right to manage resources. Therefore, the income from state-owned forest resources in the process of circulation should belong to the whole society. In other words, the income from the forest resources in the process of circulation should be used to compensate the local residents for restoring forest ecology or other aspects.

6.5 Suggestions for Improving the Property Rights System of Forest Resource Assets in China 6.5.1 Registration of Confirmation of Rights (1) Issuing detailed rules to guide the confirmation and registration of forest resource rights The measures stipulate the contents and basic framework to be registered in the natural register. As one type of natural resources, forest resources should comply with the relevant provisions. However, in practice, the data obtained during the forest resource circulation are not comprehensive and the data standards are different. For example, the approach specifies that the registration of the quantity and quality of forest resources must be accurate, but does not set out uniform criteria for their registration. Therefore, the provisions of the measures on the registration of forest resources are not complete, resulting in problems in practice. To complete the registration of confirmation of forest resources and better implement the management of forest resources, the registration of the confirmation of forest resources should draw from past experience and undertake the necessary supplements and improvements. If the registration standards improved, the registration process of forest resources could avoid many unnecessary problems [10]. The administrative departments in different regions of China are scattered, and each region has specific registration standards for the confirmation of rights. Different regions should formulate appropriate local registration standards according to their own characteristics and with reference to the standards of other regions. This would be conducive to the unification of registration standards for the confirmation of rights, and could enable differentiated registration of forest resources, making it easier to operate the registration of confirmation of rights of forest resources. (2) Developing government led multi-channel dispute resolution solutions According to the Forest Law of China, disputes over the ownership and use rights of forest land should be handled by the people’s government according to law. If there is any objection to the way in which the government handles the results, a lawsuit may be brought to the people’s court. At the same time, according to the Administrative

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Reconsideration Law, if a party is dissatisfied with the administrative measures taken by the administrative authorities on forest resources and believes they are in violation of the law, the party can bring a lawsuit to the court but only after the administrative reconsideration. At present, most of China adopts administrative measures to deal with forest resource ownership disputes, but with the continuous development of the forest resource circulation market, disputes will become widespread. Therefore, the methods of dispute resolution should also be diversified, including not only administrative measures, but also mediation, legal relief, arbitration, etc. Ownership disputes usually come from local people, who prefer to choose mediation to resolve disputes, because mediation is convenient and efficient to implement. However, a more professional outcome is likely from a judicial decision than from mediation. In the face of complex property disputes, judicial decisions on the surface require time and labor, but can fundamentally solve the problem, which is the most suitable solution for complex events. The arbitration method has the same effect as a judicial judgment, but is more convenient and has the support of many people. However, the boundary of property rights has not been fundamentally resolved through mediation, and disputes that cannot be resolved through mediation are transferred to the court. Therefore, the way to reform and improve the system for disputes over the property rights of natural resource assets is to choose appropriate solutions according to the different characteristics of the disputes; that is, judicial, administrative, and arbitration each have their own place. In dealing with disputes over the ownership of forest resource assets, the government should take the lead in solving simple disputes. More complicated cases can be settled through judicial, arbitration, and other professional channels. (3) Improving relevant supporting measures for the registration of confirmation of rights (a) Data collection and management A large amount of data are generated during the registration of forest resources. To make full use of these data, it is necessary to build a complete information management platform to integrate and analyze the relevant data of forest resources, and provide sufficient and unified survey background data for the registration of forest resources. With the development of science and technology, we can use the Internet, artificial intelligence, big data, GIS, and other modern technologies to build a forest resource information management platform, providing convenience for accurate access to forest resource-related data and clear status of forest resources. After the establishment of the information management platform, the investigation results and registration information of forest resources should be incorporated into the database, making it more conducive for data collection, change, inquiries, and maintenance [11]. Furthermore, to eliminate departmental information barriers and achieve information exchange and sharing across departments, the national conditions network,

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land and resources network, and other networks should be established to better serve the confirmation and registration of forest resources. (b) Improving the qualification certification system of forest resource registration staff The registration of forest resource ownership in China not only requires the registration of relevant data, but also the unified registration of forest resource ownership. The staff of the registration authority must have a comprehensive understanding of the ownership of all types of forest resources, including state-owned, collective, and individual. Moreover, the use of state-owned forest resources needs to be divided between different levels of government. For collectively owned forest resources, boundaries must be drawn between different collective owners. Therefore, the staff of the registration authority must have the corresponding knowledge and professional qualifications to clearly divide the ownership and solve all kinds of ownership disputes in the process of confirmation and registration of forest resources. In other words, in the registration process of forest resources, because the determination of the boundary of forest resources is very professional and strict, there is no chance of trial and error. Therefore, the staff of the registration authority for the confirmation of forest resource rights need professional qualification certificates, making it very important to establish a qualification system within the registration authority for the confirmation of forest resource rights in China.

6.5.2 Transfer (1) Improving the forest resource circulation mechanism There are many forest resource circulation markets in China, but the circulation mechanism is not perfect, the scale of circulation is small, and the use of forest land changes after the circulation, which is not conducive for the sustainable development of the circulation market. Therefore, there is an urgent need to improve the forest resource circulation mechanism and promote the healthy development of the circulation market. Specific improvements can be made as follows. (a) Adjusting relevant policies on forest resource circulation As there are differences in the regulations on the transfer scope of forest resources in different places, especially reflected in whether public welfare forest can be transferred, the state should clearly stipulate whether a public welfare forest can be transferred. If the law stipulates that public welfare forest can be transferred, the conditions and scope of transfer must be specified. For the sustainable development of the forest resource circulation market, the restrictions on transferees should be appropriately relaxed. On the one hand, the forest resource circulation should be based on the principles of fairness, voluntariness, and integrity, with both parties of the circulation having the right to choose the transaction

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object. On the other hand, when the conditions of the transferee are relaxed, the forest land properties do not change at will under the express provisions of the law, and the forest resource and ecological environment are not damaged, instead promoting the benign development of the circulation market. As for the circulation period, as the forest resources have a growth cycle, if forestry farmer sells its forest land to others in the short term for short-term interest, it would cause losses to the forest resources. Therefore, the relevant laws and regulations should stipulate the minimum period of forest resource circulation and the interval of forest resource circulation. Of course, when formulating regulations on the transfer period of forest resources, corresponding regulations should be formulated for the growth cycle of different tree species, forest land, and forests [12]. (b) Regulating the transfer in various ways Private transfer of forest resources is inevitable, but relevant regulations can be formulated to restrict it, including lease, exchange, and easement contract. There are many transfer methods of forest resource ownership recognized by laws, regulations, and relevant policies, and they have been fully implemented in various regions of China. According to the monitoring data of the economic development center of the State Forestry Administration, most parties usually transfer their forest resources by way of leasing and transfer. The forest area transferred through leasing and transfer accounts for about two-fifths of the overall transfer area of the country, and the method of pricing contribution and holding shares accounts for only one-tenth. The main circulation methods in China are lease and transfer, and almost all behaviors are restricted through lease and transfer contracts. (c) Establishing and improving the supervision mechanism of forest resource circulation The government, as the management department of forest resources, and in order to promote the sound development of forest resource circulation, should establish a legal, reasonable, and effective regulatory mechanism, and should strictly review the forest resource circulation market. Therefore, the government can build a supervision and management platform for the forest resource circulation market, realize the interconnection and sharing of data of forest resources in various places, grasp the relevant information of forest resource circulation, and better supervise the circulation market. In addition, the intermediary organization should play an appropriate role in the transfer of forest resources. Intermediaries participate in the whole process of forest resource circulation, and their functions include initiating trading activities, controlling trading information, and evaluating the value of forest resources. Intermediary agencies play a significant role in restricting the illegal behavior of the government in the process of circulation, and can indirectly supervise the circulation market of forest resource assets. In addition to government supervision, forest farmers should actively participate in supervision for their own interests. In this way, a multiple regulatory mechanism with government supervision as the main, intermediary organization supervision as the auxiliary, and forestry farmer’s active participation has been formed [13].

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(2) Innovating the forest management model and encouraging the circulation of forest farmers (a) Cooperative operation Generally, forest farmers have low education level, lack access to information, and do not have advanced science and technology skills to assist operations. Even though they have rich experience in forest management, they do not have an advantage in modern forestry, resulting in most forest farmers being unwilling to place their forest resources in the circulation market for trading. To give full play to the advantages of forest farmers in the competitive forest market, forest farmers could cooperate with each other to centralize the forest resources owned by each household, establish ecological farms, cooperatives, etc., and then transfer them. Furthermore, farmers could cooperate with local forestry enterprises to form cooperative organizations. The combination of agriculture and enterprises and their respective advantages would help to form large-scale cooperative organizations, expand the market, and obtain a scale effect, thereby improving the competitiveness of farmers and enterprises and dispersing the operational risks of farmers. At the same time, through cooperation with forest farmers, relevant enterprises could ensure stable supply of raw materials, save transaction costs, and achieve profit sharing. In this way, forest farmers could transfer forest resources to increase employment, stabilize income, and then mobilize the enthusiasm of forest farmers to transfer forest resources. (b) Scale operation Due to the decentralized management of forest resources by forest farmers, which is not conducive for the virtuous cycle of forest, relevant enterprises are able to form the best management region according to regional characteristics and market demand, reduce costs, maximize benefits, increase employment, and increase the income of forest farmers. The promotion of forest land circulation, the formation of cooperative and agricultural enterprise combinations, and other management methods would help develop the forestry economy, drive employment, and achieve common prosperity. In addition, due to the special ecological functions of forest resources, related tourist attractions could be developed to realize the potential value of forest resources. On the one hand, the development of forest tourism could play the role of a forest resource; on the other hand, it could drive the development of other industries and promote local economic development. (3) Improving the supervision of forest land use and strengthening tracking of illegal cases In developed countries, such as the United States and those in Europe, laws and regulations on the transfer of forest resources are relatively developed, and the market of forest resource transfer proceeds smoothly. After the reform of China’s collective forest right system in 2003, the country began to prepare for a forest right transfer law, but its formulation did not match progress in the reform of forest resource transfer. Although there is no relevant law in China that stipulates that forest resources cannot be transferred, the abovementioned laws and regulations neglect many details when

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referring to the transfer of forest resources; in particular, after the transfer, there is no law or regulation highlighting that the use of forest land cannot be changed, resulting in the transfer of forest resources into non-forest land, and making the maintenance of the rights and interests of forest farmers more difficult, in the process weakening the enthusiasm of forest farmers for transfer of forests. Therefore, faced with these problems, the state needs to speed up the formulation and improvement of forest land use laws and regulations in the process of circulation, and strengthen the use of forest land. After the transfer of forest rights, on the one hand, different kinds of projects related to forest land use rights need to go through all types of approval procedures in accordance with the law. All forestry authorities must earnestly perform their business responsibilities and strictly examine and supervise all kinds of forest land projects. On the other hand, coordination and cooperation among various departments need to be strengthened to achieve the purpose of comprehensive supervision. More importantly, the forest resource supervision authorities and forestry authorities should actively communicate and cooperate with each other to ensure that the forest resources do not change from forest land to non-forest land in the process of transfer, which would damage the ecological environment and the related interests of forest farmers. Accountability mechanisms should be used to prohibit illegal changes to forest land use. First, all departments must strictly prohibit the use of forest land in violation of laws and regulations, and never ignore illegal cases. In the case of any violation of the laws and regulations on limiting the use of forest land, the forest land should be restored within a prescribed time, and corresponding legal liabilities should be incurred, with simultaneous compensation for economic losses. Second, follow-up investigation should be conducted on the behavior of changing forest land, destroying forest land resources, and causing environmental damage, and the illegal behavior needs to be investigated to the end. In addition, deepen the understanding of forest farmers about the specific provisions of forest resource transfer, forest government departments should actively carry out legal popularization in the process of forest resource transfer. Through legal publicity, the sense of ownership of forest farmers should be strengthened, so that forest farmers can actively participate in the transfer of forest resources and forest land use and management. The government should guide forest farmers through various channels to reflect their needs in all aspects in a legal and reasonable manner, and reduce the change of forest land use.

6.5.3 Income Distribution (1) Strengthening the restoration of the loss of forest resource assets First, strict inspection should be implemented. To alleviate the loss of forest resource assets during transfer, China should fully restore forest resource assets by respecting history and following the reality principle. The loss of forest resources is mainly caused by the government’s irregular transfer behavior, including gratuitous transfer

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and irregular transfer. The losses caused by the irregular transfer of forest resources should be specially dealt with, and existing contracts should be standardized and improved through economic compensation and share cooperation, so as to protect the legitimate rights of village collectives and forest farmers, and to solve the problems of asset loss caused by early illegal transfer. In the process of circulation, if the loss of state-owned forest resources is not serious and only the approval procedures are incomplete, the approval authority should be allowed to approve it. However, if the examination and approval procedures are show serious illegal breaches, resulting in large losses of state-owned forest resource assets, these losses should be compensated. An attitude of zero tolerance should be adopted for gratuitous transfers by the government. When the transferee obtains the right to use state-owned forest resources without government compensation, it must return all income generated from the resources. Second, the punishment of the responsible individuals should be strengthened. The loss of forest resources and forest assets is mainly due to the violation of laws by relevant government personnel, mainly reflected in land use. Illegal land grants, illegal occupation of arable land, and the disappearance of large amounts of land transfer funds in a city are common annual occurrences. The loss of forest resources reduces the ability of all people to share in their interest. Therefore, when investigating forest resource circulation, China must strengthen the punishment for the responsible person, identify the responsible person, and implement the punishment. (2) Establishing forest resource trust fund to realize benefit sharing for all people Some foreign countries set up natural resource trust funds on the basis of trust theory. The ownership system of natural resources and relevant legal structure in China also provide a basis for the establishment of forest resource trust funds. According to the Trust Law of China, the principal entrusts its property to the trustee based on its trust in the trustee, and the trustee manages its property according to the will of the principal. The use of a trust fund can fully reflect the wishes of the principal. As the owner of state-owned forest resources, the national can entrust the income of forest resources to the manager of the trust fund, distribute the income according to their own wishes, and fully realize the sharing of forest resource income. The establishment of a forest resource trust fund requires the integration of revenue from state-owned forest resources into the fund, which is managed by the fund manager. Some scholars have proposed that the establishment of a public resources income distribution fund must be decided at a national level. Therefore, it is necessary for the National People’s Congress to legislate on specific matters, such as the purpose of the fund’s establishment, source of funds, fund management, and fund sharing. To reflect the income sharing of forest resources, the fund should mainly be used to solve the living problems of people, such as poverty, employment, health, environmental protection, and retirement income.

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6.6 Summary In summary, the establishment of the property rights system of natural resource assets requires a unified registration system of natural resources to investigate and clarify the ownership of the existing natural resource assets. It is necessary to strictly control the transfer process of natural resource assets. Furthermore, the benefits of natural resource assets need to be shared by all. However, as the system is still in the trial stage in China, there will inevitably be some conditions in the registration of rights confirmation, transfer, and income distribution. For example, the registration content of rights confirmation of natural resources might not be unified; the transfer mechanism might not be perfect; or the level of benefit sharing by all people might be low. To address the key and difficult issues identified in this chapter, we offer sound suggestions and ideas, such as the introduction of guiding rules for the registration of forest ownership confirmation to guide the registration of forest ownership confirmation. At the same time, we propose adjusting the laws, regulations, and policies of forest resource circulation to solve the problem of irregular natural resource circulation. Finally, to deal with such problems as unequal income distribution of natural resources, this chapter puts forward the concept of corresponding improvement. Building a scientific and reasonable property rights system of natural resource assets is an important task in the reform of China’s ecological civilization system, and would lay the basis for promoting the conversion of natural resources into natural resource assets with clear and complete property rights as well as realizing the value of ecological products. In the face of the problems in China of loss of natural resources, non-standard content of identification and registration, and unsound circulation mechanism of natural resources, among others, the country needs to adhere to the marketization of natural resource assets as the goal of reform; explore various ways to realize owners’ rights and interests; and promote the development of natural resource assets in China in the direction of clear property rights and efficient allocation.

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6. Coulibaly SS, Gakpa LL, Soumaré I. The role of property rights in the relationship between capital flows and economic growth in SSA: Do natural resource endowment and country income level matter? African Development Review, 2018, 30(1): 112–130. 7. Gordon HS. The economic theory of a common property resource: The fishery. Journal of Political Economy, 1954, 62: 124–142. 8. Oaudet G, Moreaux M, Salant SW. Private storage of common property. Journal of Environmental Economics and Management, 2002, 43(2): 280–302. 9. Pearce DW, Atkinson GD. Capital theory and the measurement of sustainable development: an indicator of “weak” sustainability. Ecological Economics, 1993, 8(1): 103–108. 10. Barnett AJ, Partelow S, Frey U, García-Lozano A, Del Mar Mancha-Cisneros M, Oberlack C, Ratajczyk E, Smith H, Villamayor-Tomás S, Whitney CK. Defining success in the commons: Addressing problem orientations, multidimensionality, norms, and tradeoffs. International Journal of the Commons, 2020, 14(1): 80–92. 11. Shreedhar G, Tavoni A, Marchiori C. Monitoring and punishment networks in an experimental common pool resource dilemma. Environment and Development Economics, 2020, 25(1): 66–94. 12. Arezki R, Van der Ploeg F, Toscani F. The shifting natural wealth of nations: The role of market orientation. Journal of Development Economics, 2019, 138(5): 228–245. 13. Lawer ET, Lukas MC, Jørgensen SH. The neglected role of local institutions in the ‘resource curse’ debate. Limestone mining in the Krobo region of Ghana. Resources Policy, 2017, 54(1): 43–52.

Chapter 7

Architectural Design of China’s Natural Resource Regulatory System

Since the founding of the People’s Republic of China, China’s natural resource regulatory system has undergone several significant reforms and mergers, transforming from an initial set of institutions to today’s unified regulatory landscape. However, there are many participants in the supervision system, and although the unified supervision pattern integrates the originally scattered supervision functions to a certain extent, it is still unable to achieve fully effective targeted supervision. In China’s current natural resource market, adverse selection events of related companies often occur. The problem is not that the functions and efficiency of regulatory agencies at all levels are insufficient, but that under the existing regulatory system, there are cumbersome and complex regulatory agencies, regulatory objects, and other regulatory participants. There is convergence of interests and separation of interests. With regard to regulators, the interests of central regulators and local regulators are not completely equal, and information asymmetry causes adverse selection problems for local regulators. Therefore, it is necessary to clarify the interest-seeking mechanism of participants in the regulatory system, analyze the strategic selection tendency of participants in the regulatory system, and design a system structure that can effectively improve regulatory efficiency and market utility, in order to improve the regulatory environment and quality of China’s natural resource market. For this purpose, this chapter analyzes the principal–agent relationship and game relationship among the major participants in the supervision system given the background of the development and current situation of China’s natural resource supervision system, and clarifies the natural resource market. This chapter identifies factors that could improve regulatory efficiency and develop a more reasonable, effective, and complete regulatory framework design.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 T. Ding and M. Song, Natural Resource Regulation in China, Contributions to Public Administration and Public Policy, https://doi.org/10.1007/978-981-99-5593-0_7

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7.1 The Layout of the Natural Resource Supervision System The development of China’s “ecological civilization” has been an important aspect of China’s 1000-year history, and remains a key step for China to realize the construction of a beautiful homeland. In China’s institutional reform in 2018, the concept of “two ministries and one bureau” was implemented to realize the unified construction of national ecological civilization and unified supervision of natural resources, focusing on the transformation of government functions, and building a government administrative system with clear responsibilities and administration according to law. This concept has been an important step for China’s sustainable development in recent years. The “two ministries and one bureau” refers to the Ministry of Natural Resources, the Ministry of Ecology and Environment, and the State Forestry and Grassland Administration. The two ministries both form part of the State Council of China, while the State Forestry and Grassland Administration is directly managed by the Ministry of Natural Resources. To study and understand the natural resource regulatory system, it is necessary not only to understand the historical evolution of regulatory agencies, but also to deeply explore the current operating mechanism and regulatory system layout of the natural resource regulatory system. In accordance with the architectural design requirements of China’s natural resource supervision system, this section introduces the overall supervision pattern of China’s natural resource supervision system in detail from four aspects: supervisory subjects and objects, supervision means and tools, supervision functions, and supervisory mechanism.

7.1.1 Supervisory Subjects and Objects China’s supervision and management of natural resources can be traced back to the founding of the People’s Republic of China. Since the reform and opening up, the Chinese government’s supervision and management of natural resources has undergone eight significant reforms. In the current supervision system, the Ministry of Natural Resources is the main body, and each deployment agency, internal agency, and dispatched agency comprehensively coordinate and perform their respective functions. China’s exercise of natural resource supervision and management power has generally been dominated by the government for a long time. The government, as the main body of supervision, historically established many departments and agencies with their own functions and supervisory functions for independent situations. The departments involved include the Ministry of Land and Resources, the Ministry of Water Resources, the Forestry Administration, the Ministry of Agriculture, and other natural resource management departments, as well as the Ministry of Supervision, the Ministry of Public Security, the Ministry of Environmental Protection,

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the Ministry of Finance, the National Development and Reform Commission, and the National Audit Office. Under this institutional framework of “separate supervision,” China’s natural resource supervisory objects are mainly natural resources themselves and their related economies, including land, water resources, forests, minerals, oceans, and other resources. Starting from the resources themselves and taking the development and utilization of various natural resources as the original intention of supervision, various regulatory departments and agencies have formed the supervisory functions of natural resource investigation, evaluation, planning, development, sorting, registration, pre-examination, and supervision. The establishment of the Ministry of Natural Resources in 2018 changed the original separate supervision environment, and began to break the constraints whereby the market could not play a role in resource allocation. Since then, although the government is still the main supervisory body of natural resources, but the market has gradually played its role in resource allocation.

7.1.2 Supervision Means and Tools (1) Administrative supervision The administrative supervision of natural resources mainly refers to the government’s control of the development, use, and protection of resources. There are two main levels of administrative supervision: the central government’s administrative supervision of national natural resources; and the local administration of natural resources within its jurisdiction. The central government’s administrative supervision over the country is mainly to formulate relevant laws and regulations, provide a basis for supervision by local regulatory agencies, directly administer major natural resource projects, and limit the total development and use of various natural resources across the country. Local administrative supervision mainly refers to the supervision and inspection of natural resource projects within the jurisdiction of local governments and local regulatory agencies, and the control of the development, use, protection, and other aspects of various natural resources under the central administrative regulatory agency, relying on administrative means. Administrative supervision is the most important supervision method for natural resources. Administrative supervision is required in the process of development and protection of any natural resource project, and supports the normal and orderly transformation of natural resources into social production. The government and various regulatory agencies are the most important agents of natural resource supervision, and play this role through administrative supervision. (2) Economic regulation Economic regulation of natural resources refers to the regulation of economic activities, such as price, use, and development scale of resources by regulatory agencies and governments at all levels. Economic regulation is the most direct means of natural

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resource regulation. In the process of economic supervision, the relevant regulatory agency coordinates the investment and pre-investment of resources nationwide, evaluates the price of natural resource assets in each province and city, and at the same time, purchases assets from resource owners based on an evaluation of the quality and grade of the natural resources. In such economic activities as sales and transfer, price lower bounds and price upper bounds are set, quantitative restrictions are placed on the extent and scale of regional resource development, and guidance and planning are provided for the development and use of resources. Economic supervision is the most direct means of supervision for natural resource owners and users. The supervision process directly involves the economic interests of resource owners and resource users. Economic supervision is not only related to the well-being of people, but also to the development of the national economy. It is an important part of orderly commercialization. (3) Legal supervision The legal supervision of natural resources means that regulatory agencies at all levels, through the formulation and promulgation of laws and regulations, impose mandatory restrictions on various behaviors of resource owners and users. Legal supervision provides a strong guarantee in the process of natural resource supervision. There are four stages in the process of legal supervision. First, the central regulatory agency formulates corresponding laws and regulations (see Chap. 9 for details) to enforce the behavior of resource owners and users to achieve normal development, use, and protection of natural resources. Second, the owners and users of natural resource assets conduct relevant economic activities in accordance with laws and regulations. Third, regulatory agencies and administrative agencies legally deal with those involved in the violation of laws and regulations in accordance with laws and regulations, and provide legal protection for stakeholders. Fourth, the judicial organs of the state deal with illegal cases. The law is the protective umbrella in the process of natural resource supervision. It not only provides a basis for administrative and law enforcement departments to crack down on illegal acts that violate the collective will of society, but also corrects the self-discipline of various stakeholders in the economic activities of natural resources. The law protects the collective interests of society. (4) Ethical supervision Ethical supervision involves all aspects of the entire economy and society. It is the most common means of natural resource supervision. Ethical supervision refers to the way in which supervisory agencies at all levels influence the collective behavior of the public through publicity and promotion of correct world views and values, in order to have an impact on natural resources. Stakeholders restrain their behavior through moral constraints, which are in the interest of the public. Ethical supervision constrains not only the behavior of natural resource owners, but also the administrative management behavior of the relevant personnel of the regulatory agency, and encourages administrative personnel to serve people fairly and within the law.

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7.1.3 Configuration of Supervisory Functions Under the “two ministries and one bureau” of China’s natural resource supervision system, many problems with the previous separate supervision structure have gradually been addressed, including overlapping functions, and lack of functions. It is exercised by the Ministry of Natural Resources, the Ministry of Ecology and Environment, and the State Forestry and Grassland Administration. (1) Policy formulation The three bodies are responsible for formulating laws, regulations, and policies related to the exploration, planning, development, utilization, and protection of territorial space and natural resources; formulating national special natural resource project policies; reviewing policy recommendations from local regulatory agencies and other regulatory bodies; and developing rules, regulations, and management methods for regulatory authorities at all levels. (2) Project planning The three bodies are responsible for grasping the overall planning and layout direction of national natural resource projects; formulating annual, quarterly, and monthly plans and development strategies for national natural resource development; communicating the development requirements of natural resource projects to regulatory authorities at all levels; and planning and supervising national natural resource special plans. (3) Resource exploration The three bodies should establish a national exploration system for natural resources, such as land, minerals, forests, grasslands, wetlands, water, and oceans; be responsible for the monitoring, investigation, and evaluation of various natural resources; make graded assessments of natural resources of different regions and different qualities; and monitor local regulatory agencies. Furthermore, they should provide professional advice on projects, such as natural resource development, utilization, and protection. (4) Asset pricing According to the supply and demand relationship and development requirements of the national natural resource market, the three bodies should oversee the development of basic prices of natural resource assets at all levels in the country. (5) Resource management The three bodies should manage and allocate all natural resource assets across the country, and reserve and protect some of the natural resources that have been clearly explored in accordance with national development and natural resource protection requirements. At the same time, they should rationally allocate resources to meet the

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resource needs of people everywhere, and supervise and manage the use and price setting of natural resources at all levels of natural resource owners in accordance with management requirements. (6) Market supervision The three bodies are responsible for the supervision and maintenance of the national natural resource trading market, mainly by supervising the transaction price, transaction quantity, transaction quality, and other factors of natural resource owners. At the same time, and according to the needs of people and regulatory requirements, the bodies are responsible for rationally adjusting the basic market transaction prices of various natural resources. Those who violate regulations should be punished in accordance with the management measures and regulations. (7) Scientific and technological development The three bodies are responsible for promoting the development of relevant science and technology in the field of natural resources; formulating and implementing strategies for the development of science and technology as well as developing a scientific skills base; organizing scientific updates of the supervision technology, supervision means, and supervision tools of the national natural resource supervision departments; and encouraging and coordinating departments at all levels related to natural resources. They are concerned with scientific and technological innovation and transformation of scientific and technological achievements in various fields of resources. (8) Resource protection According to the development and protection needs of various natural resources, the three bodies are responsible for formulating project plans and project standards for national natural resource protection; formulating corresponding protection policies, laws, and regulations; evaluating natural resources at all levels across the country; and setting protection cordon, unified management, and supervision of natural resource conservation work in various places.

7.1.4 Supervisory Mechanism (1) Joint supervision There are two aspects of the joint supervision mechanism of natural resource supervision agencies. One is the joint supervision between departments, which refers to the coordination and cooperation between natural resource supervision departments and other departments of the State Council in the work of particular natural resource projects; these departments include the Ministry of Ecology and Environment, rural agriculture, and the Ministry of Water Resources, among others. The second aspect

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is joint supervision within a natural resource supervision department, which means that it cooperates with several subordinate agencies, internal agencies, and dispatched agencies to coordinate and supervise specific natural resource projects. Joint supervision is the horizontal coordination of natural resource supervision departments, reflecting the division of labor and cooperation between natural resource supervision departments at all levels. (2) Hierarchical supervision Hierarchical supervision is the function distribution of regulatory agencies in the vertical organizational structure. By setting up different levels of regulatory departments to perform corresponding regulatory responsibilities, the central regulatory agency coordinates national regulatory responsibilities and is responsible for the overall planning and layout of natural resources at all levels across the country. It formulates national development requirements and policy systems, and coordinates the supervisory responsibilities and work of supervisory departments at all levels. The local supervision department is responsible for the supervision of local natural resource projects, under the condition of obeying the orders and arrangements of the central government. (3) Targeted supervision Targeted supervision is mainly to formulate special supervision arrangements for specific natural resource projects and specific regions, such as the supervision of major national planning projects, scarce natural resources, new natural resources, polar resources, and deep-sea resources. The Ministry of Natural Resources needs to provide targeted supervision based on project needs and make targeted regulatory arrangements. Targeted supervision is the derivation and supplementation of the horizontal supervision mechanism and vertical supervision mechanism of the natural resource supervision department. It reflects the overall management awareness of the natural resource supervision department in major natural resource projects.

7.2 The Principal–Agent Mechanism in the Natural Resource Supervision System 7.2.1 Principal–Agent Relationship The regulatory responsibilities of China’s natural resources are mainly performed by regulatory agencies at all levels. The functions of the central regulatory agency are granted by the State Council. The central regulatory agency, through its institutional setting and function allocation, delegates its regulatory responsibilities to various local regulatory agencies, forming a principal–agent relationship from the central to the local.

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In terms of the nature of supervision, the functions of the local regulatory agencies are granted by the central regulatory agency for maintenance of the natural resource market environment. Local regulatory agencies are the representatives of the central regulatory agency at the local level, but in a market economy environment, both the central regulatory agency and the local regulatory agency are independent rational economic subjects in a game with unequal rights and interests. In terms of information acquisition, most of the central regulatory agencies’ perceptions of the local natural resource market environment are acquired from the local regulatory agencies, which have a geographical comparative advantage, as it is difficult for external parties to obtain information on a local natural resource market. Regulators have an information disadvantage. From the perspective of contractual relationship, the central regulatory agency provides financial support for local regulatory agencies through transfer payments, aimed at maintaining the local natural resource market and obtaining maximum market utility. Local regulatory agencies not only are granted authority by the central government to maintain local natural resources. The resource market includes other economic targets, and thus, the goals and interests of local and central regulators are not exactly aligned. The central regulatory agency aims to maximize the effectiveness of local regulatory agencies in market supervision through financial payments by setting an incentive mechanism. Local regulatory agencies choose the degree of supervision according to the central incentive mechanism, so that they can coordinate resource regulation and other economic goals to maximize their own interests. The discussion above shows that, although both the central regulatory agency and the local regulatory agency carry out natural resource regulatory responsibilities, the principal–agent relationship between the two levels of government mean they have different revenue functions, and both parties maximize their own interests. Therefore, this section establishes a principal–agent model at the central and local levels according to the behavior of the principal and the agent, and seeks to identify the optimal incentive mechanism, so that the local regulatory agency can satisfy the interests of the central regulatory agency to maximize market utility.

7.2.2 The Choice of Agent Behavior (1) Client The central regulator’s aim is to maximize market utility, and the responsibilities are delegated to local regulators through an incentive mechanism. Therefore, in the central-to-local principal–agent model, the risk of the central regulator can be considered as neutral, and its behavior choice lies in the degree of market utility that local regulators can obtain [1, 2]. Therefore, the principal’s behavior choice has only an incentive mechanism, and the agent’s behavior choice is influenced by the incentive mechanism.

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(2) Agent The interests of local regulatory agencies include not only maximizing the utility of natural resource market supervision, but also other economic goals. While accepting the authority granted by the central regulatory agency, local regulatory agencies must also consider their own economic benefits. Therefore, the agent’s behavior choice concerns the intensity of coordinating supervisory duties and choosing highintensity natural resource market supervision. The aim is to obtain the greatest market utility in the natural resource supervision market, which would inevitably affect the pursuit of other economic goals and interests. Choosing an appropriate intensity of natural resource market supervision not only ensures the fulfillment of the principal’s requirements, but also enables the pursuit of maximization of self-interest [3, 4].

7.2.3 Principal–Agent Model Setting (1) Model assumptions In the establishment of the principal–agent model in this section, the following assumptions are made. (a) Rational economic man hypothesis: both the principal and the agent are rational economic parties, and their behavioral choices in the principal–agent relationship are to maximize their own interests. (b) Participation constraints: after the agent accepts the principal’s contract, the agent obtains market utility higher than that obtained by not accepting the contract; that is, the local regulatory agency, under the incentive of the central regulatory agency, obtains a certain degree of additional regulatory effort. The utility is higher than that without the additional regulatory effort. (c) Risk assumption: the principal is risk neutral, and the risk of its behavior choice does not affect its maximum utility. The agent is risk averse, and its behavior choice has a certain risk impact on the final expected utility. (d) Incentive compatibility constraint: the maximum utility of the principal depends on the maximum utility of the agent; that is, under the principal’s incentive mechanism, the maximum expected utility of the principal is realized by the agent’s maximum expected utility after behavior selection [5]. (2) Parameter assumptions (a) Assume that the utility function of the local regulatory agency is Ug = −e−ϑw , where ϑ is the risk aversion measurement index, and w is the total revenue of the local regulatory agency. (b) Assuming that U0 is market utility obtained by the local regulator not making additional regulatory efforts, after each additional k additional regulatory effort by the local regulatory agency, the market utility obtained has an additional

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increase of ϕ, and ω means that the uncertainty in market supervision brings about utility income. Then, the total market utility after the local government implements additional supervision can be expressed as Um = kϕ + ω. (c) Assume that the cost function of local regulators participating in supervision is C g = C0 + 2S k 2 , where C0 is the fixed cost of participating in supervision, and S is the cost coefficient of additional supervision intensity. (d) Assume that the incentive of the central regulatory agency is π = α + βUm , where α is the fixed incentive of the central regulatory agency for the local regulatory agency, and β is the additional incentive for market utility Um , which is also the risk coefficient that the local regulatory agency is willing to take [6, 7]. (3) Profit function (a) Agent revenue function The revenue of the local regulator depends on the incentive payment of the central regulator and the cost of participating in supervision; thus, the revenue function of the local regulator can be expressed as Pg = π − C g = α + βUm − C0 − Sk 2 . (b) Principal’s income function The revenue of the central regulatory agency depends on the incentive cost of the local regulatory agency and the obtained market utility; then, the revenue function of the central regulatory agency can be expressed as Pc = Um − π = (1 − β)Um − α.

7.2.4 Model Solution and Inference (1) Model solution In the principal–agent model between the central regulatory agency and the local regulatory agency, the former has limited understanding of the local market, the cost of information acquisition is high, and there is information asymmetry in that the information-disadvantaged party has incomplete information. People only pursue the maximization of personal interests, retain income for local regulatory agencies with contract participation constraints, and maximize the utility of agents through contract compatibility. The principal–agent model of a feasible contract can be expressed as Max Pc = (1 − β)kϕ − α s.t π1− C g1 ≥ π2− C g2 π −C ≥w

(7.1)

Considering the actual income of the local regulatory agency, the deterministic equivalent income is introduced. After removing the risk cost, the deterministic equivalent income of the local regulatory agency is

7.2 The Principal–Agent Mechanism in the Natural Resource Supervision …

w−

ϑβ 2 σ 2 S ϑβ 2 σ 2 = α + βkϕ − C0 − k 2 − 2 2 2

171

(7.2)

Analyzing the optimal principal–agent model under the participation constraints and incentive compatibility constraints, the constraints of the model can be modified as s.t k =

βϕ S ϑβ 2 σ 2 C0 + βkϕ − C0 − k 2 − =w S 2 2

(7.3)

Taking the first-order derivative of the objective function, we obtain 2ϕ Sϑσ 2 ∂β = 2 ∂ϕ ϕ 2 + ϑ∂σ 2   ϕ4 ϕ2 2 α=  + C0 + w 2 ϑσ − S 2 ϕ 2 + Sϑσ 2

(7.4)

(7.5)

β=

ϕ2 Sϑσ 2 + ϕ 2

(7.6)

k=

ϕ3 S 2 ∂ϑ + Sϕ 2

(7.7)

(2) Model inference According to the solution of the above model, the following inferences can be drawn. ϕ2 Inference 1: It can be seen from β = S∂ϑ+ϕ 2 that β > 0, indicating that local regulatory agencies need to take certain risks under the incentive model of the central regulatory agency, and are willing to do so to participate in the cost of supervision and supervision. Influenced by uncertain factors, the smaller the participation cost and the smaller the uncertain factors, the greater the risk that the local regulatory agency is willing to take, and the greater the market utility obtained by the central regulatory agency. ∂β Sϑσ 2 Inference 2: ∂ϕ = 2ϕ > 0 shows that the market utility ϕ is proportional (ϕ 2 +Sϑσ 2 )2 to the risk coefficient of local regulatory agencies; that is, with the increase of market utility, the risk of local regulatory agencies increases, and thus, they need to seek the optimal strategy between risk taking and benefits. 3 Inference 3: By k = S 2 ϑσϕ2 +Sϕ 2 , the additional supervision intensity of local regulatory agencies is affected by the additional cost coefficient S, the risk aversion measurement index ϑ, the uncertainty factor σ , and the effect of utility ϕ. It is difficult for the central regulatory agency to adjust the risk aversion measurement index ϑ of the local regulatory agency. However, to improve the utility of the natural resource market, the central regulatory agency can provide local regulatory agencies with supporting facilities and the means to cultivate high-quality products. The

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additional cost coefficient S of local regulatory agencies is reduced by means of supervisory skills and other means, and the uncertain factors affecting the market are reduced by formulating reasonable supervision policies for natural resource market enterprises, supervision systems, supervision laws and regulations, and awareness training.

7.3 The Game Relationship Among the Participants in the Natural Resource Regulatory System 7.3.1 Participant Game Problem Description The participants in the natural resource supervision system include the central regulatory agency, local regulatory agencies, regulatory objects (which generally refer to enterprises involved in the natural resource-related market), and the four main parties of the public. The first bearer of regulatory responsibilities has the highest regulatory obligations to the natural resource market, and can ignore the slack supervision of the central regulatory agency. Therefore, in the natural resource regulatory system, local regulatory agencies (hereafter referred to as “the government” for convenience), enterprises, and the public are the main players in the game in the regulatory process. The government is the executor of the policies of the central regulatory agency, and its regulatory behavior mainly depends on the instructions of the central regulatory agency. For enterprises, the foundation of corporate behavior decisions is compliance with the instructions and policies issued by regulatory agencies, but full compliance reduces corporate profits. In pursuit of the goal of maximizing corporate profits, corporate behavior decisions are based on regulatory agency policies. Enterprises must make certain choices, so that they not only increase profits, but also comply with the policies of regulatory agencies; however, corporate behavior decisions that increase profits generally lead to other regulatory problems, and there is a degree of asymmetric information between the government and enterprises. Asymmetry makes it impossible to fully grasp the real behavior of the enterprise. To fully achieve supervision of the behavioral decision-making of all aspects of the enterprise, it is necessary to increase the supervision cost. At the same time, to achieve the goal of economic growth in a region under its jurisdiction, the government may relax the supervision of enterprises to a certain extent, thereby prompting enterprises to choose behaviors that are detrimental to the public interest and violate regulatory policies. As one of the participants in the natural resource supervision system, the public can also supervise the behavioral decisions of the government and enterprises to safeguard the interests of the group. The public can report the real behavior of enterprises to the government, which reduces the cost of government supervision to a certain extent, and reduces the cost of government supervision. This would help strengthen the government’s supervision of enterprises. Enterprises also take into account the interests and behaviors of the public before making behavioral decisions. Enterprise

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behavioral decisions entail a choice between pursuit of higher profits and compliance with government policies. Therefore, in the regulatory system of natural resources, the government, enterprises, and the public form a circular game. Whether the government chooses strict regulation or deregulation depends on regulatory costs, public sentiment, and economic growth goals. Enterprises’ choice of whether and how to comply with regulatory policies depends on corporate benefits and government penalties; meanwhile, the public’s choice of supervision strategies for government and corporate behavior is determined by its own interests and the cost of participating in supervision [8].

7.3.2 Model and Parameter Setting (1) Model assumptions Two basic assumptions are made in the establishment of the game model. First, all participants are rational economic parties, their behavior decisions are rational, and they can make full use of the information of all parties to make reasonable behavior decisions. Second, all participants pursue maximization of their own interests, and their behavioral decisions are based on self-interest. When their self-interest exceeds a certain critical value, other behavioral decisions are selected. Therefore, all participants in the game model rationally make behavioral decisions that maximize their own interests. To this end, this section makes the following assumptions in the three-party regulatory game between the government, enterprises, and the public. (a) Participants: the only participants in the game model are the government, enterprises, and the public. (b) Strategy choice: the government’s strategy choice depends on regulatory costs and economic growth goals; the company’s strategy choice depends on corporate profits and penalties for violations; and the public’s strategy choice depends on its own interests and participation costs. (c) Benefits: if the government chooses to relax regulation, it definitely achieves economic growth. If the company chooses not to comply with the regulation, it definitely increases its profits. If the public chooses to participate in supervision, it definitely enhances the public interest. (d) Behavioral effectiveness: the government’s choice to strengthen supervision certainly and effectively identifies corporate violations; companies that are identified by the government definitely pay fines; and the public’s participation in supervision definitely reduces the cost of supervision [9, 10]. (2) Parameter setting Based on the analysis and assumptions about game problems in natural resource regulation, this section makes the following assumptions about the parameters involved in the game model analysis.

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When the government supervises enterprises related to the natural resource market, there are two cases: active supervision and deregulation. Deregulation incurs the lowest cost of supervision. Assuming that the minimum supervision cost under deregulation is C0 , on this basis, the government strengthens supervision, whose cost rises to C0 + C1 , where C1 is the additional cost of active government supervision, which depends on the depth of public participation in supervision. When the depth of public participation increases, the cost of active government supervision decreases, and the depth of public participation is μ(μ > 0); then, the total cost of active government supervision can be expressed as C0 + (1 − μ)C1 . When faced with government policies, companies have two choices: compliant operation or illegal operation. On the one hand, compliant operation increases the operating cost of the company, improves the market efficiency of natural resources, ensures normal market operation, and gives the public legitimate rights and interests; however, corporate profits would be reduced. As a result, the regional economic benefits are also reduced. On the other hand, illegal operations increase the profits of the enterprise and regional economic benefits; however, they infringe on the public interest. Assume that the fixed income of an enterprise’s compliant operation is R0 , and the additional cost is C2 . On this basis, if there is some degree of illegal operation, the enterprise’s cost would decrease and its income would increase. The increase in income depends on the enterprise’s violation. The higher the degree of violation γ , the greater the increase in corporate income, and thus, the corporate strategy that selects income maximization can be expressed as R0 + γ R1 , the additional cost can be expressed as (1 − γ )C2 , and the public rights violation is γ S. When γ is 0, the enterprise policy selected is a compliant operation. When the public participates in supervision, fixed cost C3 is invested, including the behavioral cost of understanding policy information, understanding the status of the enterprise, and writing a letter to report the enterprise’s behavior. The participation cost of the public depends on its participation depth μ(0 < μ < 1). When the depth of participation increases, the cost of participating in supervision also increases, and thus, the cost of public participation can be expressed as (1 + μ) C3 . When the illegal operation of the enterprise is not identified, the contribution to the regional economic benefit is VG , which is obtained by the government, and the degree to which the government obtains VG , depends on the regional economic assessment coefficient σ. When an enterprise’s illegal operation is identified by the government, the government punishes the enterprise, but the degree of the enterprise’s violation affects the government’s punishment, and thus, the enterprise’s violation penalty can be expressed as (1 + γ) F0 ; the public also receives a subsidy M from the punishment of the enterprise, while the government also invests penalty cost C f . When the government supervises the behavior of enterprises, the probability of identifying enterprises with illegal operations is P, which depends on the government’s supervision strength and the number of enterprises with illegal operations in the market. If the government actively supervises the market, but the enterprises conducting illegal operations know the signal of strengthening government supervision, and the illegal operation rate drops sharply, then the government’s probability of identifying enterprises with illegal operations does not increase as a result of the

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strengthening of supervision. Meanwhile, if enterprises increase the intensity and frequency of illegal operations owing to the government’s relaxation of signals, the probability of the government identifying violations does not decrease as a result of the relaxation of supervision [11]. Therefore, the following assumptions are made. When the government relaxes supervision and the public participation in supervision is 0, the probability that the government identifies enterprises with illegal operations is P1 ; when the government actively supervises and the public participates in supervision is 0, the probability that the government identifies enterprises with illegal operations is P2 ; when the government relaxes supervision and the public participation in supervision is μ, the probability that the government identifies enterprises with illegal operations is P3 ; and when the government actively supervises and the public participation in supervision is μ, the probability that the government identifies enterprises with illegal operations is P4 . Owing to information asymmetry between the government and enterprises, it is difficult for the real behavior of enterprises to be effectively identified by the government. Therefore, when the public does not participate in supervision, the government chooses a combination of active supervision and relaxed supervision to identify the same probability of corporate behavior, so that P1 = P2 ; and when the government actively supervises enterprises and the public also participates, the probability of identifying enterprises’ violations increases owing to the intensity of public participation. It is assumed that the increase is the square of the increase in the identification probability from public participation when the government engages in passive regulation; that is, P4 = P1 + (P3 − P1 )2 . When the government engages in passive regulation, the identification probability from the public participating in the regulation depends on the public participation depth μ, and thus, it is assumed that P3 = P1 + αμ(0 < α < 1), where α represents the transformation of public participation in supervision into actual identification of enterprises with illegal operations. To achieve efficiency, P4 = P1 + (αμ)2 , and P4 < P3 .

7.3.3 Model Establishment and Solution (1) Payment matrix The choice of strategies for the subjects and objects of natural resource supervision depends on the costs and benefits of each game subject. Only when the expected revenue reaches a certain standard does the game subject choose a corresponding strategy to execute. Taking the government as an example, whether it chooses an active supervision strategy or a relaxed supervision strategy depends not only on the supervision and assessment of lower-level institutions by higher-level institutions, but also on how to maximize government benefits within the scope of institutional assessment [12]. Based on the parameter settings in the previous section, to calculate

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the costs and benefits of the game subjects in the game, the payment matrix of the government, enterprises, and the public is obtained as shown in Table 7.1. (2) Profit function and solution It is assumed that the government, enterprises, and the public make their strategic choices independently, the influence of their decisions on each other is almost zero, and the game is played for a long time. Let the probability of the government choosing active supervision be h 1 , the probability of enterprises choosing compliant operations be h 2 , and the probability of the public choosing to participate in supervision be h 3 , 0 ≤ h i ≤ 1 (I = 1, 2, 3). Then, the probability of the government choosing to relax supervision is 1 − h 1 , the probability of enterprises choosing illegal operations is 1 − h 2 , and the probability of the public choosing not to participate in supervision is 1 − h3. According to the government payment function matrix, the expected benefit of the government choosing active supervision is Table 7.1 Three-party game payoff matrix Game subject Public partici-pation

No public participation

Government Active regulation

Lax regulation

Corporate compliant operations

−[C0 + (1 − μ)C1 ]

−C0

−C2 + R0

−C2 + R0

−(1 + μ)C3

−(1 + μ)C3

Enterprise illegal operations

−[C  0 + (1 − μ)C1 ] +  P4 (1 + γ)F0 − M − C f

−C0 + P3 (1 + γ)F0   −P3 M + C f

−(1 − γ)C2 + R0 + γ R1 −P4 (1 + γ)F0

−(1 − γ)C2 + R0 + γR1 −P3 1 + γF0

−(1 + μ)C3 − γ S + P4 M

−(1 + μ)C3 − γ S + P3 M

−(C0 + C1 )

−C0

−C2 + R0

−C2 + R0

−C3

−C3

Corporate compliant operations Enterprise illegal operations

− [C0 + C1 + σ VG ]   + P2 (1 + γ )F0 − C f

− [C0 + C1 + σ VG ]   + P1 (1 + γ )F0 − C f

−(1 − γ)C2 + R0 + γ R1 −P2 (1 + γ)F0

−(1 − γ)C2 + R0 + γR1 −P1 (1 + γ)F0

−C3 − γ S + P2 M

−C3 − γ S + P1 M

Note The expressions in lines 1, 2, and 3 of each cell are the government, enterprise, and public payment functions, respectively

7.3 The Game Relationship Among the Participants in the Natural Resource …

177

  E Rg1 = −h 2 h 3 [C0 + (1 − μ)C1 ] + (1 − h 2 )h 3    P4 (1 + γ )F0 − M − C f − [C0 + (1 − μ)C1 ] 

− (1 − h 3 )h 2 (C0 + C1 ) + (1 − h 2 )(1 − h 3 )   P2 (1 + γ )F0 − C f − [C0 + C1 + σ VG ]

(7.8)

The expected benefits of the government choosing to deregulate are      E Rg2 = −h 2 h 3 C0 + (1 − h 2 )h 3 P3 (1 + γ )F0 − C0 − P3 M + C f 

− (1 − h 3 )h 2 C0 + (1 − h 2 )(1 − h 3 )   P1 (1 + γ )F0 − C f − [C0 + C1 + σ VG ]

(7.9)

    The average government revenue is π(Rg ) = h 1 E Rg1 + (1 − h 1 )E Rg2 . The expected benefits of enterprises choosing compliance operations are E(Rc1 ) = h 1 h 3 (R0 − C2 ) + (1 − h 1 )h 3 (R0 − C2 ) + (1 − h 3 )h 1 (R0 − C2 ) (7.10) + (1 − h 1 )(1 − h 3 )(R0 − C2 ) = R0 − C2 The expected benefits of the illegal operation of an enterprise are   E(Rc2 ) = h 1 h 3 R0 + γ R1 − (1 − γ )C2 − P4 1 + γ F0   + (1 − h 1 )h 3 R0 + γ R1 − (1 − γ )C2 − P3 1 + γ F0   + (1 − h 3 )h 1 R0 + γ R1 − (1 − γ )C2 − P2 1 + γ F0   + (1 − h 1 )(1 − h 3 ) R0 + γ R1 − (1 − γ )C2 − P1 1 + γ F0

(7.11)

The company’s average revenue is π(Rc ) = h 2 E(Rc1 ) + (1 − h 2 )E(Rc2 ). The expected benefits of public participation in supervision are E(Rs1 ) = −h 1 h 2 (1 + μ)C3 − (1 − h 1 )h 2 (1 + μ)C3   + (1 − h 2 )h 1 P4 M − (1 + μ)C3 − γ S   + (1 − h 1 )(1 − h 2 ) P3 M − (1 + μ)C3 − γ S

(7.12)

The expected benefits of the public not participating in supervision are E(Rs2 ) = −h 1 h 2 C3 − (1 − h 1 )h 2 C3 + (1 − h 2 )h 1 (P2 M − C3 − γ S) + (1 − h 1 )(1 − h 2 )(P1 M − C3 − γ S) (7.13) The average benefit of the public is π(Rs ) = h 3 E(Rs1 ) + (1 − h 3 )E(Rs2 ). From the income function of the game subject, the expected income of the government, enterprises, and the public can be regarded as a function of their strategy selection probabilities h 1 ,h 2 , and h 3 . Therefore, when the game is in equilibrium,

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we know that



∂ π ( Rg ) ∂h 1

∂ π (R ) ∂ π (R ) = 0, ( ∂h 2 c ) = 0, and ( ∂h 3 s ) = 0, calculated as follows:

    E Rg1 = E Rg2 E(Rc1 ) = E(Rc2 ) E(Rs1 ) = E(Rs2 ) Thus,    h 3 (P4 − P3 ) (1 + γ)F0 − M − C f − [(1 − μ)C1 ]    − h 2 C1 + h 2 h 3 C1 + h 2 h 3 (P3 − P4 ) (1 + γ)F0 − M − C f = 0

(7.14)

h 1 h 3 (1 + γ )F0 (P3 − P4 ) + h 3 (1 + γ )F0 (P1 − P3 ) + γ R1 + γ C2 − P1 1 + γ F0 = 0

(7.15)

h 1 (P4 M − P3 M) + h 2 (P1 M − P3 M) + h 1 h 2 (P3 M − P4 M) + P3 M − P1 M − μC3 = 0

(7.16)

   h 3 (P3 − P4 ) 1 + γF0 − M − C f − [(1 − μ)C1 ]   h2 = h 3 C1 − C1 + h 3 (P3 − P4 ) 1 + γF0 − M − C f h1 =

(7.17)

h 3 1 + γ F0 (P1 − P3 ) + γ R1 + γ C2 − P1 1 + γ F0 h 3 1 + γ F0 (P4 − P3 )

(7.18)

P1 M + μC3 − P3 M − h 2 (P1 M − P3 M) (1 − h 2 )(P4 M − P3 M)

(7.19)

h1 = and

d(h 1 ) μC3 (P4 M − P3 M) = d(h 2 ) [(1 − h 2 )(P4 M − P3 M)]2   −1 + γ F0 (P4 − P3 ) γ R1 + γ C2 − P1 1 + γ F0 d(h 1 ) =  2 d(h 3 ) h 3 1 + γ F0 (P4 − P3 )    −C1 (P3 − P4 ) 1 + γF0 − M − C f − [(1 − μ)C1 ] d(h 2 ) =  2  d(h 3 ) h 3 C1 − C1 + h 3 (P3 − P4 ) 1 + γF0 − M − C f

(7.20)

(7.21)

(7.22)

(3) Model inference According to the differential solution of the strategy selection probabilities h 1 , h 2 , and h 3 of the government, enterprises, and the public, respectively, the following three inferences can be drawn.

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μC3 (P4 M−P3 M) d(h 1 ) d(h 1 ) Inference 1: From formula (7.20) d(h = [(1−h 2 , we know that d(h ) < 2) 2 2 )(P4 M−P3 M)] 0, indicating that the probability of the government choosing an active regulatory strategy decreases with the increased probability of companies choosing a compliant operation strategy. This would reduce regulatory costs and provide more options for deregulation strategies. On the contrary, when the number of companies in the market choosing illegal operation strategies increases, the government would be more likely to choose an active supervision strategy to maintain market order. −1+γ F0 (P4 −P3 )[γ R1 +γ C2 −P1 1+γ F0 ] 1) Inference 2: From formula (7.21) d(h = , it can d(h 3 ) [h 3 1+γ F0 (P4 −P3 )]2 d(h 1 ) be seen that the value of d(h 3 ) is determined by γ R1 +γ C2 −P1 1+γ F0 , and γ R1 +γ C2 is the profit of the enterprise that chooses illegal operations and cost savings, where P1 1 + γ F0 indicates that after the enterprise violates the degree of γ , the government has probability P1 of discovering the violation, and issues violation penalty 1 + γ F0 . Then, P1 1 + γ F0 can be expressed as the violation cost of the enterprise after the violation. If the company’s violation cost is higher than the violation revenue, then d(h 1 ) < 0, indicating that the probability of the public choosing to participate in the d(h 3 ) supervision strategy increases, and part of the government’s supervision functions can be borne by the public. To save supervision costs, the government, the probability of opting for active regulation decreases. On the contrary, if the probability of the public choosing to participate in regulation decreases, the government would assume the supervisory responsibilities abandoned by the public in order to maintain market order, making is more inclined to choose an active regulation strategy. If the noncompliance benefit of the enterprise is higher than the non-compliance cost, that is d(h 1 ) γ R1 + γ C2 > P1 1 + γ F0 , then, from formula (7.21) d(h > 0, the increase in 3) the probability of the public participating in the supervision strategy would make the government more inclined to adopt an active supervision strategy. This is because the non-compliance benefits of enterprises are already higher than the non-compliance costs, and most enterprises are more inclined to adopt a non-compliance operation strategy in pursuit of profit maximization. From formula (7.20), it can be seen that an increase in the probability of enterprises choosing illegal operation strategies leads to an increased probability of the government’s choice of an active supervision strategy. At this time, regardless of the level of public participation, the government would increase supervision to maintain market order. Therefore, the effect of the public’s participation in the supervision system is determined by the cost of the profits of enterprises’ illegal operations. Therefore, whether the public participates in supervision depends on the government’s ability to identify the illegal enterprises and the amount of penalties. −C {(P −P ) 1+γF0 −M−C f ]−[(1−μ)C1 ]} 2) Inference 3: From formula (7.22) d(h = 1 3 4[ , the d(h 3 ) [h 3 C1 −C1 +h 3 (P3 −P4 )[1+γF0 −M−C f ]]2  d(h 2 ) value of d(h 3 ) is determined by 1 + γF0 − M − C f and [(1 − μ)C1 ]. The former is the difference between the government’s penalty income and penalty cost for illegally operating enterprises under active supervision, which can be regarded as the total income after the government punishes illegally operating enterprises. The latter is the additional cost to the government for supervision. If the penalty income is higher than the additional cost, the net income of the government’s supervision of

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enterprises under public participation is positive, and the probability of an enterprise choosing a compliant operation strategy is the same as that of the public choosing to participate in the supervision strategy. Negative correlation means that the increase in the probability of public participation in supervision increases the probability of companies choosing illegal operation strategies, because in this case, the government always obtains a positive benefit under the condition of public participation in supervision, and thus, public participation in supervision cannot make companies abandon illegal operations. The probability of the government choosing an active regulatory strategy increases, and formula (7.20) shows that when the government chooses a relaxed regulatory strategy, companies are more likely to choose an illegal operation strategy. Therefore, when net income is positive after the government punishes enterprises with illegal operations, improved public participation cannot reduce the probability of enterprises with illegal operations. If the net income of the government’s penalty to the enterprise is negative, that is, 1 + γF0 − M − C f < [(1 − μ)C1 ], then the income after the government’s penalty for illegal operation cannot cover 2) > 0, indicating that the probability of an enterprise the additional cost, and d(h d(h 3 ) choosing a compliant operation strategy increases as the public chooses to participate in a regulatory strategy. To reduce expenditure, the government prefers companies to choose compliance. Therefore, the increase in the probability of public participation in supervision makes the government more inclined to adopt an active supervision strategy and increase the penalties for illegal operations by companies that violate regulations, making companies more inclined to choose compliance. Therefore, when the government imposes a negative net value on companies whose operations violate regulations, the promotion of public participation in the supervision strategy reduces the probability of companies choosing an illegal operation strategy.

7.3.4 Game Equilibrium In the real world of natural resource supervision, the game between the government, enterprises, and the public is a stable and long-standing supervision game. To better interpret the status and value of the government, enterprises, and the public in the regulatory game, and to analyze the relationship between the various elements in the equilibrium game, this section revises the game model and analyzes the equilibrium game. The interrelationship of game subjects in a state. (1) Model improvement and parameter setting In the game between the government, enterprises, and the public, the public can be regarded as an independent entity. As long as there is supervision of enterprises, there is public participation, but the degree of public participation varies. Assuming that the degree of public participation is μ(μ > 0), the government has two strategic choices: active supervision and deregulation, the probabilities of which are h 1 and 1 − h 1 , respectively. Furthermore, enterprises have two types of operations: compliant and illegal operations, with probabilities h 2 and 1 − h 2 , respectively. The fixed cost of the

7.3 The Game Relationship Among the Participants in the Natural Resource …

181

government choosing to deregulate is C0 , the additional cost of active regulation is (1 − μ)C1 , the additional cost of choosing compliant operations is C2 , the additional benefit of choosing illegal operations is γ R0 , and enterprises with illegal operations are identified by the government. The penalty is (1 + γ )F0 , the penalty cost for the government of punishing the violating enterprises is C f , the probability of identifying enterprises with illegal operations under relaxed supervision is P1 , the probability of identifying enterprises with illegal operations under active supervision is P2 , and 0 < P1 < P2 < 1. (2) Payment matrix In the above improved model, because the public is regarded as a whole that always participates in supervision, the degree of public participation μ only affects the additional cost of active supervision by the government. Therefore, in the original three-party game model, only the government and enterprises can choose different strategies, which can be regarded as a binary game model composed of government and enterprises, and its payoff matrix is as follows Table 7.2. (3) Profit function Assuming that the strategy choices between the government and the enterprise exist independently, that the probability of the government choosing an active regulatory strategy is h 1 , and that the probability of the enterprise choosing a compliant operation strategy is h 2 , the revenue functions of the government and the enterprise are as follows. Expected benefits under active government regulation:   E Rg1 = h 2 [(μ − 1)C1 − C0 ] + (1 − h 2 )    P2 (1 + γ )F0 − C f − C0 − (1 − μ)C1

(7.23)

Expected benefits under government deregulation:      E Rg2 = −C0 h 2 + (1 − h 2 ) P1 (1 + γ )F0 − C f − C0

(7.24)

Table 7.2 The payoff matrix of the game between the two parties Game subject Enterprise

Government Compliant operation Illegal operation

Active regulation

Lax regulation

−C0 − (1 − μ)C1

−C0

−C2

−C2

−C0 − (1 − μ)C1 + P2 (1 + γ )F0 − C f γ R0 − P2 (1 + γ )F0

  −C0 + P1 (1 + γ )F0 − C f γ R0 − P1 (1 + γ )F0

Note The expressions in the first and second lines of each cell are the government and enterprise payment functions, respectively

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The average government revenue is π(Rg ) = h 1 E(Rg1 ) + (1 − h 1 )E(Rg2 ). The expected benefits under enterprises’ compliant operations are E(Rc1 ) = −C2

(7.25)

The expected benefits under companies’ illegal operations are E(Rc2 ) = h 1 {γ R0 − P2 (1 + γ )F0 } + (1 − h 1 ){γ R0 − P1 (1 + γ )F0 }

(7.26)

The company’s average revenue is π(Rc ) = h 2 E(Rc1 ) + (1 − h 2 )E(Rc2 ). (4) Game equilibrium solution In the game equilibrium state, the strategic choices of the government and enterprises result in their expected returns reaching the maximum value, and therefore, we make

    ∂ π ( Rg ) ∂ π (R ) = 0, ( c ) = 0, so that E R = E R , E(R ) = E(R ). ∂h 1

∂h 2

g1

g2

c1

c2

   h 2 [(μ − 1)C1 − C0 ] + (1 − h 2 ) P2 (1 + γ )F0 − C f − C0 − (1 − μ)C1    = −C0 h 2 + (1 − h 2 ) P1 (1 + γ )F0 − C f − C0 (7.27) −C2 = h 1 {γ R0 − P2 (1 + γ )F0 } + (1 − h 1 ){γ R0 − P1 (1 + γ )F0 }

(7.28)

R0 +C2

h1 = 

h2 =

P1 (1 + γ )F0 − R0 − C2 P1 (1+γ )F0 = − P2 − P1 P2 − P1 (P1 − P2)(1 + γ )F0

(P2 − P1 ) (1 + γ )F0 − C f − (1 − μ)C1 (1 − μ)C1     =1− (P2 − P1 ) (1 + γ )F0 − C f (P2 − P1 ) (1 + γ )F0 − C f

(7.29) (7.30)

Inference 1: The value of the probability of the government choosing an active supervision strategy is determined by the ratio of the company’s illegal operation revenue R0 + C2 to the illegal operation cost (1 + γ )F0 . The larger the ratio, the lower the risk of the company’s adopting an illegal operation strategy. Therefore, to reduce the probability of choosing an active supervision strategy, the government can reduce the profit of the company with illegal operations or increase the punishment for the company’s illegal operations. Inference 2: The value of an enterprise’s choice of a compliant operation strategy is determined by the additional cost (1 − μ)C1 of active government supervision and the ratio of the enterprise’s penalty for illegal operations. The smaller is the probability of the operation strategy (i.e., the greater is the ratio of the additional cost of the government’s choice of active supervision to the penalty benefit), the more likely the company is to choose an illegal operations strategy. The additional cost of choosing active supervision is also affected by the degree of public participation. The greater the degree of public participation, the lower the additional cost of the government choosing active supervision, and the greater the probability of enterprises

7.3 The Game Relationship Among the Participants in the Natural Resource …

183

choosing a compliant operation strategy. Therefore, to reduce the probability of enterprises’ choosing an illegal operation strategy, the government can increase the penalties for enterprises’ violations or increase the participation of the public.

7.3.5 Conclusion of the Game Model In the natural resource regulatory system, the regulatory agency, the regulatory object, and the public form a long-standing three-party circular game. When the game equilibrium is reached, the public as a whole can be regarded as stable in the short term in terms of the depth of its participation in supervision. Furthermore, the threeparty circular game can evolve into a binary game composed of the government and enterprises. In this game model, the degree to which the government chooses active supervision is determined by the benefits and costs of companies choosing an illegal operation strategy, and the benefits of such violations depend on natural resources. The influencing factors of the market include the asset price of natural resources, the grade quality of natural resources, and the supply and demand of natural resources, etc. The cost of an enterprise’s violation is determined by the government’s penalty amount and the violation identification rate. The amount of the penalty is determined by the regulatory agency when formulating market standards and laws and regulations based on the actual situation of the region, and is completely controlled by the government. The violation identification rate is subject to government supervision mechanisms and the influence of regulatory means, regulatory tools, and other factors. The probability of an enterprise choosing a violation strategy is determined by the government’s cost of increasing supervision and the benefits of penalty fees. The cost of improving supervision depends not only on the government’s supervision efficiency, but also on the depth of public participation, the amount of the penalty, and the cost of the government penalty. Therefore, for the government to reduce the probability of corporate violations in the regulatory system, it should consider the following four aspects. First, it should strengthen public awareness of participating in supervision through education campaigns to reduce the cost of government supervision of enterprises. Second, it should develop organizational and institutional capacity, improve the efficiency of its own supervision, reduce the additional cost of strengthening its supervision, and improve the identification rate of companies that violate regulations. Third, the government should facilitate market management, reasonably set lower and upper limits of the price of natural resource assets, maintain the supply–demand relationship in the natural resource market, and reduce the possibility of enterprises choosing illegal operation strategies by reducing their income from illegal operations. Fourth, the government should increase penalties for corporate violations, which not only could make up for the additional costs of strengthening supervision, but also could increase the cost of non-compliance, making companies more inclined to choose compliance.

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7.4 System Design of Unified Supervision of Natural Resources 7.4.1 Building a Multi-information Sharing Platform for Natural Resource Supervision Information asymmetry in the natural resource regulatory system has caused many problems. Owing to information asymmetry between the central regulatory agency and local regulatory agencies, the central agency cannot accurately grasp the real situation of local natural resource markets, and local agencies can take advantage of this situation. The information asymmetry between local regulatory agencies and enterprises makes it possible for companies to opportunistically choose illegal operations to increase corporate profits. Furthermore, the information asymmetry between local regulatory agencies and the public makes it difficult for local regulatory agencies to understand the state of natural resources in a timely and accurate manner. To achieve an optimal design of the natural resource supervision system, it is particularly important to reduce the influence of information asymmetry and improve the information acquisition efficiency of the central and local regulatory agencies. China should build a national multi-information sharing platform, relying on the Internet, blockchain, artificial intelligence, and other technologies, to connect the information of various regulatory bodies, including the central regulatory agency, local regulatory agencies, enterprises, and the public. By accurately grasping the real situation of the local natural resource market and making timely and effective policy adjustments, local regulatory agencies can prepare to understand the real situation of enterprises and the information feedback of public participation in supervision, and can timeously regulate enterprises, effectively improving the efficiency of supervision.

7.4.2 Establishing a Corporate Behavior Recognition System The identification of corporate violations is an important part of the regulatory process. Many regulators cannot accurately identify companies that violate laws and regulations based on the information obtained, which greatly reduces the efficiency of their supervision. The chain reaction of information asymmetry would raise the probability of companies choosing illegal behavior strategies, the depth of public participation in supervision would decrease, and the government would strengthen supervision, thereby greatly increasing the cost of supervision, resulting in high costs and low efficiency. Because enterprises face similar behavioral choices, China should understand these choices and enterprises’ basic characteristics in advance, establish a national enterprise violation identification system, and incorporate it supervision by local

7.4 System Design of Unified Supervision of Natural Resources

185

regulatory agencies. In such a system, the central regulatory agency should develop a corporate behavior identification mechanism. Through professional data analysis and corporate behavior analysis, the probability of identifying illegal companies would be greatly improved, while the costs of individual identification by local regulatory agencies would be reduced.

7.4.3 Strengthening Risk Emergency Response and Prevention and Control Mechanisms The results of the principal–agent relationship analysis between the central regulatory agency and local regulatory agencies show that after accepting the authority and incentives granted by the central regulatory agency, the local regulatory agency needs to take certain risks in its behavior choices, and it would be affected by uncertain external factors. The degree of its willingness to take risks is finally and directly fed back into the market utility gains that the central regulatory agency can obtain. Therefore, strengthening the risk management of regulatory agencies can directly affect the regulatory efficiency of the natural resource market. Against a background of unified supervision of the central regulatory agency, this chapter recommends risk emergency response and prevention and control mechanisms for regulatory agencies at all levels; risk control standards should be established; and local regulatory agencies should be strengthened. Risk contingency and prevention and control mechanisms not only can reduce the impact of external risks caused by market factors, but also can prevent systemic risks within regulatory agencies.

7.4.4 Establishing a Skills and Technology Training Base Human cost and technical cost are the main cost inputs of natural resource regulatory agencies at all levels. High fixed costs and additional costs of supervision directly affect the strategic choice of local regulators. High costs directly affect the final regulatory benefits, making regulators reluctant to choose active regulatory policies, and instead favor the lowest-cost policy. Relaxation of supervision would achieve the goal of supervision. Because the game relationship between local regulatory agencies and enterprises directly affects enterprises’ behavioral choice, the relaxation of supervision by local regulatory agencies would make companies more willing to choose illegal operation strategies, and finally, would directly affect the order of the entire natural resource market. Therefore, good cost control by regulators could make regulators more willing to choose active regulatory policies. In China’s natural resource supervision system, although much progress has been made in supervision technology and supervision

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skills in the decades since the reform and opening up, in many grassroots supervision organizations, supervision technology is still not mature enough, and there is a lack of knowledge, which requires large investment and raises the costs of supervision. As science and technology develops, many regulatory fields have gradually introduced advanced regulatory technologies, such as blockchain and artificial intelligence, which have improved regulatory efficiency. Therefore, against the background of unified supervision by the central regulatory agency, establishing skills and technology cultivation bases and gradually improving the quality of skills and technologies in the field of natural resource supervision could improve supervision efficiency and reduce supervision costs.

7.5 Summary With the advancement of China’s reform and opening up, the natural resource supervision system has undergone a radical change. It has gradually evolved from the initial decentralized supervision with each department performing its own duties into a unified supervision system dominated by the Ministry of Natural Resources. This chapter focuses on the structural design of the natural resource supervision system, explains the reform process and development status of China’s natural resource supervision system, introduces the supervision subjects and supervision objects in the supervision system, and analyzes the current supervision methods in the natural resource market. Based on this analysis, this chapter identifies the participants in the natural resource regulatory system as central regulatory agencies, local regulatory agencies, enterprises, and the general public. Based on the principal–agent theory, this chapter analyzes the principal–agent and incentive mechanisms of the central and local regulatory agencies. It focuses on the game relationship among regulators (government), enterprises, and the public to analyze the strategy selection mechanism of the three-party game subjects. Finally, this chapter considers how to improve the supervision efficiency and the market utility of natural resources. Based on the principal–agent analysis and game analysis, this chapter adopts a system design for the supervision optimization of the central and local regulatory agencies. In general, for both a central regulatory agency and a local regulatory agency, the relationship between costs and benefits must be considered in the optimization of the regulatory system. As the overall supervisor in the natural resource market, the central regulatory agency needs to start from the basis of supervision, optimize supervision policies, update supervision technology, cultivate supervision skills, and coordinate supervision goals. Local regulatory agencies, as regulators in the natural resource market, need to start from their own regulatory efficiency, do a good job of accounting for economic goals, improve information collection and identification, strengthen basic regulatory work, and improve national awareness of regulation.

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Chapter 8

Implementation Path of Natural Resource Regulation

China’s “ecological civilization” construction level is still very backward compared with its economic and social development, and faces many problems. Under such circumstances, there is an urgent need to study a new natural resource supervision system. Some scholars have identified the need for coordination between environmental auditing and government auditing. Government environmental auditing can affect the natural resource environment through laws and regulations and can test the effectiveness of government policies by systematically monitoring the quality of the natural resource environment [1]. As a unique audit system in China, the exit audit system of natural resource assets for leading cadres when they depart office is not only a major institutional innovation for the country to strengthen the construction of ecological civilization, but also an important means of environmental performance management [2].

8.1 China’s Unique Natural Resource Supervision System—The Audit System of Natural Resource Assets for Leading Cadres When They Leave Office 8.1.1 Connotation of Exit Audit System of Natural Resource Assets for Leading Cadres (1) Definitions At present, various countries have made rapid progress in government environmental auditing by improving their own environmental systems [3]. The natural resource assets exit audit system is a new type of audit system proposed in China; it comes against the background of China attaching great importance to environmental protection and promoting sustainable development. Exit audits are an innovative improvement to the audit system. The aim of this system is to examine the performance of © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 T. Ding and M. Song, Natural Resource Regulation in China, Contributions to Public Administration and Public Policy, https://doi.org/10.1007/978-981-99-5593-0_8

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leading cadres with responsibility for natural resources at all levels during their term of office. This special audit mode includes two aspects: an economic responsibility audit and an ecological environment audit. The audit system has uniquely Chinese characteristics. China has focused on vigorously developing the economy for a long time, and thus, leading cadres generally prioritize political achievements and hope to improve their own standing through political achievements, which leads to the blind pursuit of rapid economic development at the expense of protecting the natural ecological environment. Realizing high-speed economic development and destroying the ecological environment seriously undermines the concept of green development [4]. Some international scholars, emphasizing the importance of the ecological protection of natural resources, have described the status quo, benefits, and changes of natural resources for natural resource auditing from the perspective of ecosystems [5]. Therefore, it is particularly important to audit the implementation of “ecological civilization” construction, the effect of environmental pollution prevention and control, environmental protection measures, and the use of funds during the tenure of leading cadres. By using natural resources as a basis to audit leading cadres, detailed indicators can reflect the governance of the local natural environment by leading cadres and whether they have balanced economic and environmental factors. The elements of the environment are complex, and each element should be comprehensively analyzed [6]. Furthermore, there are always differences between theory and practice in research on the real world, and the same is true of exit audits [7]. Therefore, the audit standards adopted for different categories of natural resources also differ. For example, the audit of forest resources should focus on indiscriminate deforestation, illegal occupation, and expropriation; whereas the audit of water resources should focus on water quality pollution, etc. As opposed to social audits, exit audits include the status of natural resources, the implementation of natural resources and environmental protection policies, etc., and adopts binding and effective methods and means [8]. Some scholars consider supervision and consistency to be the foundation of environmental auditing work, and auditors have to use their expertise within this framework [9]. Natural resource assets and ecological accounting are the basis and starting point for this work, and play a key role in the environmental economic accounting system [10]. Some research discusses the objectives and necessity of exit audits [11], and categorizes the types, standards, and steps of auditing [12]. The exit audit can also be used to identify the existing and future environmental responsibilities of an enterprise outside the national governance system [13]. (2) The subject and object of the exit audit system for natural resource assets In the exit audit system for natural resource assets, the audit objects are, for example, the leaders of state-owned enterprises. Because natural resources are owned by the state, the audit subjects are audit departments at all levels. If auditors are not familiar with the protection mechanism of ecological resources, they can jointly work with the internal audit department to ensure the smooth completion of audit work. In addition, the content of the audit business is extremely complex, involving many

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fields, and the audit department is unlikely to have sufficient audit capabilities; thus, it is necessary to conduct joint audits with personnel from financial departments and other departments. (3) Scope of exit audit of natural resource assets According to the purpose of auditing, there are many types of definitions for auditing [14]. Thus, the corresponding auditing scope also differs, and the auditing scope of the natural resource exit audit system is mainly determined by its corresponding audit object. If resource accounting is difficult, the asset might not be audited. For ecological protection and asset management responsibilities under the jurisdiction of the audit object, a combination of qualitative and quantitative methods can be used, and specific problems should be analyzed in detail. Natural resources are diverse and widely distributed, and many resources cannot be measured by currency amounts. Therefore, when providing statistics on physical objects, the sections that are closely related to natural resources can be measured by other means, such as text annotation. As long as the information is objective and comprehensive, different methods can be used. (4) Objectives of exit audit of natural resource assets According to relevant laws and regulations, an audit generally monitors and evaluates the audited entity to determine whether its fiscal revenue and expenditure are legal and accurate. Scholars have derived three main research conclusions about audit objectives in academia. The first is the concept of environmental governance. This view holds that the goal of exit audits is to ensure the sustainable development of the national economy while reducing or eliminating threats to the environment posed by government activities. Some scholars posit that during the exit audit process, green management policies and experiences of different regions should be summarized, learning experiences should be shared, and the negative impact of irresponsible leaders on the regional ecological environment should be eliminated to realize sustainable development. According to these views, the end goal of the exit audit system is to achieve harmonious coexistence between humans and nature. The second main research conclusion is the concept of natural resource management. This view holds that a sound resource monitoring and management system should be established through external audits to lay the foundation for an evaluation mechanism for sustainable development. At the same time, it is necessary to monitor and review natural resources in the areas under the jurisdiction of leading cadres, optimize the allocation of natural resources, fairly distribute the right to use natural resources across various regions, and promote the effective management of natural resources in different regions. This perspective refers to the management and protection of natural resources. The third main research conclusion is the concept of responsibility. This view holds that the purpose of the exit audit is to determine whether there has been abuse of power by senior managers during their terms of office, and to clarify their responsibilities for managing natural resources.

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(5) General audit content of natural resource assets upon leaving office (a) Natural resource assets accounting and statistics The natural resource balance sheet can reflect the specific situation of assets at a certain point in time. It is an important element of accounting and auditing, and can intuitively reflect changes in the use and scale of natural resources within a jurisdiction. Careful and objective preparation of the balance sheet is not only conducive to the registration of complete accounting information, but also helps timeously analyze the causes of value changes, discover core problems, improve various management mechanisms, and increase the overall value of natural resources. Therefore, the natural resource balance sheet is an important basis for evaluating the work performance of leading cadres. (b) Formulation of the strategic layout The national resource and environmental strategy is an important part of the overall planning of resources and environmental protection, and thus, it is particularly important to clarify the responsibilities of relevant leading cadres. The audit of these contents checks whether the local government has implemented a sustainable development strategy in the development process; whether it complies with existing longterm plans; whether the system and measures for protecting the environment are gradually developing and improving; and whether it is formulated in accordance with the local conditions and appropriate plans. (c) Utilization of natural resource assets The audit reviews the specifics of the formal sector to understand implementation and whether the system complies with the regulations adopted and implemented by the state. It identifies who supervises resource development and construction and approval of various projects. The audit assesses whether the program implementation results meet relevant standards, and whether scientific verification and democratization processes are underway. At the same time, the emergency mechanism and risk assessment system in the process of data protection are identified to ensure the safety and reliability of data. (d) Financial fund management and decision-making of major investment projects The audit reviews the behavior of key leaders during their tenure, and determines the authenticity and profitability of fund management. It reviews key investment project decisions and all payment processes, with focus on key fund compliance.

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(6) Exit audit methods for natural resource assets (a) Regular audit method The interview method is a routine and commonly used method. To establish the decision-making content of natural resource assets, local governments hold meetings to discuss and clarify the responsibilities of personnel at all levels; leaders can also talk with the heads of relevant departments to understand the specific situation of policy implementation, workflows, and business processes. At the same time, the audit assesses whether the policy implementation of the leading cadres has been carried out in accordance with corresponding laws, rules, and regulations, at the local and national level. (b) Geographic information system audit methods Geographic information system (GIS) is a modern information technology that combines the technologies of communication, space, and computing to collect, process, and apply spatial information. The main application of GIS in the exit audit of natural resource assets is the use of hierarchical overlay technology to analyze related data. This technology reflects the basic situation of farmland construction through corresponding information provided by GIS, and determines whether the plot information is realistic, so as to effectively protect the basic farmland. At present, most problems with the use of GIS for auditing are related to irregular cooperation by surveying and mapping departments. Auditors are required to audit natural resource assets according to the physical quantity and changes of natural resource assets. GIS auditing is the future development trend. It is necessary for auditors to establish a long-term and stable cooperative relationship with surveying and mapping departments to improve the auditors’ grasp of the functional operation and principles of GIS. In addition, auditors should inform the surveying and mapping departments of their needs in a timely manner. On the one hand, auditors can overcome difficulties associated with their lack of professional knowledge about natural resources in their work. On the other hand, auditors can use the information provided by GIS to solve various problems and improve the efficiency of audit work. In addition, it is necessary to collate the work of auditors to create a geographic information audit database that suits their own conditions, and to update the database in real time, for better integration with on-site audit. (c) Computer data auditing methods Each process in the administrative approval process of the natural resource asset licensing system is interrelated. If there is a problem with any link, there will be problems in the relevant administrative approval procedures. The auditor should identify and resolve central issues in the research process by studying the links between computer data for administrative approval, especially the relationships

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between departments. Computer data auditing is an effective auditing method. As social informatization progresses, computer data auditing will become the future development trend.

8.1.2 Theoretical Basis of Exit Audits of Natural Resource Assets for Leading Cadres (1) Theory of public fiduciary responsibility The concepts of the theory of public fiduciary responsibility are derived from modern economics. Individuals are not suitable as managers of public goods. Therefore, the government is the best manager to undertake the management responsibility of public goods. In addition, the government collects taxes from taxpayers, which are the main source of funding for fiscal spending. Therefore, people have the right to supervise the work of the government. The emergence of public fiduciary responsibility forms the basis for the development of audit work. (2) Sustainable development theory In social production activities, sustainable development means that society not only meets the needs of current generations, but also those of future generations. Exit audits should be undertaken with the aim of sustainable development [15]. The theory of sustainable development is based on the principles of sustainability, fairness, and openness, with the fundamental goal of achieving efficient and coordinated development. At present, sustainable development theory states that not only environmental factors should be incorporated in in economic planning, but also balanced population growth and environmental protection. The sustainable development process is inseparable from the efforts and cooperation of all parties. It not only needs to reform existing technologies and establish modern concepts, but also requires the support of the government and leaders.

8.2 Construction of the Evaluation Index System for the Exit Audits of Natural Resource Assets for Leading Cadres 8.2.1 Principles for Constructing the Indicator System (1) Principle of operability The principle of operability means that in order to design more scientific and rational rating indicators, in the process of setting indicators, the rationality and feasibility of the factors to be considered should be combined. At the same time, the conceptual

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perspective is transformed into the audit unit itself, such as comprehensive consideration of the technical strength of the audit, knowledge level of the personnel, and use of funds. In addition, the focus shifts to a comprehensive evaluation of leading cadres and a representative comment on the indicators themselves, which are mainly aimed at some index data that are difficult to obtain but can be measured using various methods. (2) Principle of sustainable development The principle of sustainable development means that while the current generation enjoys the right to use natural resources, the rights and interests of future generations are fully considered in the use of natural resources. For example, from a scientific point of view, the current generation rationally selects qualitative and quantitative indicators. The indicator system should show that the current generation enjoys the rights and interests of natural resources, and at the same time protects the rights and interests of future generations in the use of resources. People’s sense of responsibility should also reflect limits on the use of their own resources, which requires the current generation not only to consider immediate needs, but also longer-term needs, considering the lives of future generations. In the process of constructing and setting the index system, two points should be heeded: first, the index system needs to combine both dynamic and static elements, so as to establish a more reasonable and scientific index system; second, the index requires continuous improvement and should follow the development requirements of the times. (3) Principle of highlighting key points The principle of highlighting key points means that in the process of creating the indicator framework, irrelevant factors are eliminated, and important indicators that can reflect the nature of responsibility are retained. First, in the process of implementing the audit, the selected indicators should have core representativeness, be hierarchical, have clear priorities, make appropriate choices, and consider the constraints of the audit implementation process as much as possible. The focus of audit implementation should be to combine both the overall and materiality indicators. Second, when selecting the corresponding indicators, core indicators related to the rights and interests of the people and that have extensive influence are selected as the objects to improve the focus of the content. (4) Principle of combining qualitative and quantitative indicators When counting and quantifying most assets, it is necessary to conduct comprehensive analysis and evaluation, and set the corresponding framework for asset indicators from both quantitative and qualitative perspectives. For example, when expressing the asset framework in text form, it is necessary to combine qualitative and quantitative indicators, because most assets have many types, wide coverage, and complex procedures to obtain asset statistics. Therefore, assets that cannot be directly counted and measured are still reflected. When auditing various data, such as fiscal revenue and expenditure, it is necessary to design a systematic and comprehensive project,

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consider the rationality of revenue and expenditure management, combine quantitative indicators and qualitative indicators, and start from two levels. The comprehensive evaluation of project development should be objective, accurate, scientific, and reasonable.

8.2.2 Elements of the Indicator System (1) Contents of indicators of the status quo of governance policies (a) Soundness of policy planning Local leading cadres, as the trustees responsible for environmental development, must conscientiously implement the ecological environment guidelines and regulations issued by the Chinese government in accordance with local conditions, and develop and protect natural resources rationally and scientifically. The soundness of leading cadres’ policy planning can be used as an indicator to show the degree of policy importance they attach to the development, protection, and governance of local resources and environment. At the same time, this indicator can reflect the rationality of their planning for resource and environmental governance. The qualitative index can be scored through relevant index literature, and the index score can reflect the ability of leading cadres to rationally develop natural resources. (b) Policy planning compliance rate When leading cadres implement relevant economic and environmental policies, they must ensure the rationality and scientificity of natural resource governance, as well as the degree of implementation of relevant policies and regulations. The policy planning compliance rate is a positive indicator, and its value reflects the degree of implementation of the natural resource governance policy by leading cadres. (c) Public satisfaction with ecological environment governance The public has the right to evaluate and supervise the performance of leading cadres’ ecological governance work, and local ecological environment governance and the effects of leading cadres’ ecological governance work can be reflected in public satisfaction. This qualitative index is scored by means of a questionnaire survey. The higher the score, the more satisfied the public is with the work of leading cadres. (d) Participation rate of environmental protection training for leading cadres Previously, even if leading cadres had a personal preference for ecological resource protection, they did not center it in their work, which invariably focused only on economic development. To better protect local ecological resources and the environment, it is necessary for leading cadres to participate actively in environmental protection training, so that they can actively learn advanced methods of environmental

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governance. The larger the value of the index on the participation rate of environmental protection training for leading cadres, the higher the importance leading cadres attach to environmental protection work. (2) Content of indicators of the status quo of governance funds (a) Ratio of energy conservation and environmental protection expenditure to total fiscal expenditure China has previously invested few funds in tackling environmental pollution. Today, under the guidance of green development, the government has increased capital investment to improve environmental governance and curb environmental degradation. The ratio of energy conservation and environmental protection expenditure to total fiscal expenditure is a positive indicator. The larger the indicator value, the higher the government’s emphasis on environmental governance work, and the more it reflects the support of leading cadres for environmental governance and environmental protection work. (b) Compliance rate of use of funds Some non-compliance phenomena can be identified by reviewing the use of funds for relevant environmental protection work. The compliance rate of use of funds is a positive indicator. Its value reflects the compliance degree of leading cadres in the use of funds. The larger the indicator value, the better the compliance of the use of funds. (c) Budget expenditure completion rate The completion rate of budget expenditure refers to whether leading cadres can complete the required expenditure according to the budget funds planned at the start of implementation of ecological environment governance work. If leading cadres want to use the ecological and environmental governance funds efficiently, they need to formulate detailed fund-use plans and allocation standards at the beginning of the period, so that the environmental governance funds are fully utilized by the end of the period. The budget expenditure completion rate is a positive indicator. The larger the indicator value, the better the overall benefit of environmental governance. (3) Contents of indicators of the status quo of governance resources (a) Atmospheric resources 1. Average value of inhalable particle concentration In terms of environmental quality monitoring, inhalable particulate matter is an important indicator. The smaller the inhalable particle size is, the more it harms human health. In addition, inhalable particles affect the visibility of the atmosphere and hinder traffic safety. The average value of inhalable particle concentration is a reverse indicator. The smaller the average value, the lower the concentration of inhalable particulate matter.

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2. Annual average sulfur dioxide concentration As society has developed, the demand for various types of fossil fuels has increased. However, the extensive use of fossil fuels has produced a large amount of harmful gases, including sulfur dioxide. Sulfur dioxide emissions in the air cause acid rain, which in turn acidifies the soil and affects soil fertility. The annual average sulfur dioxide concentration is a reverse indicator. The smaller the average value, the lower the sulfur dioxide concentration. 3. Air quality compliance rate The consumption of resources in modern industrial production has greatly increased, and at the same time, large quantities of three waste types (sold, water, and gas) are generated. Among them, the influence of exhaust fumes on air quality is very high. The annual ambient air quality compliance rate refers to the proportion of the number of days with an air quality index above the second level in the whole year. The air quality compliance rate is a positive indicator. The higher the indicator value, the higher the air quality compliance. 4. Exhaust fumes treatment facilities Exhaust fumes treatment facilities can purify the air to treat harmful substances from exhaust fumes that affect human health. The facilities are supported by different technical processes and have such functions as absorption, adsorption, and purification. Exhaust fumes treatment facilities are a positive indicator. 5. Total industrial waste gas emissions The total amount of industrial waste gas emissions is one of the statistical indicators of environmental protection. Given that the main source of air pollution is industrial waste gas, controlling the total amount of industrial waste gas emissions is the top priority of air pollution control. Total industrial waste gas emissions are an inverse index. (b) Water resources 1. Sewage treatment rate The continuous industrialization and rapid expansion of urbanization have produced a lot of domestic sewage. Domestic sewage is discharged into the ground, which pollutes groundwater resources and causes environmental degradation. Leading cadres should demonstrate environmental awareness and pay attention to environmental protection work, adopting more advanced and effective treatment methods to deal with sewage treatment problems. The sewage treatment rate is a positive indicator.

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2. Drinking water quality compliance rate The compliance rate of drinking water quality is calculated by the compliance rate of the total water consumption that can be provided by the water source. In the past, problems included over-exploitation of water resources and low utilization efficiency, which not only affected the quality of life of residents, but also endangered their health. The drinking water quality compliance rate is a positive indicator. 3. Total water resources The total amount of water resources is the sum of surface and underground water resources. This indicator reflects the water resource reserves in the region, and thus, it is necessary to focus on statistics for its measurement. Total water resources are a positive indicator. 4. Treatment capacity of sewage treatment plants Centralized sewage treatment enables the government to inspect the centralized discharge of sewage, thereby improving the environmental condition of the sewage. The importance attached by leading cadres to sewage treatment and capital investment in sewage treatment indirectly affect the sewage treatment plants’ ability to control pollution, and thus, directly affect economic development related to the water resource environment. The treatment capacity of sewage treatment plants is a positive index. 5. Ratio of industrial wastewater discharge to the number of enterprises Modern industrial processes produce a large amount of industrial wastewater. Direct discharge of industrial wastewater seriously damages local water quality. Therefore, the discharge of industrial wastewater must be strictly controlled. The ratio of industrial wastewater discharge to the number of enterprises is an inverse indicator. (c) Land resources 1. Area of arable land per capita The index of per capita cultivated land area reflects the degree of pressure on the supply of cultivated land resources. The shortage of land resources adversely affects regional economic development. The area of arable land per capita is a positive indicator. 2. Cultivated land utilization The local government takes effective measures to protect land resources, formulates minimum standards for cultivated land area, effectively develops and utilizes land resources, and improves resource utilization. The utilization of cultivated land refers to the ratio of crop-sown area to total cultivated area. Cultivated land utilization is a positive indicator.

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3. Agricultural non-point source pollution per unit of arable land The over-use of pesticides and fertilizers can change soil structure, destroy soil quality, pollute soil, and endanger human health. The leading agency responsible for soil resources and environmental protection should pay attention to the harm caused by agricultural pollution, guide scientific farming, and promote the rational use of pesticides and fertilizers. This indicator can be used to evaluate the performance of leading cadres in protecting soil resources. Agricultural non-point source pollution per unit of arable land is an inverse indicator. (d) Forest resources 1. Forestry land area Forestry land area includes shrub forest and sparse forest land, among other types. It refers to the forest coverage area of a piece of land. Forest land area is a positive indicator. 2. Green space rate in built-up areas Cities need to increase the green space construction area in public areas and the design of scenic woodland to improve residents’ living conditions. The Green space rate in built-up areas is derived from the ratio of the city’s green area to the total urban built-up area. 3. Forest coverage rate China has a relatively large amount of forest resources, but the proportion of forest area in the total land area is small, and the distribution is uneven. In some areas, forests are severely degraded, and soil erosion is extremely serious. Forest coverage represents the strength of protection and development of forest resources. The forest coverage rate is a positive indicator. (e) Mineral resources 1. Energy consumption per unit of GDP Energy consumption per unit of GDP is the ratio of total energy consumption to GDP. This indicator reflects not only the impact of energy on economic development, but also the various adjustment measures formulated by leading cadres to reduce energy consumption, and the local government’s management of local mineral resources. Energy consumption per unit of GDP is an inverse index. 2. Comprehensive energy consumption When calculating comprehensive energy consumption, it is necessary to clarify its main coverage. Thermal power generation energy and power energy generated by fossil fuels form part of the comprehensive energy consumption calculation.

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When carrying comprehensive energy consumption, it is necessary to pay attention to converting the calculated energy consumption units into standard measurable units, so as to make the calculation results comparable. Comprehensive energy consumption is an inverse indicator. 3. Funds invested in environmental governance this year The development of mineral resources undoubtedly damages the local environment, and thus, the government needs to invest funds to rehabilitate the environment. The more funds are invested, the better the protection of mineral resources. Funds invested in environmental governance this year are a positive indicator.

8.2.3 How to Determine the Indicator Weight The determination of the index weight is very important in the evaluation index system. Different methods of determining the index weight yield different results. To make the evaluation system scientific and rational, it is critical to choose a suitable weight determination method in the entire evaluation system. The weights corresponding to the indicators are different, and their influence and importance are also different. The weight values can be assigned and quantified by the Delphi method, the entropy weight method, and the AHP method. The Delphi method solicits opinions from experts, and thus, is also known as the expert survey method. Because the results of this method depend strongly on empirical analysis, it is a subjective evaluation method. The general process of this method is as follows: first integrate, calculate, and summarize the opinions of experts on the problems that need to be solved; then use anonymous feedback to seek suggestions from experts again; and finally, summarize the opinions solicited again. The advantage of the Delphi method is that it is easy to operate and the process is simple, but the disadvantage is that the determination of the weight results depends on the experience of the experts themselves. The entropy weight method can obtain a comprehensive index. The weight of the index is determined according to the degree of the amount of data obtained. It is an objective assignment method. Entropy represents the degree of mixing of sample data and is a measure of a system program. In comprehensive evaluation, the lower the value of entropy, the greater the weight of the index, and the simpler the mixing of information expressed in the evaluation process. This index information plays a significant role in the scoring process. The objective assignment method of the entropy weight method has an advantage over the subjective assignment method in that the index weight focuses on objective reality and is not disturbed by subjective factors. However, the method requires a large amount of data, and if the sample size is not sufficient, it may make the index weight lack objectivity, thereby affecting the evaluation results. The AHP method is commonly used in case studies in operations research. The foundation of this method is a comprehensive evaluation system with many goals and

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a network system theory system. It is a subjective empowerment method. The application process first separates the relevant factors of each target in a multi-objective comprehensive evaluation system, and then qualitatively and quantitatively divides the relevant factors of each target, analyzing and evaluating them. The advantages of the AHP are that the investigation process is easy and concise, the data calculation method is simple, and it has wide application, high practicability, and good effectiveness. The basic steps of the AHP are as follows. 1. Build a hierarchical model First, to analyze the actual situation, the target of the decision is determined according to the actual situation and relevant information is obtained. Then, three hierarchical structure models are established according to the relevant information; these are the target layer, the criterion layer, and the index layer. 2. Construct judgment (pairwise comparison) matrix Starting from the criterion level, the reciprocal and the scale of 1–9 are used to compare the different indicators at each level in pairs, and a judgment matrix is formed for mutual comparison. 3. Calculate the judgment matrix The corresponding eigenvectors and the largest eigenroot of the pairwise comparison matrix are calculated one by one, and each relevant eigenvector is evaluated and graded. 4. Consistency check In the construction of the pairwise comparison matrix, it is difficult to achieve a completely consistent effect. Therefore, when undertaking the process, a controllable category with inconsistent ranges but little deviation can be chosen. To achieve a consistent matrix structure, a consistency test can be used. The operation process first compares the consistency index (CI) and random consistency index (RI), and then calculates the consistency ratio (CR), so that certain judgments can be made. The calculated CR is less than 0.1, indicating that the feature vector obtained through the quantitative judgment standard is the weight vector. In summary, the AHP method can produce a relatively obvious structure level, its analysis and evaluation problems are clear and intuitive, and its data calculation method simplifies complex phenomena. It combines qualitative and quantitative methods; rationally sorts the weights of each attribute index, such as funds, policies, and the actual situation of the environment; and produces objective, scientific, and rational index weights. Therefore, most scholars choose the AHP method when determining the weights of various indicators in a system.

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8.2.4 Calculation of Indicator Weights The weights of the evaluation indicators of the exit audit of natural resource assets differ owing to various influencing factors, and the indicator weights are dynamic to a certain extent; thus, a standardized workflow is required. The general workflow for determining the weight and the specific content are shown in Fig. 8.1. (1) Build a hierarchical structure According to the constituent elements of the index system in Sect. 8.2.2, a hierarchical structure is constructed, where the exit audit of natural resource assets for leading cadres is the ultimate goal (the target layer). Then, the structure is divided into three aspects: policy, capital, and resources (the standard layer). Each criterion is Fig. 8.1 Workflow for determining indicator weights

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subdivided into various detailed indicators (the indicator layer). The resources are divided into two layers of indicators, as shown in Fig. 8.2. (2) Construct and calculate the judgment matrix and carry out a consistency check To quantify the importance of the indicators, the 1–9 scale method is usually used. To ensure the feasibility of scaling, it is necessary to construct a judgment matrix for consistency detection, see Tables 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9 and 8.10. If the test coefficient is less than 0.1, the consistency of the expert judgment thinking of the judgment matrix is good, with a scientific and reasonable weight; if the test coefficient is greater than 0.1, the judgment matrix needs to be adjusted until the consistency test −n , where λmax represents the maximum eigenvalue, which can is passed. C I = λmax n−1 be calculated by YAAHP software, and n represents the order. The average random consistency index (RI) has a fixed reference value, as shown in Table 8.1. (a) Target layer judgment matrix Calculated by relevant software, the maximum eigenvalue λmax = 3.0055 and CI = 0.0028. Thus, the test coefficient CR = 0.0053 < 0.1, and the consistency test is passed. (b) Governance policy status judgment matrix Calculated by relevant software, the maximum eigenvalue λmax = 4.1179 and CI = 0.0393. Thus, the test coefficient CR = 0.0442 < 0.1, passing the consistency test. (c) Current situation of governance funds judgment matrix Calculated by relevant software, the maximum eigenvalue λmax = 3.0858 and CI = 0.0429. Thus, the test coefficient CR = 0.0825 < 0.1, passing the consistency test. (d) Status of governance resources judgment matrix Calculated by relevant software, the maximum eigenvalue λmax = 5.3792 and CI = 0.0948. Thus, the test coefficient CR = 0.0846 < 0.1, and the consistency test is passed. 1. Atmospheric resource judgment matrix Calculated by relevant software, the maximum eigenvalue λmax = 5.2219 and CI = 0.0555. Thus, the test coefficient CR = 0.0495 < 0.1, passing the consistency test. 2. Water resource judgment matrix Calculated by relevant software, the maximum eigenvalue λmax = 5.1547 and CI = 0.0389. Thus, the test coefficient CR = 0.0345 < 0.1, passing the consistency test. 3. Land resource judgment matrix Calculated by relevant software, the maximum eigenvalue λmax = 3.1083 and CI = 0.0541. Thus, the test coefficient CR = 0.0176 < 0.1, passing the consistency test.

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Fig. 8.2 Evaluation system hierarchy diagram

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Table 8.1 Average stochastic consistency metrics N

1

2

3

4

5

6

7

8

9

RI

0

0

0.52

0.89

1.12

1.24

1.36

1.41

1.46

Table 8.2 Target layer judgment matrix Governance policy status

Current situation of governance funds

Status of governance resources

Governance policy status

1

1

1/5

Current situation of governance funds

1

1

1/4

Status of governance resources

5

4

1

Table 8.3 Governance policy status judgment matrix Soundness of policy planning

Public awareness of ecology environmental governance satisfaction

Policy planning compliance rate

Leading cadres’ environmental training participation rate

Soundness of policy planning

1

4

1

2

Public awareness of ecology Environmental governance satisfaction

1/4

1

1/4

1/3

Policy planning compliance rate

1

4

1

4

Leading cadres’ environmental training participation rate

1/2

3

1/4

1

4. Forest resource judgment matrix Calculated by relevant software, the maximum eigenvalue λmax = 3.0092 and CI = 0.0046. Thus, the test coefficient CR = 0.0088 < 0.1, passing the consistency test. 5. Mineral resource judgment matrix Calculated by relevant software, the maximum eigenvalue λmax = 3.0536 and CI = 0.0268. Thus, the test coefficient CR = 0.0516 < 0.1, passing the consistency test. (3) Calculate the judgment matrix to determine the weight of each indicator

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Table 8.4 Current situation of governance funds judgment matrix Soundness of policy planning

Public satisfaction with ecological environment governance

Policy plan compliance rate

Participation rate of leading cadres in environmental protection training

1

4

1

2

Public satisfaction 1/4 with ecological environment governance

1

1/4

1/3

Policy plan compliance rate

4

1

4

3

1/4

1

Soundness of policy planning

1

Participation rate 1/2 of leading cadres in environmental protection training

Table 8.5 Status of governance resources judgment matrix Atmospheric resources

Water resources

Land resources

Natural resources

Mineral resources

Atmospheric resources

1

3

5

6

7

Water resources

1/3

1

4

5

6

Land resources

1/5

1/4

1

3

5

Natural resources

1/6

1/5

1/3

1

3

Mineral resources

1/7

1/6

1/5

1/3

1

Individual weights obtained through YAAHP software, as shown in Tables 8.11, 8.12, 8.13, 8.14, 8.15, 8.16, 8.17, 8.18 and 8.19. (a) Target layer indicator weights (b) Weight of each indicator of the status quo of governance policies (c) Index weight of the current situation of governance funds (d) Index weight of current situation of governance resources 1. Various index weights of atmospheric resources 2. Weight of water resource index

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Table 8.6 Atmospheric resource judgment matrix Waste gas treatment facilities

Total industrial exhaust emissions

Mean respirable particle concentration

Air quality compliance rate

Annual average of sulfur dioxide concentration

Waste gas treatment facilities

1

3

1/2

1/6

1/4

Total industrial exhaust emissions

1/3

1

1/4

1/5

1/6

Mean respirable 2 particle concentration

4

1

1/4

1/3

Air quality 6 compliance rate

5

4

1

2

Annual average 4 of sulfur dioxide concentration

6

3

1/2

1

Table 8.7 Water resource judgment matrix Sewage treatment rate

Total water resources

Ratio of industrial wastewater discharge to the number of enterprises

Sewage Drinking treatment plant water quality capacity compliance rate

Sewage treatment rate

1

5

2

3

1/4

Total water resources

1/5

1

1/3

1/2

1/7

Ratio of industrial wastewater discharge to the number of enterprises

1/2

3

1

2

1/3

Sewage 1/3 treatment plant capacity

2

1/2

1

1/4

Drinking water 4 quality compliance rate

7

3

4

1

8.2 Construction of the Evaluation Index System for the Exit Audits …

209

Table 8.8 Land resource judgment matrix Per capita arable land Cultivated land use Agricultural non-point source pollution per unit of arable land Per capita arable land

1

3

1/2

Cultivated land use

1/3

1

1/4

4

1

Agricultural non-point 2 source pollution per unit of arable land Table 8.9 Forest resource judgment matrix

Forestry land area Green space rate in built-up Forest cover rate area Forestry land area

2

3

Green space rate in built-up 1/2 area

1

1

2

Forest cover rate

1/2

1

1/3

Table 8.10 Mineral resource judgment matrix Energy consumption per unit of GDP

Comprehensive energy consumption

Funds invested in environmental governance this year

Energy consumption per unit of GDP

1

4

2

Comprehensive energy consumption

1/4

1

1/4

Funds invested in environmental governance this year

1/2

4

1

Table 8.11 Weights of indicators in the target layer Target level indicator

Governance policy status

Current situation of governance funds

Status of governance resources

Total

Weight

0.1488

0.1603

0.6908

1.0000

Table 8.12 Weight of each indicator of the status quo of governance policies Governance policy indicators

Soundness of policy planning

Public satisfaction with ecological environment governance

Policy planning compliance rate

Participation rate Total of leading cadres in environmental protection training

Weight

0.3395

0.0783

0.4189

0.1633

1.0000

210

8 Implementation Path of Natural Resource Regulation

Table 8.13 Weight of current indicators of governance funds Measure for governance funds

Spending on energy conservation and environmental protection in total government expenditure

Completion rate of budget expenditure

Compliance rate of fund use

Total

Weight

0.6267

0.2797

0.0936

1.0000

Table 8.14 Weight of current indicators of governance resources Control resource indicator

Atmospheric resources

Water resources

Land resources

Timber resource

Mineral resources

Total

Weight

0.4884

0.2806

0.1268

0.0667

0.0375

1.0000

Table 8.15 Weight of atmospheric resource indicators Air resources index

Waste gas treatment facilities

Total industrial exhaust emissions

Average value of inhalable particle concentrations

Air quality compliance rate

Annual average value of sulfur dioxide concentration

Total

Weight

0.0841

0.0471

0.1338

0.4412

0.2939

1.0000

Table 8.16 Weight of various water resource indicators Water resource metric

Sewage treatment rate

Gross amount of water resources

Ratio of industrial wastewater discharge and number of enterprises

Treatment capacity of sewage treatment plant

Drinking water quality meets the standard rate

Total

Weight

0.2242

0.0501

0.1455

0.0892

0.4911

1.0000

Table 8.17 Weight of each index of land resources Land resource index

Per capita arable land area

Utilization of cultivated land

Agricultural non-point source pollution per unit of cultivated land area

Total

Weight

0.3196

0.1220

0.5584

1.0000

8.3 Application of the Audit Evaluation Index System of Natural Resource …

211

Table 8.18 Weight of various forest resource indicators Forest resource indicators

Area of forestry land

Green rate of built-up area

Land area covered with trees

Total

Weight

0.5396

0.2970

0.1634

1.0000

Table 8.19 Weight of various mineral resource indicators Mineral resource index

Energy consumption per unit of GDP

Comprehensive energy consumption

Funds invested in environmental governance this year

Total

Weight

0.5469

0.1085

0.3445

1.0000

3. Weight of land resource index 4. Weights of forest resource index 5. Weight of mineral resource index Based on the above calculation results, the weight of the exit audit evaluation system of natural resource assets for leading cadres is finally obtained, as shown in Table 8.20.

8.3 Application of the Audit Evaluation Index System of Natural Resource Assets in Xi’an City 8.3.1 Current Situation of Natural Resources in Xi’an City and Exit Audits of Natural Resource Assets (1) Introduction of natural resources in Xi’an Xi’an is located in the northwest of the Chinese mainland, and is characterized by poor air quality, especially in winter, severe haze, poor water resources, serious pollution, annual rainfall, low ground and groundwater reserves, as well as land desertification, drought, degradation from mineral resource development, and serious damage to forest vegetation. To solve the abovementioned problems, Xi’an city has issued a series of regulations in recent years, and the effects have been noteworthy. (2) Exit audits of natural resource assets for leading cadres in Xi’an Exit audits of natural resource assets for leading cadres in Xi’an are carried out from top to the bottom in accordance with the national planning requirements. The audit starts with the main municipal leaders and has gradually expanded to the grass-roots level, in order to achieve the full coverage of exit audits of natural resources for

0.1603

Current situation of governance funds

Status of governance 0.6908 resources

0.1488

Governance policy Status

Target

Weight

Criterion layer

Target layer

Weighs 0.4884

Atmospheric resources

0.0841 0.0471 0.1338

0.4412 0.2939

Total industrial exhaust emissions Mean respirable particle concentration Air quality compliance rate Annual average of sulfur dioxide concentration

/

Waste gas treatment facilities

Secondary indicators

0.0936

First-level indicator

0.2797

Fund use compliance rate

0.1633

Participation rate of leading cadres in environmental protection training

Budget expenditure completion rate

0.4189

Policy plan compliance rate

0.6267

0.0783

Public satisfaction with ecological environment governance

Ratio of energy conservation and environmental protection expenditure to total fiscal expenditure

0.3395

Weight

Soundness of policy planning

Indicator layer

Table 8.20 Weight table of the exit audit and evaluation system of natural resource assets

1.0000

/

1.0000

1.0000

Weighted subtotal

0.0991

0.1489

0.0451

0.0159

0.0284

/

0.0150

0.0448

0.1005

0.0243

0.0623

0.0116

0.0505

Total weight

(continued)

1.0000

Total weight

212 8 Implementation Path of Natural Resource Regulation

Target layer

Criterion layer

Table 8.20 (continued)

Weight

Drinking water 0.4911 quality compliance rate 0.1268

0.0667

Land resources

Natural resources

0.1634

0.0075

0.0249

Forest cover rate

1.0000

0.0137

0.5396

Green space rate in 0.2970 built-up area

Forestry land area

0.0489

0.5584

Agricultural non-point source pollution per unit of arable land

0.0280 0.0107

1.0000

0.0282

Cultivated land use 0.1220

0.3196

0.0952

0.0892

Sewage treatment plant capacity

Per capita arable land

0.0173

0.1455

Ratio of industrial wastewater discharge to the number of enterprises

0.0097

0.0435

0.0501

Total weight

Total water resources

1.0000

0.2242

Water resources

Weighted subtotal

Weight Sewage treatment rate

0.2806

Indicator layer

(continued)

Total weight

8.3 Application of the Audit Evaluation Index System of Natural Resource … 213

Target layer

Criterion layer

Table 8.20 (continued)

Weight

Weight 0.5469

0.1085

0.3445

Energy consumption per unit of GDP Comprehensive energy consumption Funds invested in environmental governance this year

Mineral resources

0.0375

Indicator layer 1.0000

Weighted subtotal

0.0089

0.0028

0.0142

Total weight

Total weight

214 8 Implementation Path of Natural Resource Regulation

8.3 Application of the Audit Evaluation Index System of Natural Resource …

215

leading cadres. The rich financial audit experience of grassroots auditors has been very helpful in the development of this work, but many problems and difficulties remain. At present, the focus of the exit audit of natural resources for leading cadres is on policy and capital. For example, the audit reviews the implementation of relevant environmental laws and regulations, the use of environmental management funds, the time and place of capital allocation, etc. For the specific management effect of natural resource assets, the audit evaluation index is less utilized. This is mainly for the following reasons. First, natural resource audit data are from different departments, making it difficult to collect the relevant data. Sometimes data collected for the same project are inconsistent. Second, most existing auditors have professional financial and accounting backgrounds, but lack the relevant expertise and expert judgment needed to assess natural resources; specifically, owing to the imperfect evaluation system and incomplete evaluation indicators, it is impossible to know where to investigate natural resources. Therefore, there is an urgent need to improve the professional abilities of auditors to deal with realities on the ground, establish a natural resource evaluation system based on environmental governance, and realize the efficient management of natural resources.

8.3.2 Application of Exit Audit and Evaluation Index System of Natural Resource Assets in Xi’an City (1) Data collection By applying the exit audit evaluation index system constructed in the previous section to Xi’an, the practical application of the evaluation index system is verified and the application results of the evaluation system are summarized and summarized. (a) Determine the scoring criteria Because the former mayor of Xi’an served from 2015 to 2017, this article uses 2015 as the benchmark with 80 points. The rating is set as five levels: 90–100 is excellent, 80–89 is good, 70–79 is moderate, 60–69 is qualified, and < 60 is unqualified. The index data from 2015 to 2018 are compared with the previous year to obtain the index score, multiplied by the corresponding weight, and then summed to obtain the final score of the audit evaluation. 1. Qualitative index evaluation method Qualitative indicators refer to audit content that is difficult to quantify. Because these indicators cannot be quantified, they cannot be calculated and analyzed with intuitive data. Generally, they are scored through literature reviews, expert scoring, etc., and the average value is calculated after removing the highest and lowest scores.

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8 Implementation Path of Natural Resource Regulation

2. Quantitative index evaluation method For quantitative indicators, the corresponding difference between the value of each indicator in each year and the value of each indicator in the previous year is calculated, and then the difference obtained by subtraction is divided by the value in the previous year to obtain the ratio of the increase or decrease of the indicator, which is positive or negative according to the ratio. Negative points are added or subtracted. The increase of the positive index and the decrease of the inverse index are set as positive values, which adds points to the index. If an increase of 2% is added, 1 point is added, with a maximum of 100 points. For negative values, points are subtracted from the index. If there is a decrease of 1%, 1 point is subtracted, with a minimum of 0 points. If the ratio is 0, then the 80 points remain unchanged. (b) Data of Xi’an city The data of Xi’an city from 2015 to 2018 are shown in Table 8.21. (2) Score After scoring the index, multiplying the weight coefficient, and summing, the audit evaluation of natural resources for leading cadres is obtained. The scoring results of the status of governance policies are shown in Table 8.22. The scoring results of the status quo of governance funds are shown in Table 8.23. The scoring results for the current status of governance resources are shown in Table 8.24. The exit audit score results of natural resource assets of the leading cadres in Xi’an city are shown in Table 8.25.

8.3.3 Exit Audit and Evaluation Conclusion of Natural Resource Assets in xi’an City Evaluating the various indicators of natural resource assets from 2015 to 2017, the final evaluation score is 80.3 points. The evaluation grade is good, indicating that natural resource governance during the tenures of leading cadres was good. Among the three indicators at the standard level, the current status of governance funds has the highest score of 88.3 points. This result indicates that the leading cadres focused on capital investment in natural ecology during their tenure, with good results achieved. The current status of governance policies scored the second highest, 80.1 points. Meanwhile, the score of governance resource status is only 78.5 points, which is not a good level. From the results, it can be seen that Xi’an city needs to focus on strengthening the management of resources. Among the five indicators of the current situation of governance resources, mineral resources scored highest at 88.6 points, followed by water resources at 83.8 points,

Governance policy status

Target

Status of governance resources

Current situation of governance funds

Standard layer

Target layer

Table 8.21 Data of Xi’an city

Water resources

% 100 million cubic meters

Sewage treatment rate Total water resources

Annual average of sulfur Microgram/cubic dioxide concentration meter

351.64

91.85

24

68.8

%

Air quality compliance rate

1108.48 125

100 million cubic meters

Total industrial exhaust emissions

801

/

97.4

99.3

3.78

100

100

2015

Mean respirable particle Microgram/cubic concentration meter

cover

Waste gas treatment facilities

Atmospheric resources

/

Secondary indicators

%

Level 1 index

%

Fund use compliance rate

%

Participation rate of leading cadres in environmental protection training

Budget expenditure completion rate

%

Policy plan compliance rate

%

/

Public satisfaction with ecological environment governance

Ratio of energy conservation and environmental protection expenditure to total fiscal expenditure

/

Unit

Soundness of policy planning

Indicator layer

333.43

91.93

20

52.6

137

1034.46

834

/

98.1

99.4

1.97

100

100

2016

271.48

93.10

19

49.3

130

1444.6

1048

/

98.9

98.9

4.13

100

100

2017

(continued)

449.13

93.85

15

51.5

122

1040.4

1225

/

99.5

99.7

4.64

100

100

2018

8.3 Application of the Audit Evaluation Index System of Natural Resource … 217

Target layer

Standard layer

Table 8.21 (continued)

Mineral resources

Natural resources

Land resources

Indicator layer

/

10,000 yuan

Funds invested in environmental governance this year

1157.3

487.94

10,000 tons of standard coal

41.42

Comprehensive energy consumption

%

Forest cover rate

34.03

480.74

0.470

%

Green space rate in built-up area

77.12

4262.1

0.410

100

200.28

7.21

2015

Energy consumption per Tons of standard coal/ unit of GDP 10,000 yuan

1,000 hectares

Forestry land area

Agricultural non-point kg/acre source pollution per unit of arable land

Acre/person

%

Drinking water quality compliance rate Cultivated land use

10,000 cubic meters/ day

Sewage treatment plant capacity

Per capita arable land

/

Unit Ratio of industrial wastewater discharge to the number of enterprises

5400

495.28

0.394

43.06

34.95

480.59

71.19

4284.2

0.393

99.7

232.7

7.05

2016

260,995

698.92

0.384

43.06

36.78

480.54

69.47

4276.9

0.389

98.1

242.8

4.90

2017

441,289

674.69

0.370

43.06

35.23

508.39

70.06

4286.3

0.367

99.7

274.0

4.97

2018

218 8 Implementation Path of Natural Resource Regulation

8.3 Application of the Audit Evaluation Index System of Natural Resource …

219

Table 8.22 Evaluation results of the current situation of governance policies in Xi’an City Metric Governance policy status

Grade

Weight points

Soundness of policy planning 0.3395

Weight

80.6

80.1

Public satisfaction with ecological environment governance

0.0783

78.3

Policy plan compliance rate

0.4189

80.0

Participation rate of leading cadres in environmental protection training

0.1633

80.0

Table 8.23 Evaluation results of the current situation of governance funds in Xi’an city Metric

Weight

Grade

Weight points

0.6267

93.1

88.3

Budget expenditure completion rate

0.2797

80.0

Fund use compliance rate

0.0936

81.1

Current situation of Ratio of energy conservation and governance funds environmental protection expenditure to total fiscal expenditure

Table 8.24 Evaluation results of the current situation of governance resources in Xi’an city Current situation of governance resources

Metric

Weight

Grade

Weight points

Atmospheric resources

0.4884

74.2

78.5

Water resources

0.2806

83.8

Land resources

0.1268

78.9

Natural resources

0.0667

81.8

Mineral resources

0.0375

88.6

forest resources at 81.8 points, land resources at 81.8 points too, and atmospheric resources at only 74.2 points. It can be seen that Xi’an needs to strengthen the supervision and protection of atmospheric resources in particular. The specific indicators are as follows: First, regarding mineral resources, Xi’an has invested heavily in environmental governance, but still faces some problems. Although the energy consumption per unit of GDP has been declining every year, with a final score is 91.2 points, the comprehensive energy consumption is only 39.1 points, although it has been improved significantly every year. The latter indicator greatly reduced the score of mineral resources. In terms of water resources, the treatment capacity of sewage plants is very good, and the discharge of industrial wastewater is within a reasonable range compared

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8 Implementation Path of Natural Resource Regulation

Table 8.25 Exit audit score results of natural resources and assets for leading cadres in Xi’an city Target layer

Standard layer Indicator layer

Total weight

Grade

Total points

Target

Governance policy status

Soundness of policy planning

0.0505

80.6

80.3

Public satisfaction with ecological environment governance

0.0116

78.3

Policy plan compliance rate

0.0623

80.0

Participation rate of leading cadres in environmental protection training

0.0243

80.0

Ratio of energy conservation and environmental protection expenditure to total fiscal expenditure

0.1005

93.1

Budget expenditure completion rate 0.0448

80.0

Fund use compliance rate

0.0150

81.1

Level 1 index

Secondary indicators

/

Atmospheric resources

Waste gas treatment facilities

0.0284

Current situation of governance funds

Status of governance resources

Water resources

100.0

Total industrial 0.0159 exhaust emissions

65.2

Mean respirable particle concentration

0.0451

76.0

Air quality compliance rate

0.1489

52.4

Annual average of 0.0991 sulfur dioxide concentration

100

Sewage treatment 0.0435 rate

81.1

Total water resources

0.0097

89.0

Ratio of industrial 0.0282 wastewater discharge to the number of enterprises

94.9

Sewage treatment 0.0173 plant capacity

96.7

Drinking water quality compliance rate

78.9

0.0952

(continued)

8.3 Application of the Audit Evaluation Index System of Natural Resource …

221

Table 8.25 (continued) Target layer

Standard layer Indicator layer

Total weight

Grade

0.0280

69.2

Cultivated land use

0.0107

80.2

Agricultural non-point source pollution per unit of arable land

0.0489

84.2

Forestry land area 0.0249

82.9

Green space rate in built-up area

0.0137

79.8

Forest cover rate

0.0075

82.0

Energy consumption per unit of GDP

0.0142

91.2

Comprehensive energy consumption

0.0028

39.1

Funds invested in environmental governance this year

0.0089

100.0

Land resources Per capita arable land

Natural resources

Mineral resources

Total points

with the number of enterprises. This shows that Xi’an should continue to strengthen the protection of water quality and the treatment of sewage. For forest resources, the overall situation is acceptable, but there is a lack of green space in the built-up area. Thus, Xi’an needs to continue strengthening the protection of forest resources. For land resources, the per capita arable land area is very low at only 69.2 points. Even though the utilization of arable land in Xi’an is good, the per capita arable land area is too small. Thus, Xi’an needs to pay more attention to this issue. Finally, atmospheric resources scored lowest among the five resources. Even though waste gas treatment facilities in Xi’an continue to improve every year, they still treat the symptoms rather than the root causes. The exhaust fumes emissions and air quality in Xi’an do not score well. The annual increase in exhaust fumes treatment facilities in Xi’an cannot cope with the increase in the total annual industrial exhaust emissions. Thus, Xi’an city needs to reduce its number of factories. The above analysis shows that the indicator system can clearly reflect the various indicators of natural resource assets during the tenure of leading cadres, and the indicator system can be judged as feasible. This could provide direction for leaders to carry out governance work in the future, so as to clarify the focus of work and greatly improve efficiency.

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8.4 Summary Since the audit of natural resource assets for leading cadres upon leaving office was proposed, a corresponding audit system has been established and continuously developed to become more standardized and institutionalized. The system mainly comprises three stages: theoretical exploration; individual pilots; and comprehensive deployment. It is extremely important to further improve the evaluation system. This chapter first introduces the connotation, theories, and techniques of the audit system of natural resource assets for leading cadres upon their departure. Then, this chapter introduces the construction principles and various components of the index system, and introduces the methods of determining the various index weights. Finally, this chapter selects the AHP method and calculates the weights of the relevant indicators. The calculated index system is applied to the actual situation of Xi’an, and the example verifies the feasibility of the index system. At the same time, this chapter analyzes existing problems with Xi’an’s environmental governance and identifies areas for future management focus. Through the continuous accumulation and innovation of audit practice, the exit audit of natural resource assets for leading cadres has developed a series of guarantee mechanisms adapted to China’s national conditions, and used the evaluation index system as the evaluation standard. This has enabled audit work to be carried out in an orderly manner. Nevertheless, some problems remain, and there is room improvement, as explained in the following points. (1) Improving the corresponding rules and regulations The Chinese government should learn from both theory and practical experience in the audit pilot; timeously guide and standardize the relevant systems of China’s audit of natural resources that are out of service; perfect specific arrangements in the system; and clarify departmental rules and regulations for the out-of-service audit of resources and assets. Second, to improve the legalization of audit work and fill in the loopholes in laws and regulations, it is necessary not only to plan a series of management and audit results application methods, but also to formulate and optimize the work criteria of exit audits one by one. (2) Speeding up the natural resource sharing database Although the establishment of the text data database was emphasized in the early stage of the establishment of the exit audits of natural resource assets, subsequent data search work revealed that the data sharing database needs further improvement. Because natural resources not only change from time to time, but may also change abnormally, the characteristics of natural resource assets are complex and diverse. Only by putting the establishment of the natural resource sharing database on the agenda can the data management of natural resources and understanding of its changes become more accurate and effective. With the support of information technology, the pre-supervision of auditing in the governance resource project can be gradually transformed into pre-intervention and in-process tracking, so as

References

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to solve the problems of cumbersome and complicated data collection in the audit process. Doing so would strengthen the construction capacity of the audit mode in the decision-making, establishment, and governance of the project. (3) Strengthening the training of auditors in natural resource knowledge Exit audits of natural resource assets have a strong internal relationship with environmental protection and ecological management, and thus, the professional requirements for audits are very high. At present, most auditors are skilled in financial auditing, but lack knowledge and professional skills related to resources and the environment. Existing personnel do not have sufficient knowledge and skills to make professional judgments on the exit audits of natural resource assets for leading cadres, and it is difficult to carry out the audits effectively. Therefore, it is necessary to strengthen the professional training of natural resource asset auditors and to improve the overall quality of auditors. If skilled professionals familiar with the ecological environment and resource management were introduced into audit teams, and the professional knowledge structure of the team were improved, audit risks and audit costs could be reduced. (4) Optimizing the index system continuously The rationality of the audit evaluation system directly affects the cost and efficiency of the audit. The current audit rating index system is based on existing theory and will continue to evolve with the continuous deepening of the governance of natural resources and the environment. The national ecological policy is also changing, and the laws and regulations are continuously being updated. Thus, the audit evaluation index system should be continuously optimized. It will be necessary to revise indicators in a timely manner to ensure that the evaluation system conforms to the national development plan and local development needs.

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Chapter 9

Legal Safeguards for the Natural Resource Regulatory System

This chapter analyzes the regulatory system from the legal perspective, specifically from the three aspects of natural resource regulation, natural resource assets management, and natural resource taxation system, in light of the current situation and management system of natural resources in China. We propose corresponding solutions to problems identified based on China’s current situation and advanced international management experience. At the same time, a series of laws and regulations promulgated by the Chinese government are used to analyze the relevant contents. Finally, we propose how to improve the natural resources regulatory system from the legal perspective, so as to provide theoretical support for the improvement and reform of the natural resource regulatory system.

9.1 Natural Resource Regulation and Law The Chinese government clearly stipulates those natural resources, as an indispensable and important part of China’s economic development, must comprehensively promote the management of natural resources and strengthen the supervision of natural resources. In China, supervisors of natural resources shall inspect the punishment of his subordinates for illegal acts related to natural resources and whether the punishment is reasonable as the key supervision content. In addition, emphasis is placed on strengthening the asset management and supervision of natural resources and promoting the construction of natural resource management capacity and the management system. Therefore, there is an urgent need to promote the work of natural resource supervision and improve the system of natural resource supervision in an orderly manner.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 T. Ding and M. Song, Natural Resource Regulation in China, Contributions to Public Administration and Public Policy, https://doi.org/10.1007/978-981-99-5593-0_9

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9.1.1 Legal Problems in the Regulation of Natural Resources Natural resources supervision has the goal of protecting the public interests of society, in the face of various threats to natural resources, [1] based on administrative power, relevant laws, regulations, and rules and regulations. Supervision uses economic and administrative means, among others, to directly organize, lead, plan, coordinate and monitor the development, utilization, restoration and protection of natural resources, as well as the operation of various natural resources ownership and use rights Supervision At present, the Chinese government has established the Ministry of Natural Resources to coordinate the management of natural resources for the protection and rational use of natural resources. In addition, the Ministry of Natural Resources has set up internal agencies and dispatched agencies, which act according to the directives of the ministry, thereby ensuring the rational development and utilization of natural resources in China. Since the establishment of the People’s Republic of China, the management pattern of the Chinese government’s natural resource regulation has generally shifted from widely decentralized to centralized. During this period, the natural resource regulatory system has been gradually clarified with the establishment and revision of various natural resource laws; national and local regulatory powers have been clarified, and management powers have been gradually institutionalized. However, in China’s natural resource regulatory system, the government is dominant and producers play only a passive role. This regulatory system has been an extremely factor in the process of China’s economic transformation. However, along with the transformation of the socio-economic and governance environment, the system has started to reveal various problems. (1) Conflicting government functions China’s development over the past 40 years is, to some extent, a process of separating government from society and that of government from enterprises. A system in which society operates autonomously, producers are responsible for their own profits and losses. The basic logic of the government as an external regulator gradually takes shape. However, given the deep-rooted influence of the original system, this separation was not accomplished overnight, but rather through ongoing exploration and reform. In contemporary China, the functions of economic management and environmental regulation fall simultaneously on the shoulders of the Chinese government. Historically, from the beginning of the People’s Republic of China to the 1980s, and from the 1980s to the present, China has primarily elevated the economy to the center of development. This historical factor means that Chinese governments at all levels have maintained the management function of economic development as their main function. Correspond to it, governments at all levels have always made GDP the focus of their assessment mechanisms for lower-level governments and officials. This has resulted in local officials ignoring environmental protection for the sake of their own promotion and prioritizing economic development and GDP growth, disregarding the massive depletion of natural resources and the serious

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consequences of environmental damage. Although the Chinese government’s latest revision of the laws on natural resources requires the rational development and use of natural resources, improves and innovates the guiding philosophy of economic development, and no longer regards GDP as the key measure, it does not fundamentally solve the problem. As shown in Fig. 9.1, China’s total energy consumption has been increasing. GDP growth remains the main channel through which higher governments measure the performance of lower governments and the promotion of officials. An in-depth study of China’s current socio-economic and governance environment reveals that the main reason for this situation is the conflicting functions of the government. Of course, natural resource depletion is not an inevitable outcome of the relationship between economic growth and environmental damage, and natural resources can be used to drive economic growth. For example, water, land, and other natural resources form the basis for establishing establish scenic viewing areas to promote economic development [2]. It is possible to achieve common development of the economy and the environment through the use of natural resources, so as to achieve a win–win situation. (2) Management fragmentation The Chinese government’s environmental regulation has always long producers the main target of regulation and insisted on the environmental protection guideline of the polluter pays: whoever damages the environment should restore it and whoever pollutes should rehabilitate it. Logically, there is nothing wrong with this guideline, as the government keeps a close watch on the producers’ activities and regulates all aspects of production before, during and after production, with penalties for unreasonable use of natural resources and environmental pollution at any point. However, 500,000 487,448

Total energy consumption

490,000 480,000

471,925

470,000 455,827

460,000 450,000 440,000

441,492 434,113

430,000 420,000 410,000 400,000 2015

2016

2017

2018

2019

Time

Fig. 9.1 Total energy consumption (coal consumption calculation method for power generation) (Unit: million tons of standard coal)

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there are specific barriers to implementation of this code. The Chinese government has established the Ministry of Natural Resources and its agencies as the main regulatory bodies, but are they able to regulate all natural resource participants in a comprehensive manner? At present, natural resource regulatory authorities at all levels are generally short of staff and funds, and thus are not able to supervise the full range of producers’ activities. There are many different types of industries and a clear division of labor between industries in China, and regulators are not familiar with all these industries or the division of labor between industries. In addition, the Chinese government stipulates that different regulatory bodies are responsible for the regulation of different natural resources, which may lead to unclear authority and responsibility among regulatory departments, which in turn shirk their responsibilities, leading to low efficiency of regulatory work and greatly reducing the effectiveness of natural resources utilization. (3) Target differentiation China is a vast country with many kinds of natural resources, and a certain spatial carrier often has different types of natural resources. However, owing to their own interests and the lack of synergy and cooperation between the upper and lower levels, each government and each department has inconsistent planning for different types of natural resources. This may result in different governments and departments setting different target constraints, planning guidance and control objectives to deal with natural resource issues. This leads to regulatory loopholes and detracts from the effectiveness of natural resource regulation. In order to make large profits, developers take advantage of these loopholes to develop and utilize the natural resources unreasonably, which not only causes inefficient use of natural resources or even consumption without reason, but also prevents natural resources from being used to their fullest potential. Table 9.1 lists the specific classification. (4) Spatial superimposition Table 9.1 Specific classification of target differentiation Reason

Problems

Results

Owing to their own interests and the lack of synergy and cooperation between the upper and lower levels

➀ Each government and each department has inconsistent planning for different types of natural resources; ➁ Different governments and departments setting different target constraints, planning guidance and control objectives to deal with natural resource issues

➀ Leading to regulatory loopholes and detracts from the effectiveness of natural resource regulation; ➁ Causing inefficient use of natural resources or even consumption without reason, but also preventing natural resources from being used to their fullest potential

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Overlap of natural resources, such as land and sea, agriculture and livestock, and forests and wetlands on riverbanks, is common in China. The lack of a good delineation of geospatial boundaries and management limits makes it easy for the management of natural resources to overlap for gaps in regulation to occur. To obtain resources that can bring economic benefits such as nature reserves and scenic spots, localities give up natural resources that are not developed or cannot bring economic benefits at present. This leads to the problem of multiple licenses for nature reserves and scenic spots while other natural resources are not reasonably utilized and developed. None of this is conducive to ecological protection and integrated management of natural resources. (5) Dislocation of information The large number of government departments in China and the problem of coordination between regions have led to diversified and non-uniform spatial classification standards for survey and registration and planning, resulting in incorrect basic data, conflicting planning objectives, and discrepancies in information. It is difficult to form a unified plan and objective among departments, with each department sticking to its own way. This is not conducive to reasonable planning and unified supervision and management of natural resources, resulting in a great difference between the quantity and quality of natural resources available and the actual use, which may lead to some producers taking advantage of the difference for their own profit, and thereby leading unreasonable utilization of natural resources.

9.1.2 Improvement of Natural Resources Regulatory System Under the Legal Environment The Chinese government requires adherence to the law, and promotes the rule of law through using laws and regulations as the benchmark for the whole country. The reform and improvement of the natural resources regulatory system should be carried out under this legal framework. The Chinese government emphasizes the need to clarify the objects of natural resource regulation and the management boundaries of natural resources regulatory authorities, and requires improvement of the total natural resources management and comprehensive conservation system. Therefore, it is necessary to improve China’s natural resources regulatory system while adhering to the premise that the law must be adhered to. Based on this, the natural resource regulatory system needs to be improved from the following aspects. (1) The implementation of multi-regulation, universal participation in management In the regulatory systems of Western countries, for historical reasons and economic development, government regulation has moved toward diversified regulation. For example, since the United States developed from free competition to monopoly stage, oligopolistic enterprises have expanded wildly, and the public interests of society have been seriously damaged. At the 1960s, the public strongly appealed to the

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government to regulate and control large enterprises, and the US style “commandand-control regulation” emerged. In Western countries, along with the rapid development of the economy and the awakening of people’s awareness of their rights, problems in other areas of society cropped up frequently. To solve these problems, various regulatory agencies have also sprang up, and Western countries have changed the direction of regulating the industry from economic to social in order to achieve better regulatory effects. Although this regulatory model has achieved some results, it also reveals the drawbacks of having too many laws and regulations, and of over-regulation. European countries have borrowed this regulatory model from the United States, but improved it, discarded the bad parts, and established a hybrid model in which both the government and non-government players can regulate. The Chinese government’s regulatory system has many similarities with the United States “command-and-control regulation”. The biggest similarity is that the power is very centralized; specifically, the power to legislate, regulate and punish all reside in one place, and there is no decentralized system in which one department is responsible for only one power. The Chinese government usually holds both administrative and regulatory rights, leading to unclear authority and responsibility as well as conflicting government management functions. In the process of regulatory practice in China, there are often violations of the law by regulatory bodies. Thus, the Chinese government urgently needs diversified regulation to address the problems in the regulatory system. Since 2015, the Chinese government has been advocating that it is not only necessary to achieve a shared ecological environment for all, but it also necessary for everyone to participate in the governance of the environment. For the purpose of universal governance and sharing, the government needs to replace administrative compulsory regulation with encouraging guiding regulation; this is the only way to facilitate participants’ active and voluntary participation in regulatory activities. Therefore, to improve the natural resource regulatory system under the legal environment, China should diversify the regulatory subjects, target common governance by all people, and promote the diversification of the natural resource regulatory system. (2) Changing the object of supervision and optimizing owner of all natural resources assets responsibilities The regulation of natural resources is very different from that of other fields. When natural resources are damaged and then restored, it always consumes a lot of time and economic costs. Therefore, the focus of natural resource regulation should be ex ante and ex post. However, this would increase the difficulty of natural resource regulation and, as mentioned Sect. 9.1 of this chapter earlier, relying on the government alone to regulate all producers in real time is impossible for any country or government. Therefore, from the perspective of legalization, natural resource regulation should start from regulating the elements of resource rights and interests, [3] which in turn regulates the behavior of natural resource participants. Rivers often span multiple regions, and thus, is it better to regulate the enterprises, units and individuals in the region through which the river passes, or to regulate the pollution of the river? Previously, enterprises were regulated, using a combination of hightech equipment and advanced technology to closely monitor whether the emissions

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and discharges of each enterprise in the watershed met standards. Such a model not only exhausts natural resource regulators, but also causes the regulatory effect to fall short of expectations owing to the existence of inter-regional regulatory barriers. In addition, because of the ambiguity of rights and interests, cases of natural resource damage often cannot pinpoint a victim, and it is not uncommon for rights and interests to go unappealed. In 2018, the Chinese government proposed the establishment of the Ministry of Natural Resources, transferring the relevant responsibilities of the Ministry of Land and Resources, the National Development and Reform Commission, and other relevant departments to the new ministry, and stipulating that the responsibilities corresponding to different types of natural resource asset owners should be implemented. The division of responsibilities should be classified and not generalized. The investigation of natural resources and the registration of natural resources in terms of physical quantity of ownership are integrated, and the system of natural resource use is also clearly defined. At the same time, the Ministry of Ecology and Environment was also established. It is mainly responsible for the formulation and implementation of laws, regulations, and standards related to ecology and environment; the unified scheduling of supervision and law enforcement, and the supervision and management of the work of environmental pollution control. Under such planning, the regulatory system of natural resources as a regulatory element has been clarified. The Ministry of Natural Resources, as the overall regulator of natural resources, has the right to manage natural resources in an integrated manner, including managing the development and utilization of natural resources, regulating violations of laws and regulations, tracing producers who damage natural resources, and punishing them by demanding compensation. The Ministry of Ecology and Environment, as the developer and enforcer of relevant laws, regulations and standards, punishes violators of environmental laws and regulations in accordance with the law. The natural resource owners initiate claims and the regulators investigate and deal with them in accordance with the law, creating it a better regulatory system than the previous one. (3) Separation of natural resource owners and regulators Around the 1980s, the Chinese government recognized the interrelationship between environmental construction and environmental supervision in practice and gradually separated the environmental protection department from the construction department, establishing an independent environmental department. However, it has not been able to solve the problem of the relationship between natural resource owners and regulators well. Government departments at all levels not only manage the development and management of natural resources, such as land, forest, marine, and energy resources, but also are responsible for natural resource protection and ecological construction. There are two main consequences of this: first, the rights and interests of state-owned natural resource owners are not well maintained; second, the protection system of natural resources and environment is not well implemented, and the protection of natural resources does not achieve the expected effect. Therefore, a regulatory system with clear rights and responsibilities, as well as effective supervision should be established as soon as possible, requiring various rights subjects to perform their respective

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duties and promote the separation of ownership and supervision. The registration of the physical quantity of natural resources’ rights should be completed as soon as possible, and the responsible subjects of natural resources supervisory agencies should be clarified. A single natural resource supervision department should be established with unified distribution for supervision and protection and restoration. The responsibilities, powers, and interests of natural resource management should be clarified among governments at all levels and among various departments to ensure that natural resources are not consumed and wasted owing to lax management or unclear property rights. (4) Improving the institutional development of natural resource mechanisms to increase operational efficiency The Ministry of Ecology and Environment is a large department, and can propose reasonable solutions only for the problem of synergy of environmental elements; it seems unable to sort out the relationship between natural resource management and economic development. In Western countries, practice shows that there is no substitute for efficient inter-agency synergy for natural resource protection. In China currently, although no effort is spared to support economic development, the situation of ecological protection is more severe. As a result, the relevant departments should not develop policies and implement measures that benefit only themselves, regardless of the overall situation. To prevent this situation, it is necessary both to promote institutional innovation and to call for the active participation of stakeholders, thereby creating a multi-stakeholder situation. Improving the efficiency of deliberation and coordination to establish an efficient regulatory system is conducive for the system and mechanism to have the necessary effects. Therefore, to improve the efficiency of natural resource regulation, China should first give full play to the role of the Ministry of Natural Resources as the coordinator of natural resource regulation. This ministry should provide unified guidance on all aspects of natural resources development, protection, and security, and should support and supervise interdepartmental and cross-regional regulation and development. Second, before making relevant decisions, it is necessary to take into account the opinions of the government, experts, and the public, so as to make the decisions scientifically and democratically. Finally, governments and departments should regularly disclose relevant information on their websites or bulletin boards so that the public can be informed in a timely and accurate manner, and improve the public reporting system to make the regulation of natural resources more transparent. (5) Enhancing the work of the Ministry of Natural Resources departments comprehensively The lack of capacity is a key problem in the natural resource supervision department. Although the importance of natural resources supervision is increasing, improvements in the supervision capacity and the quality of supervisory personnel in the natural resources department should be put on the agenda as soon as possible. In particular, there is a need to strengthen guidance to all levels of government and departments and improve the efficiency of government agencies and departments;

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this would ensure timely completion of relevant tasks and avoid delays. The government agencies and departments need to be guided and become more efficient. As the main body of natural resources supervision, natural resources supervision departments at all levels need to pay special attention to self-discipline and stop working in a loose manner. Natural resource-related departments should actively fulfill their respective responsibilities, but of course, capacity building varies from department to department. The General Office Department needs to ensure normal operation of daily work and actively perform its duties related to finance and asset management. The Natural Resource Investigation and Monitoring Department needs to ensure that the standards of investigation and evaluation comply with the relevant laws and regulations, and should also exercise all-round supervision of natural resource investigation, monitoring, and evaluation. The Natural Resource Identification and Registration Bureau should register natural resources and manage the registered information properly; it may not disclose or use the information for profit. The Department of Natural Resource Development and Utilization should ensure the implementation of the natural resources compensation system in accordance with the law, implement dynamic monitoring of the operation of the natural resource market, and provide reasonable guidance on the development and utilization of natural resources. The Law Enforcement Bureau directs the implementation of relevant laws and regulations as well as the specific enforcement of rules and regulations, traces the source of illegal cases, assists in the handling of cross-regional natural resource-related illegal cases, and strengthens the capacity and literacy of law enforcement officers.

9.2 Legal Perspective on Natural Resource Asset Management Since the 1980s, China has not only witnessed a rapid increase in total economic volume, but also a rise in GDP. However, part of this economic growth has been brought about by the destruction of the environment and the unreasonable exploitation and use of natural resources, causing serious damage to China’s natural and ecological environment, which in some places is even beyond repair. Although China has many natural resources, has less resources per capita. In the long run, if China continues to destroy the environment and deplete natural resources in pursuit of economic growth, it would certainly lead to frequent environmental problems and even natural disasters, which is not conducive to the green development or the sustainable development of natural resources. In the face of the disharmonious relationship between economic development and environmental destruction, the Chinese government has issued two bills on natural resource management, both of which clearly state that natural resource asset management is the focus of the country’s future work on natural resources, and vigorously promote the establishment and improvement of the natural resource asset management system, so that the natural resource asset

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management system can fully play its role in preventing the loss of natural resources and protecting the environment.

9.2.1 Current Management System of Natural Resource Assets (1) Newly established administrative organs under the State Council To solve the disadvantages of multi-head management of natural resources and low administrative efficiency. In 2018, the Chinese government reassigned the responsibilities of various departments and set up the Ministry of Natural Resources separately, on the basis of which the Ministry of Natural Resources became the main regulator of natural resource, and was tasked with exercising the unified ownership of natural resources on behalf of the state. This approach is conducive to improving management efficiency and promoting the orderly management of natural resources, as well as reducing the problems of shifting responsibilities and ambiguity in management among relevant departments, thereby facilitating the implementation of integrated management of natural resources. (2) National classification management of natural resource assets At present, in China, natural resources can be broadly divided into seven sectors: atmosphere, water, land, forest, grassland, minerals, wetlands and so on, based on the classification methods stipulated in the relevant regulations. Except for wetlands and atmosphere, the remaining five sectors are regulated by proprietary laws, which all specify the responsibilities and authority of relevant departments. After the national reform of institutions, the management of natural resources falls under the responsibility of a special agency and is managed in a unified manner [4]. For the future management of natural resource assets, China should both the management of natural resources and allow specialized regulatory agencies to make full use of their functions. There are differences in the nature of different natural resources, and management agencies should take such differences into account when exercising their own responsibilities; at the same time, they should establish management systems and management methods that are suitable for national conditions, and adopt various means to manage natural resource assets.

9.2.2 Current Status of Natural Resource Asset Management China’s rapid economic growth has been accompanied by an “overdraft” of natural resources. Due to the lack of understanding of the finite and non-renewable nature of natural resources, resources have been managed in a crude and predatory manner, and have been cheaply used and severely damaged. The Chinese government has

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carried out institutional reforms in recent years, adjusting the management functions corresponding to each department, so that the management of natural resource assets has formed a new pattern. Although China has gone through the storms of decades of economic transformation and overcome the problems of the transition, many shortcomings and drawbacks have been exposed in the practical management process of contemporary China owing to lack of management and inadequate laws and regulations, which manifest in the following aspects. (1) Long-term neglect of the value of natural resource assets In the past, free use of natural resources and the worthlessness of these resources were deeply rooted in people’s minds. This led to the blind, greedy, unlimited, and inefficient exploitation and use of natural resources, causing a large number of resources to disappear, seriously polluting the environment, and completely abandoning the concept of sustainable development. This has not only hindered the quality of China’s economic growth to a large extent, but also seriously affected the benefits that should be enjoyed by future generations. Natural resource assets mainly encompass three kinds of values: scarcity value, labor value, and ecological value. As far as natural resource assets are concerned, [5] ecological value is to some extent more important than scarcity value and labor value. Under the market economy system and price system currently implemented in China, the concept of ecological value has not been deeply rooted in people’s hearts and minds. Its theoretical calculation has not yet formed a complete system, and thus, there is no policy that can be put into practice for the time being. This means that people do not recognize the existence of ecological value and ignore the importance of such value. At present, in the international market, the value of natural resources is not fully reflected in the price of natural resource products, and all these factors have led to the problem of “externalities” in the use of natural resource assets. (2) Confusion of ownership, management and administrative rights Economics scholars have found that unclear property rights are one of the important factors that lead a country to stay in the quagmire of poverty for a long time; a country in this position keep its citizens in a constant and state of low income, and is unable to increase national income. Unclear property rights also make owners dispensable, resulting in no one being able to reasonably restrain the behavior of users; this has not only caused users to devalue precious natural resources, but also resulted in some people becoming the victims of others whose goal is to increase their own total wealth. However, in practice, the identities of the natural resource owner are not very clear, and property rights have become vitiated, leading to the inability of each body to coordinate the corresponding economic relationship; as a result, disputes about rights and interests often occur. At the same time, the benefits from the development and utilization of relevant state-owned assets not only do not flow into the pockets of the state, but are instead used to enrich certain departments and individuals, [6] leading to a large loss of state-owned natural resource assets. Furthermore, owing to the lack of rationality and effectiveness of the relevant interest mechanism as well as

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the lack of clear boundaries for the division of interests, the interests of enterprises and the state’s resource rights and interests are mixed together, leading to disputes. (3) Lack of a sound management system Although natural resource management has been developed in China for a while, there are still shortcomings in the current management system, which have contributed to the lax supervision of natural resource development and utilization, causing largescale loss and waste of natural resources. The current sectoral management of natural resource assets in China is driven by the interests of other sectors, which often lead to competition for natural resources that are not under the management of the sector. In addition, the management departments usually have a good understanding of only a certain aspect of the situation, and inadequate understanding of the rest, resulting in a lack of comprehensive understanding of the quantity and reserves of natural resources and the current status of development and utilization. This is not conducive to integrated management. Meanwhile, management departments at all levels often shirk their responsibilities and refuse to deal with matters that are unfavorable to the departments. The expected high efficiency is not reflected in the management, and there may even be estrangement between departments in order to solve disputes. The management of natural resource assets is multi-faceted and each aspect is extremely complex, requiring not only the consideration of many factors, but also the participation of many more parties in the management, resulting in multi-party management. In the present situation, only the government is responsible for the management of natural resource assets, and it is difficult to find relevant institutions and social groups to participate in the management, thereby creating a situation in which the efficiency of administrative management is greatly reduced. To deal with this situation, the government should establish a management mechanism that coordinates the interests of all parties and mobilizes their motivation. In addition, there are still many shortcomings in the sharing and coordination mechanisms between Chinese government departments and institutions in the management of natural resource assets. (4) A mature market trading mechanism for natural resource assets has not yet been established While China’s natural resource property rights market has received strong support from the state and achieved some results, it remains nascent compared to the mature natural resource property rights markets in developed countries, and mostly relies on administrative means to complete the relevant work. In addition, government departments have long occupied the main position of natural resources assets management and property rights allocation, while there has been limited room for the market, highlighting gap with developed countries. At the same time, the pricing system of natural resources and the formation of the price system can be completed only by administrative pricing. Under this pricing method, the pricing of natural resources deviates from its value and scarcity, revealing the disadvantages of inaccurate pricing. In addition, the cost of natural resource management and the cost of withdrawal after the depletion of natural resources have not been well reflected.

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(5) Inadequate laws and regulations The Chinese government attaches great importance to the development of natural resources as an integral part of China’s economic development Since founding of the People’s Republic of China, many laws and regulations related to natural resources have been promulgated, making the management of natural resources basically lawful and rule-bound. However, there have been numerous problems and shortcomings in the actual enforcement process, detracting from the legal environment. Taking the mineral resources as an example, the relevant laws promulgated by China clearly state that mineral resource rights are mainly divided into two kinds of rights: mining rights and exploration rights. The law clearly stipulates that prospecting and mining rights are prohibited from being sold for profit, but in fact, profit-driven prospectors and miners abound.

9.2.3 Introduction of Foreign Experience in Natural Resource Asset Management In terms of natural resource management, a comparison of China with the United States, Canada, Japan, Australia, and other countries with better market development shows find that these countries have achieved better results in the management of natural resource assets, and better systems and management systems. Their experience is worthy of Ref. [7]. (1) Focusing on the collection of basic data and information on natural resource assets If the situation of natural resources and natural resource assets could be understood and timeously, it would be convenient for the management of natural resource assets, and would help ensure scientific decision-making. Western countries are ahead of China in terms of natural resource surveys, registration, and research [8]. In addition, the resource survey system and monitoring system implemented by various administrative departments across Western countries have reflected a comprehensive and thematic nature, forming a systematic management system. In the case of the United States, the Forest Service of the Department of Agriculture is responsible for forest surveys, and the US Fish and Wildlife Service conducts surveys of the nation’s endangered species, the nation’s fisheries, and the nation’s wildlife. A special agency has been established by the state to collect data on natural resources and to publish the collected data and information according to relevant standards. The government also holds conferences on natural resources, conducts and introduces its own projects on natural resources, shows the latest research trends to private natural resource owners, introduces new technologies from abroad, and makes reasonable adjustments to management policies to regulate the use of natural resources. In addition, surveys of global natural resources are given special attention, resulting in

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the construction of many monitoring stations that provide technical support for the collection of accurate data on natural resources. (2) Management of natural resource assets based on different criteria Governments generally adopt different approaches to managing natural resource assets based on the characteristics of the assets themselves and the geographic location of the resources. In the United States, three types of natural resourcebased economic activities, resource-consuming activities, non-resource-consuming activities, and land-use practices are generally classified, and different management approaches have been used for various types of economic activities. For resourceconsuming activities, the United States restricts the number of such activities and implements a licensing system, imposing fees to reduce the generation of such activities. For non-resource-consuming activities, such as tourism, the United States usually regulates such activities by assessing the capacity of scenic areas and adopting variable fees. For land-use activities, it is mandatory that the development activities of the subject comply with relevant standards and laws and regulations; they must not cause irreparable damage to the natural environment and natural resources, and should keep the damage to a tolerable level. (3) Focusing on the role of market mechanisms If natural resource assets are managed by the government alone, it would be difficult to achieve the goal of comprehensive protection of resources. Therefore, the introduction of industrialized and market-based management into natural resource asset management has been recognized by many countries internationally. Market guidance and government control have become the main guiding principles for natural resource conservation and utilization in most developed Western countries, giving priority to market mechanisms. If the market is to be the main guide, then the property rights and owners of the resources must be clearly defined, and the property rights need to be legally tradable. Based on this, there are many countries that have made the regulation of resource property rights and the method of allocation the specific object of their legislation, giving it legal authority. Unlike the United States, New Zealand has made the market for water rights licenses its main object of development, and can legally transfer and trade quota fishing, and some countries have introduced tradable development rights into land and resource management. (4) Giving full play to the role of the public in the management of natural resources assets Public participation in natural resource management is conducive to the collection and sharing of information beyond the governments’ grasp, improving the comprehensiveness of information, which in turn provides sufficient information for natural resource management and decision-making, and helps government departments at all levels to carry out scientific management and decision-making; in addition, allowing the public to participate in the management of natural resource assets not only popularizes the publics’ awareness of conservation, but also helps them develop the values of sustainable use. As developed countries attach great importance to the property

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rights of natural resources and actively disseminate knowledge of related regulations and management, the public is willing to understand and care about how natural resources are developed, utilized and managed, and they actively participate in the management of natural resource assets. The public also calls for the formation of associations or organizations to assist the government in its regulatory work. For example, the US governments’ public participation policy explicitly supports the publics’ active participation in natural resource management through a variety of channels and affirms its legitimacy.

9.2.4 Improving Natural Resource Asset Management (1) Scientific assessment and pricing of natural resource assets In accordance with the relevant laws and regulations, the Chinese government has made it clear that violating the law in the appraisal process is strictly prohibited, and severely punishes individuals and institutions for violating the law, so as to improve the standardization of appraisal management and provide some assistance in the pricing of natural resource assets. Although the Chinese government has provided guidelines and standards for pricing natural resources, the current market economy is not mature enough and has not formed a perfect price system. This may result in the market failing to accurately value natural resources due to inherent flaws, leading to discrepancy between the pricing and the true value of natural resources. Therefore, it is necessary to shift the focus of research from other aspects to natural resource prices, focusing on the factors that affect natural resource prices and how they are affected, and to strictly regulate the calculation methods, as well as to study the policies and auxiliary measures related to pricing. (2) Clarifying property rights and protecting the interests of owners The clarification and definition of property rights are divided into three main aspects, each with a different focus and role. First, clarifying whether natural resources belong to public property rights or private property rights is conducive to protecting the rights and interests of property owners and bringing predictable benefits; it would encourage subjects other than owners to invest their spare funds in natural resources, broaden their investment subjects, and diversify funding sources. Second, clarifying the identity of natural resource owners and managers, clearly dividing the responsibilities of both, separating the rights of both, and facilitating the realization of the purpose of property rights transfer, would reduce the waste caused by unclear rights and responsibilities. Third, China should register natural resources and verify and supervise their physical quantity to avoid the loss of natural resources and the damage of rights and interests owing to the ambiguous division of property rights. Therefore, to change the previous situation of unclear and diluted ownership, it is

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necessary to strengthen the ownership of natural resources assets, and at the same time, to emphasize the owners’ income from natural resource assets. (3) Optimizing management tools At present, the Chinese government adjusts the price of natural resources mainly through taxation and regulates the development and utilization of natural resources. Financial departments at all levels can provide financial assistance for the protection and utilization of natural resource assets through special accounts. On the one hand, to facilitate the smooth completion of transactions and reduce transaction costs, it is necessary to make greater efforts to improve the relevant market transaction guidelines and regulate the market transaction behavior; on the other hand, to avoid the previous overemphasis on administrative means, it is necessary to optimize the layout and improve the structure, so as to give full play to the role of market mechanisms in the management of natural resource assets. In addition, it is possible to learn from the natural resource management methods of foreign countries through exchange and cooperation, and further optimize the way of allocating natural resource assets. China should strengthen the integration and unified management of natural resource assets by adjusting the organizational structure and the functions of management departments. It should vigorously develop intermediaries to promote the rapid transformation of government functions, while accelerating the establishment of a mechanism for incentive and restraint coordination on the management of natural resource assets and improving the corresponding public participation mechanism. (4) To play a regulatory and normative role of the market mechanism Asset-based management of natural resources not only helps maintain the rights and interests of owners to the state, but also revitalizes natural resources assets, and provides a reasonable guarantee for the development and utilization of natural resources. Giving full play to the important role of the market in the allocation of natural resources would largely encourage market players to participate in the management and protection of natural resource assets. Since the founding of the People’s Republic of China, the development, utilization, and sustainable development of natural resources have been firmly in the hands of the government; this concept is deeply rooted. However, when we study the excellent management experience internationally and compare it with China’s natural resource management practices, we find that private individuals or manufacturers are the key to solving the problem of natural resources. To strengthen the protection and management of natural resources assets, it is not only necessary for the state to further improve and optimize the institutional system of natural resources assets, but also to actively promote the reform of natural resource products and their prices, so that the trading market becomes a more accurate and timely reflection of the value of natural resources assets. (5) Providing a sound legal guarantee for natural resource asset management To avoid the problem of disputes arising from the law, both the rights and obligations of the property rights subjects should be clearly defined and the users should be clearly

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delineated; at the same time, protection of the legal rights of the owner subjects should be guaranteed. The granting of operating rights and trading rights and whether they are legal should be judged by law, so as to better meet the needs of the rapid development of China’s market economy. The law should be the guiding principle to manage all aspects of development, utilization, and protection of natural resource assets. The law forces government departments to realize that macroeconomic control is their priority, with clearly defined rules and regulations, thereby facilitating the formation of a professional legal atmosphere in government departments and professionalizing law enforcement work. China should continuously update and improve laws, regulations, and policies to keep pace with the times and promote the construction of the rule of law, in particular, to ensure that there are laws to regulate and standardize the initial stage of development, that is, to manage the legal system at the source. China should severely punish individuals or manufacturers that seriously damage or privately appropriate natural resources in the process of natural resource development, relying on a sound legal system to strengthen the protection of natural resource assets and modernize management capacity.

9.3 Natural Resource Tax System Management Whether a country exploits and uses its natural resources in a rational way has a crucial impact on the level and quality of its economic development. Resource taxes help guide the adoption of a rational approach to the exploitation and use of natural resources [9]. A sound resource tax and fee system is conducive to enhancing people’s awareness of protecting resources and maintaining the ecological environment [10]. The harmonious development of humankind and nature is beneficial for achieving a win–win situation for natural resource protection and economic development, [11] laying a solid foundation for the establishment and improvement of the natural resources tax system. Optimizing the resource tax system can allocate natural resources reasonably and adequately in the process of economic development. To a certain extent, it can also reduce the losses caused by over-exploitation, which in turn can achieve the purpose of protecting and reasonably developing and utilizing natural resources, and at the same time support improvement in the quality of economic development as well as the speed of development. How to maximize the use of natural resources and minimize the side effects of natural resources so that they can be developed sustainably has become a central research object in various countries around the world.

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9.3.1 Resource Tax System Related Theories and Functional Positioning (1) Theories related to resource tax system (a) Sustainable development theory Natural resources play an important role in promoting human development and progress, but previous rapid economic growth has been achieved at the expense of g the environment on which humans depend for their survival. Continuing to promote economic growth in this way would bring irreparable harm to people’s living environment. Sustainable development covers three aspects development: social, ecological, and economic. The connotation of sustainable development is to ensure a reasonable allocation of resources, prevent over-exploitation of natural resources, and maintain ecological balance. Currently, the concept of sustainable development occupies an important place in all countries in the world, and is actively applied in all aspects of economic development. The sustainability of natural resources is mainly reflected in their reasonable allocation. Natural resources are an important part of human survival and development, and the impact on the ecological environment should be given more attention. The emergence of extreme weather patterns, such as the frequent occurrence of haze, reflects the over-exploitation and unreasonable use of natural resources, which serious impact not only on present generations but also future generations. In terms of resources, sustainable development means that when contemporary human beings use resources, they should ensure the utilization of resources of future generations, so that their utilization can at least not be lower than that of contemporary people. (b) Externality theory Human society is full of economic agents that do not exist as a single individual, but rather interact and are interconnected. When the economic behavior of one agent affects the welfare of another, it is defined it as an economic behavior with externalities. If the behavior of the agent increases the welfare of other agents, then it has a positive externality; while the opposite effect is called a negative externality. The exploitation of natural resources usually changes and may even destroy the natural environment. Therefore, it is generally accepted that the exploitation of natural resources has negative externalities. Such negative externalities mainly manifest in the form of pollution of land resources and ecological damage caused by extraction activities. This is mainly because most enterprises value only the economic income generated by the exploitation of natural resources, and ignore their responsibilities arising from the negative externalities. As mentioned in the second section of this chapter, the market mechanism is not perfect and the regulation of externalities cannot achieve better regulation. In this case, the government needs to use tax policy to regulate externalities such that the tax revenue is at least not less than the money spent on managing the externalities; this reflects the government’s drive to achieve tax equity to a certain extent.

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(2) Functional positioning of resource tax system (a) Curb blind exploitation of scarce resources National taxes on natural resources have an impact on the market price of natural resources, and it has contributed to the increase of the consumer price of natural resources. This has increased the scarcity of natural resources to a certain extent, and has gradually balanced the supply and demand of natural resources in the market, which is conducive for the realizing the purpose of natural resources conservation. The initial idea behind China’s resource tax system was to implement differential tax rates on natural resources to obtain differential revenue. However, along with the rapid development of China’s economy, the role of resource taxes in regulating the exploitation of natural resources and regulating the way of utilization has gradually weakened. In China, the ownership of natural resources belongs to the state, and the tax rate of natural resources should be determined by taking into account all factors that may affect natural resources, such as the quality and ease of extraction, so as to prevent the indiscriminate exploitation of natural resources by producers, as well as to motivate enterprises to improve their technical level. This would increase the recovery rate and ensure the reasonable allocation of natural resources. Doing so would not only prevent the indiscriminate exploitation of resources by producers, but also motivate enterprises to improve their technology, thereby increasing the recovery rate and ensuring the rational allocation of natural resources. China’s resource tax rate is lower than that of developed countries. Table 9.2 lists the tax policies of some countries on mining enterprises. The light tax burden is not directly related to the extraction efficiency and recovery rate of natural resources. Therefore, an appropriate increase in the tax on natural resources would force companies to improve their technologies and thus, to improve the efficiency of resource use, which would curb the misuse of natural resources. (b) Promote coordinated development among regions Uneven distribution is an important feature of China’s resources. The vast majority of oil and gas resources are in the central and western regions of China, where the level of economic development is low. Reform of the resource tax system would increase fiscal revenue and promote the economic development of these regions. In addition, it would be beneficial for the resource locations to fully enjoy the benefits of resource development, and the level of local public services would also be improved, increasing local governments’ funds available for environmental protection and pollution control. This would convert the resource advantages of these regions into economic advantages and greatly help achieve coordinated common development between regions. In 2010, the Chinese government changed the previous quantitative taxation method and fully implemented the ad valorem taxation method. This change in taxation method has increased the tax revenue of areas with rich resources; these areas invest a lot of money to maintain the environment, and at the same time improve the resource taxation system, leading to a stable increase in local revenue and further narrowing the economic gap between less developed areas and developed areas.

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Table 9.2 Comparison of resource taxation policies of mining enterprises in China and some developed countries Country

Corporate tax

Specific mining tax

Financial incentives Tax loss carry forward

Australia

29%

None

Mining-specific benefits (e.g., direct tax credits for exploration expenditures and assets first used for exploration)

No time limit, but the utilization of loss carryforward is subject to specific requirements and loss carryforward is not allowed

United States

35% plus state State corporate government income tax levies extraction tax according to state law (1% to 2% of each state’s revenue)

A credit against federal income tax for mining-specific taxes based on "gross mining income" is allowed under certain conditions

Federal taxes 20 years forward and 2 years back; state tax loss carryforwards from 5 to 20 years

Germany

Effective income tax rate of around 30%

No resource taxes or energy import duties, but specific energy tax provisions (mineral oil tax on gasoline)

Some energy sources can be subsidized

Loss carry forward is limited to e511,500; there are no restrictions on the use of loss carryforward up to e1 million; however, that exceeding e1 million is limited to 60% of income

China

25%

Resource tax

Tax incentives for foreign investors and mining operations in the western part of the country

5 years

9.3.2 Current Development of China’s Resource Tax System Since China’s resource tax system was formally implemented in 1984, it has not only benefited the national fiscal revenue, but also played a role in promoting rapid economic development. However, in terms of the function of resource protection, China’s current resource tax system still has many more defects the systems in place in foreign countries. (1) Scope of the levy is too narrow At present, the resource tax levied in China includes only seven categories of natural resources, namely, oil, coal, natural gas, raw non-ferrous metal ores, raw ferrous metal ores, raw other non-metallic ores and salt [12]. There are no clear regulations for other natural resources, and the scope covered is narrower than that of developed

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countries, such as the United States. The narrow scope causes two problems to arise. First, it is unfavorable for environmental protection. As the scope of taxation in China covers only the seven natural resources mentioned above, other natural resources are used without compensation, which leads to the indiscriminate exploitation and abuse of natural resources by enterprises. The main problem is that forest resources are indiscriminately cut down and desertification of land becomes more serious than before, while water resources are also being seriously damaged and polluted, and quantities of fresh water resources are gradually declining. Second, the large price difference has led to perverse demand for non-levy resources. The prices of natural resources that are taxed are found to be much higher than the prices of natural resources that are not taxed, owing to the narrow scope of taxation [13]. Such unreasonable prices lead to great competition among enterprises for the right to exploit and use non-taxed natural resources, making the demand for non-taxed natural resources perverse. (2) Unscientific basis for tax calculation The advantage of taxing natural resources based on sales or self-use is that it facilitates tax collection and calculation without a particularly complicated taxation process. However, this method of taxation based on quantity has many defects. First, it takes only the sales volume or self-use volume as the basis for taxation, but does not include the resources that may be wasted during the construction process, and the enterprises do not take the responsibility for this wastage out of self-interest, which is bound to lead to indiscriminate mining and abuse. Second, the quantitative taxation method cuts the relationship between the tax levy and the market price, widening the connection between the tax rate, price, and taxable amount, and the tax leverage is also weakened because the tax rate is fixed to regulate profit, and the size of the tax levy is not related to the change of the market price of resource products and the profit of resource enterprises. The linkage between taxation and resource prices is severed, and the state is unable to regulate resources through economic means. Finally, this taxation method does not take into account the differential costs caused by different geographical locations, and the taxation method is applied on a quantitative basis without discrimination. (3) Ambiguous tax relationship and double taxation China’s resource tax on mineral resources broadly covers resource tax, mineral resource compensation fee, and mine use fee; this coexistence of taxes and fees makes the relationship between the two confusing. China’s natural taxation system not only can play the role of cascading regulation, it also compensates natural resources based on a universal levy. The role played by the resource tax and mineral resources compensation fee is largely similar, but the state adopts different ways to collect the two; the process of taxation involves different departments, which inevitably leads to a lack of clarity between the tax and the fee, and thus, is not conducive to taxation by the taxation department. In practice, local governments not only need to develop the economy, but also need to protect the environment. When tax revenue is not sufficient to support the completion of the task, the government departments may

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levy other fees, which may increase the burden of enterprises, leading to the problem of crowding out the tax with fees, and greatly weakening the role that the resource tax itself should play. (4) Irrational revenue distribution relationship of resource tax In China, only the tax revenue from marine oil resources tax belongs to the central government, while the rest of natural resource tax revenue is collected by local governments. In fact, resource tax is one of the local taxes, mainly because the western part of China has more natural resources, but the economic level in western China still lags far behind that of from the eastern China, and the tax on natural resources has a regulating effect on this gap, further narrowing it. However, China’s resource tax rate is set at a relatively low level and is still based on volume; thus, western China does not share in the benefits of the increase in resource prices. Given that the resource tax is not helpful for narrowing the gap between regions, it also reflects the fact that the resource advantages of these regions are not better converted into economic advantages. At the same time, local governments are responsible for collecting resource tax, and given the low tax rate, the only way for local governments to raise revenue is to increase the amount of natural resource extraction. Excessive exploitation of natural resources greatly damages the carrying capacity of the environment, and is often accompanied by safety accidents, causing great losses to the country and even people.

9.3.3 Countermeasures for Improving China’s Current Resource Tax System (1) Expanding the scope of taxation At present, China only levies resource tax on seven kinds of natural resources, including oil, coal, natural gas, raw non-ferrous metal ores, raw ferrous metal ores, raw other non-metallic ores and salt. In terms of the relationship between China’s economic development and the quantity and kinds of resources exploited, it is obvious that the scope of taxation is too narrow. Therefore, there is an urgent need to expand the scope of taxation. It should not be expanded blindly, but should follow the following three principles. First, the current national shortage and relatively scarce resources should be included in the scope of taxation. Taking water resources as an example, the residents’ commonly experience poor drinking water quality in large and medium-sized cities, indicating that water resources have become scarce in China. As can be seen from Fig. 9.2, the per capita water resources in China have been declining in recent years, which has sounded the alarm for the use of water resources. Therefore, water resources can be included in the scope of taxation. Second, some non-renewable, limited, irreplaceable, and severely damaged natural resources should be included in the scope of taxation. Finally, “green resources”, which are in serious short supply and are conducive to environmental protection,

9.3 Natural Resource Tax System Management

Water resources per capita in China

2400

247 2355

2300 2200 2086

2100 1999

2039 1972

2000 1900 1800 1700 2014

2015

2016

2017

2018

Time

Fig. 9.2 Water resources per capita in China (Unit: cubic meters per person)

should be included in the scope of taxation [14]. Theoretically, the scope of taxation should include all natural resources that are used, but because China’s taxation instruments and management standards are not optimal, there should be a process rather than a rush to do so. (2) Reforming the taxation basis According to China’s current economic development, the previous quantitative taxation method should be abandoned, and natural resources should be taxed through a combination of quantitative and ad valorem methods. The combination of the two methods can be adopted for resource products that are in high demand and whose prices are rising rapidly. The two approaches can be phased in, with the tax being applied at the time of extraction and at the time of sale. For resource products with less fluctuation in demand and more stable price, the tax should be applied at a fixed rate. (3) Integrated tax relationship The taxes and fees levied on mineral resources in China generally cover resource tax, mineral resource compensation fee, and mine use fee. However, based on the actual situation, the resource tax and mineral resource compensation fee are duplicated in the tax law, and the resource tax already reflects the paid use of minerals. Thus, the tax and fees can be combined into one resource tax. In addition, the water resource fee can follow the practice of the mineral resource compensation fee and be integrated into the resource tax. As a scarce natural resource, water resources must be compensated through taxation; the cost of using water resources varies according to the geographical environment and the difficulty of development, and thus, so the tax on water resources can be combined into one. Other natural resources can also

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be modeled on these two types of natural resources to develop an effective and easy way to implement the taxation system, thereby contributing to the goal of resource conservation and environmental protection.

9.4 Improving the Legal Guarantee of Natural Resources Regulatory System Currently, the main natural resources face ineffective legal regulation and lax enforcement. The more serious problem is that the relevant departments in the natural resources of process of regulation may shield or connive with the transgressor, when it should be acting as a regulator. In addition, some departments may collude with each other to enhance their own performance and profit, even ignoring cases that should be regulated and punished. Therefore, it is necessary to establish a sound legal system, strengthen planning and management, and combine “external control” and “internal control” to guarantee natural resource regulation.

9.4.1 Establishing Goals and Values, and Improving the Legal System of Natural Resource Regulation (1) Establishing scientific and rational new system of natural resource management China’s approach to natural resource management, which is mainly based on individual laws, must constantly coordinate all factors of the natural ecosystem, improve the quality and efficiency of legislation, and give full play to the role of the rule of law in leading and guaranteeing the path of natural resources management reform, after taking into account its holistic and social nature. To speed up the establishment of a relevant regulatory legal system that is compatible with the current ecological civilization system, China should revise its ecological legislation and deal with the main contradictions, taking natural resources as the core and key; the current singleact law should be the main basis and local laws with regulations as the auxiliary work. (2) To start a new journey of a single law for natural resources The implementation of the single law on natural resources has contributed to the protection of forest resource and ecological environment; further revision and improvement of the single law would not only be conducive to creating a more complete natural resource regulatory system, but would also play an important role in enhancing the systemic nature of the law and achieving coordination of the law. Therefore, by focusing on improving government functions, transforming regulatory objects, and strengthening capacity building of natural resources departments, China should summarize and solve the problems of management fragmentation,

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spatial overlap, and information misalignment in the current natural resource regulatory laws, [15] and promote existing laws and regulations through repeal, reform, enactment, and interpretation. (3) Regulating the centralization and specialization of laws through legislation and improve the effectiveness of law implementation As there are few specific regulations and explanations for natural resource management and ownership in China’s laws, the core task is to improve the laws and regulations, take advantage of the natural resource construction system and ensure the rigid binding force of legal protection according to the regulations made in the relevant laws and regulations. China should accelerate the construction of supporting laws to form a strong guarantee of legal implementation, clarify the functions and nature of the entrusted agency to regulate natural resources, ensure that the specific rules formulated are specialized and operable for law enforcement and compliance, clarify the relationship between government and enterprises, and build a mechanism for sharing among all people.

9.4.2 Sounding Property Rights System and Strengthening Standardized Management (1) Implementing the main body of property rights and carrying out positive reform and innovation To clarify the property rights of natural resources, with distinct rights and responsibilities, it is necessary to reasonably design the procedures and strengthen the physical norms, and to provide strict supervision to ensure smooth flow. First of all, a property right system of natural resources assets with clear ownership, clear rights and responsibilities and effective supervision should be established and finally formed. Second, through the commissioning agent or the extension of the right to use or other ways and policy refinement, the terms of the right to use provide a clear division, indicate scientific allocation of resources and distribution of revenue, and standardize the management procedures and standards of natural resources. Taking into account the actual situation, China should increase the types of usufruct rights currently provided by the law, expand their functions, and innovate the exercise methods, focusing on solving the problems of inefficient use of natural resources and the transfer of property rights. (2) Enhancing awareness of natural resource asset protection and promoting open and transparent registration The unified registration of natural resources and the assessment and accounting of their value would help determine the actual value of natural resources, but because technology and skilled personnel are required for assessment and accounting, it is necessary to proceed step by step rather than in a hasty manner. It is recommended,

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first, that China standardize survey methods and improve accounting techniques, unify standards, delineate ownership rights and clearly define use rights. It should improve the level of service at the same time to improve the registration information management infrastructure platform, so as to establish and update the asset database in a timely manner and understand the dynamics of resources in real time, thereby better recognizing natural resource assets. In addition, China should speed up the construction of an information sharing mechanism, complete the registration of natural resource rights as soon as possible, and improve the ability and level of public services to keep pace with the times and benefit the people.

9.4.3 Combining “External Traceability Control” and “Internal Traceability Control” to Improve the Monitoring Mechanism of Natural Resources (1) “External” control as the main body, government supervision has a role To safeguard national ecological security, China should exercise administrative supervision with the general objective of protecting natural resources duties in accordance with the law; adopt remote sensing monitoring technology for relevant departments; steadily establish a sound system of investigation, evaluation, and detection; and ensure scientific organization and implementation of the planning of national land space. A smooth and orderly working mechanism would greatly help the regulation of natural resources use control, asset planning and market transaction rules. To achieve further improvement of governance capacity, strengthening self-monitoring is also on the agenda, as is preventing the occurrence of strictly prohibited abuse of power. Therefore, natural resource management departments should coordinate the working mechanism of various departments and further clarify the unified standard to deal with controversial issues; this would facilitate information sharing, separation of authority and responsibility, and mutual assistance. Classified management of state-owned assets with operational and public benefit properties should be implemented to identify the owners and regulators of natural resources assets in the national space and their responsibilities according to the different objectives set by the state for natural resources. The hierarchical management system between the central and local governments sometimes leads to the problem that the actual controllers prioritize economic interests at the expense of social values, which in turn leads to the indiscriminate exploitation and destruction of natural resources to an intolerable extent. Therefore, government departments need to undertake real-time assessment and evaluation of the work. To better establish relevant laws and regulations, it is necessary to focus on the relationship between these aspects, and to supervise and check the power. (2) “Internal” control and social supervision should be strengthened

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Internal control emphasizes the internal supervision and relief of the subject of natural resource rights. First, China should prioritize expansion of channels for residents, enterprises and government employees to participate in democratic consultation, and to establish a sound “internal control” through various means, while retaining a selfregulatory character and carrying out practical internal monitoring of the implementation of the right. Second, China should establish a communication and consultation mechanism, publicize natural resource property rights in the platform, realize information sharing, and facilitate public queries and requests for the published data and the issued policy documents through the sharing platform anytime and anywhere. Lastly, the boundaries of authority and responsibility should be reasonably delineated so as to coordinate and promote each other. The Chinese government should handle natural resource assets of public interest by establishing hearings and conducting field surveys on such assets, talk directly local people, pay attention to their opinions and measures, and make democratic decisions to ensure that the public’s right to comment and participate is respected and fulfilled.

9.5 Summary This chapter analyzes the problems of natural resource regulation, natural resource assets management and natural resource taxation system. It proposes corresponding countermeasures for problems that hinder the development of natural resource regulation, and suggests how to improve the rule of law and optimize the natural resource regulatory system from these three perspectives. This chapter further discusses how to improve the natural resource regulatory system from the legal perspective.

References 1. Smith D C. Environmental courts and tribunals: changing environmental and natural resources law around the globe[J]. Journal of Energy & Natural Resources Law, 2018, 36(2): 137–140. 2. Venables A J. Using natural resources for development: Why has it proven so difficult? Journal of Economic Perspectives, 2016, 30(1): 161–84. 3. Hare D, Forstchen A B, Smith C A. Developing governance principles for public natural resources. Society & Natural Resources, 2018, 31(3): 382–388. 4. Ma Y H, Wu C G, Lin H. Insights for conservation and utilization: Reconstruction of China’s natural resource management system. International Journal of Science, Technology and Society, 2018, 6(3): 52–62. 5. Liu C. A review of natural resource asset accounting literature. International Core Journal of Engineering, 2021, 7(8): 429–432. 6. Zhan J V. Do natural resources breed corruption? Evidence from China. Environmental and Resource Economics, 2017, 66(2): 237–259. 7. Dam-de Jong D. Building a sustainable peace: How peace processes shape and are shaped by the international legal framework for the governance of natural resources. Review of European, Comparative & International Environmental Law, 2020, 29(1): 21–32.

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8. DONG Z. Natural resource asset management and land and spatial planning. Landscape Architecture Frontiers, 2019, 7(1): 88–93. 9. Reitberger M. Targeting rents: Global taxes on natural resources. European Journal of Political Theory, 2020, 19(4): 445–464. 10. Hopper J A S. The regulation of combination: The implications of combining natural resource conservation and environmental protection. State Politics & Policy Quarterly, 2017, 17(1): 105–124. 11. Boley B B, Green G T. Ecotourism and natural resource conservation: The ‘potential’ for a sustainable symbiotic relationship. Journal of Ecotourism, 2016, 15(1): 36–50. 12. Liu Y, Zhou M. The impact of coal resource tax reform on the Chinese economy: A CGE analysis. The Singapore Economic Review, 2018, 63(03): 555–565. 13. Kopnina H. Commodification of natural resources and forest ecosystem services: Examining implications for forest protection. Environmental Conservation, 2017, 44(1): 24–33. 14. Journeault M. The influence of the eco-control package on environmental and economic performance: A natural resource-based approach. Journal of Management Accounting Research, 2016, 28(2): 149–178. 15. Keith H, Vardon M, Stein J A. Ecosystem accounts define explicit and spatial trade-offs for managing natural resources. Nature Ecology & Evolution, 2017, 1(11): 1683–1692.

Chapter 10

Outlook: The Road Ahead for Natural Resource Supervision

The previous chapters focus on the theoretical basis, historical changes, domestic and foreign comparison, subject and object of regulation, implementation path, and legal basis of natural resource regulation, and investigate the current situation of the natural resource regulatory system from various aspects as well as propose corresponding problems. With increased development and utilization of natural resources around the world, scarcity of natural resources has become a global phenomenon, and it is necessary to strengthen their supervision. In addition, with economic development advances in science and technology, the traditional supervision system needs further refinement. This chapter makes policy suggestions for the overall path of natural resource regulation, natural resource property rights and a mechanism for natural resource assets to land and resources planning and China’s trade in natural resources with other countries and multi-agent participation perspective. The suggestions are intended to ensure reasonable and effective regulation of China’s natural resources.

10.1 Basic Idea of Natural Resource Supervision 10.1.1 Basis of Natural Resource Supervision Natural resources are an important material basis for national economic development, and are also the main component of the ecological environment. When developing its regulatory system for natural resources, China needs to clarify the basis for the establishment of the regulatory system. Overall consideration should be given to quality, efficiency, and fairness in the development and utilization of natural resources so as to ensure sustainable development, protect the ecological environment, and ensure coordinated development of the economy and society. (1) Sustainable development

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 T. Ding and M. Song, Natural Resource Regulation in China, Contributions to Public Administration and Public Policy, https://doi.org/10.1007/978-981-99-5593-0_10

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In 1972, the concept of sustainable development was formally introduced at the United Nations Conference on The Human Environment. The Chinese government first formally mentioned sustainable development in 1994. The meaning of sustainable development has been continuously enriched with the development of economy and society, but how to rationally use natural resources has long been one of the key issues of sustainable development. The concept of “sustainable development” accords not only with the international concept of natural resource utilization, but also with China’s inherent cultural tradition of harmonious development between humankind and nature. The establishment of a natural resource supervision system needs to consider the principle of sustainable development, so that the economy and environment can feed back into each other and develop in coordination, while the regional and intergenerational contradictions of natural resource distribution can be alleviated. (2) Efficient and high-quality utilization From an economic perspective, scarcity of natural resources is caused by imbalances between supply and demand in the market. According to the marginal cost utility theory, the scarcer a resource, the higher the cost of using it. At present, China is paying increasing attention to the efficient and high-quality utilization of natural resources. The Chinese government stresses the importance of promoting harmonious coexistence between man and nature and proposed comprehensive improvements in the utilization efficiency of natural resources. In line with this drive, at the beginning of 2021, the Ministry of Natural Resources issued the Comprehensive Improvement of the Utilization Efficiency of Natural Resources. The aim is to establish a natural resource supervision system that considers efficient and high-quality utilization and that meets the requirements of both the economy and the environment. Through reasonable supervision, exploitation rights for natural resources will be granted to enterprises with high efficiency, and the right to use natural resources will be allocated efficiently to users, so as to make full use of resources. (3) Fairness and justice The fairness and justice of natural resource distribution includes two main aspects: intra-generational fairness and justice; and intergenerational fairness and justice. Intra-generational fairness and justice refers to the reasonable distribution of natural resources among the same generation. Specifically, it considers the equity and justice of resource distribution among different countries (e.g., developed and developing countries) and the equity and justice of resource distribution within the same country. Countries not only have equal rights in the use of natural resources, but also have equal obligations for environmental protection. All natural resources are interrelated. Developed countries should not emit more waste gas, waste water or grab too much natural resources especially public goods. At the same time, developing countries should also undertake their own obligations to protect natural resources. With regard to fairness within the same country, all residents have equal ownership of natural resources. Only emphasizing intra generational equity will lead to the unsustainable use of resources and the deterioration of ecological environment. To get out of

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the dilemma of development, we must pay attention to intergenerational equity at the same time., Intergenerational equity refers to the rational distribution of natural resources between current and future generations. Rawls proposed the equity theory by which the next generation should at least enjoy the same resource and environmental base as the previous generation [1]. Therefore, it is necessary to establish a system of natural resource regulation based on fair and just principles. Regulations governing natural resources not only need to consider fair distribution for present generations, but equally too the interests of future generations. (4) Overall coordination Overall coordination is an important component of China’s socialism and is continuously evolving based on experience and practice. Since the founding of the People’s Republic of China, the Chinese government has proposed adherence to overall coordination. For example, during the period of the reform and opening up, it was pointed out that “the relationship between various interests must be adjusted according to the principle of overall consideration.” Overall coordination is being applied to construct an “ecological civilization”; the overall planning and coordination mechanism in the field of ecological civilization is being improved, the all-round green development of economy and society promoted, and the harmonious coexistence between humankind and nature prioritized. From the perspective of the Chinese government’s planning, at present, ecological benefits and economic benefits need to be taken into consideration, and the principle of unifying economic and social ecological benefits should be adhered to. While developing the economy, China should pay attention to the scarcity of natural resources, integrate the concept of green development into all fields of social production and social practice, and focus on maximizing total social welfare. Therefore, the establishment of a natural resource supervision system should be based on the principle of overall planning and coordination, and natural resources, ecology, the economy, and society should be supervised as a whole. The influence of natural resources on the economy and society should be considered when formulating regulatory policies related to natural resources.

10.1.2 Implementation Path of Natural Resource Supervision As the largest developing country in the world, China’s demand for natural resources is increasing at pace with the development of its economy. China has a vast territory and many kinds of natural resources, but its population is much larger than that of developed countries. Generally, China has a small per capita share of natural resources but large demand for natural resources. While drawing on the experiences of other countries, China should reform its supervision system for natural resources by considering its unique characteristics. (1) Improving the laws and supervision of natural resources

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The primary task of natural resource supervision is to formulate clear laws, strengthen comprehensive legislation, and improve the legislative system of natural resource supervision. The Constitution is China’s supreme law, and China should further clarify the guarantees it provides for the environment. China’s natural resources are owned by the state, and therefore, it is necessary to study and formulate comprehensive laws in the field of natural resources by considering the integrity and systematicness of natural resources. Moreover, it is important to speed up the revision and improvement of individual laws, such as the Grassland Law and Mineral Resource Law. China should establish a unified, scientific, standardized, and effective natural resource legislation system with Chinese characteristics, based on the Constitution, comprising comprehensive laws, separate laws for natural resources, and detailed local laws and regulations for natural resources. (2) Promoting ecological compensation mechanism Excessive demand for natural resources leads to the unsustainable development of natural resources. To reduce the resource waste, it is necessary to transform the traditional resource-consuming economy and establish a mechanism of ecological compensation. On the one hand, ecological compensation is an active incentive mechanism, encouraging beneficiaries of ecological protection to consciously and independently compensate the ecological protection providers in the form of funds and materials. On the other hand, ecological compensation is a passive punitive mechanism that occurs after an infringement. Those who destroy the environment need to pay compensation for the damage caused according to the corresponding regulation. To promote the establishment of the ecological compensation mechanism, China needs to clarify the property rights of natural resources, speed up the preparation of a balance sheet of natural resources, clarify the quantity and amount of natural resource loss, and bring it into the fold of national economic accounting. For this, it is necessary to increase the role of the government. Nowadays, most providers of natural resource protection are from the public, and thus, the government needs to strengthen financial compensation. It should also formulate a strict punishment system for illegal and criminal acts. (3) Improving natural resource oversight agencies The regulation of natural resources requires not only the support of legislation but also the strength of law enforcement to put the regulations into practice. It is necessary to accelerate the transformation of government institutions toward service orientation, streamline the administration, delegate more powers, improve regulation, and provide better services. In the process of governance, the government should fully implement the strategy of governing the country according to law and be more transparent in disclosing government information. Government departments should clarify their respective roles and ensure overall coordination, constantly strengthening the means of supervision and improving the level of law-based governance. To deal with imperfections in regulatory institutions, China should undertake overall planning to form a complete and closely connected network. Because departments are

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connected, overall governance efficiency would improve, and high-quality, efficient, and convenient public services would be provided to society.

10.2 Institutional Innovation of Natural Resource Asset Elements 10.2.1 Improving the Property Right System of Natural Resource Assets The establishment of the property rights system of natural resource assets enables the holders of the rights to obtain their due rights and interests according to laws and supervision; it further promotes the protection of natural resources and stimulates the construction of ecological civilization based on corresponding rights and responsibilities. The natural resource property rights system has a long history, but the system remains sub-optimal. In practice, there are many problems, such as serious overlap of natural resource assets, unclear subject of property rights, incomplete powers and functions, lax protection of property rights, and imperfect laws and supervision, resulting in frequent property rights disputes. The system of property rights of natural resources requires improvement so that property rights of natural resources are clearly defined and natural resources are used efficiently. (1) Clarifying the subject of property rights of natural resource assets From the perspective of state-owned natural resource assets, the Chinese government has clearly stipulated that the Ministry of Natural Resources is responsible for natural resources owned by the whole people. In practice, it is also necessary to add an institutional basis, such as legal authorization and entrusted management, to ensure the implementation of the system. Income from the transfer and leasing of stateowned resources needs to be reasonably distributed, the income management system needs to be improved, and the proportion of central and local income distribution needs to be adjusted (it cannot accrue only to municipal and county governments). To improve the system by which the central government entrusts provincial and municipal governments to exercise ownership, China can first select some provinces and cities to carry out pilot work, and implement a resource list and a supervision and management system of ownership for provincial and municipal governments. For collectively owned natural resource assets, the owners of rural collective natural resources should be identified [2], and it should be made clear that rural collective economic organizations exercise the ownership of rural collectively owned natural resources on behalf of the collective, to give villager sufficient equity, reasonably distribute income, and maximize the owners’ rights and interests of rural collective resource assets. (2) Carrying out unified monitoring and evaluation of natural resources

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A unified investigation and monitoring system is based on the relatively complete input of natural resources. China should carry out a nationwide inventory of all natural resource assets owned by the people, and record them uniformly based on the type, scope, quantity, ownership, and utilization of natural resources. According to the unified classification standard, a unified investigation, monitoring, and evaluation system and natural resource value evaluation mechanism can be established. Through monitoring and evaluation, a balance sheet of natural resources can be prepared to price the property rights of natural resource assets accordingly. Through this system, dynamic changes of natural resources can be fed back, and the property rights of the relevant natural resources can in turn be reasonably adjusted. (3) Accelerating the unified confirmation and registration of natural resource assets The premise of confirming various property rights is to determine the base amount of various natural resources. All provinces not only need to cooperate with the state to confirm and register rights of natural resources in which the state directly exercises ownership, and in which they exercise ownership on their own behalf. All departments also need to maintain a unified caliber of data statistics. The various natural resources need to be clearly defined and their definitions and standards unified, especially focusing on dividing the boundaries of the ownership and use rights, so as to truly clarify the rights and responsibilities of each subject. The unified rights confirmation and registration relies on a sound and interconnected natural resource rights confirmation and registration information management platform. All departments in a province can undertake data sharing through a dedicated provincial government data sharing and exchange platform to avoid statistical overlap. A unified rights confirmation and registration sharing platform also needs to be established nationwide to improve overall governance efficiency. (4) Improving the property rights system of natural resource assets To improve the property rights system of all natural resources, it is necessary to clarify the property rights of various natural resources; coordinate the powers and functions of these various natural resources; expand the transfer, mortgage, and security rights of usufruct; [3] build a classified and scientific property rights system of natural resource assets; and promote the separation of ownership and usufruct of natural resource assets. In terms of land resources, in the early stage of the reform and opening up, the main reform was to change the separation of land ownership and contracted management right to separation of ownership, qualification right, and usufruct [4]. The usufruct of construction land can be constructed from above ground, surface, and underground parts. In terms of mineral resources, China should strengthen the integration and unification of oil and gas exploration rights and mining rights, and classify and set mineral resources, appropriately extend the validity period and extension period of exploration rights according to different mineral reserves. For marine resources, China should properly handle the coordination mechanism between sea area use right and land use right; improve its transfer, mortgage, lease, and other functions; and improve the usufruct system of uninhabited islands. From the perspective of water resources, China should improve the power of water intake

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rights and clarify the relationship between water intake rights and geothermal water and mineral water mining rights. (5) Strengthening the property right protection mechanism of natural resource assets In addition to establishing and improving the property rights system of natural resource assets, it is necessary to strengthen the property right protection mechanism of natural resource assets to provide a guarantee for its effective implementation. First, China should improve relevant laws and supervision to ensure that there are sufficient funds to protect the legitimate rights and interests of obligees. If the interests of a natural resource obligee are damaged owing to a proposed policy, it would be necessary to pay compensation, and to clearly distinguish between active illegal acts and illegal acts caused by the policy. Second, China should properly handle disputes over the ownership and infringement of natural resources; formulate a settlement mechanism combining civil, administrative, and judicial treatment methods; and clarify the final ownership of natural resource property rights. Finally, China should improve the linkage mechanism between the administrative department and the judicial department, promote joint law enforcement between the people’s court and the natural resource department, and reasonably prevent and crack down on illegal and criminal acts in the field of natural resources.

10.2.2 Improving the Accounting Mechanism of Natural Resource Assets and Liabilities The rapid development of the Chinese economy has led to further deterioration of the environment. The focus on GDP as a measure of economic growth has been increasingly questioned, and the corresponding indicators of natural resource asset accounting have been paid more and more attention. China’s management and accounting of natural resource assets lags the systems in place in developed countries, and needs to be improved. (1) Improving physical and value quantity accounting China needs to speed up the formation of a unified method and system for natural resource asset accounting. It should learn from the experience of other countries in combination with its own national conditions. First, it is necessary to conduct physical quantity accounting, and then gradually improve value accounting. On the premise of clarifying the physical quantity of natural resources, divide them according to economic benefits, and calculate the value of resources with economic benefits. Second, China should carry out resource accounting of important assets closely related to human life, such as land, mineral, and water resources, followed by detailed accounting of all resources. This is because China is rich in natural resources, and it takes a long time to calculate each type of assets. Finally, each resource should be carefully divided. For example, mineral resources can be divided according to whether they are scarce and their strategic value. For accounting methods, China

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can learn from those adopted by foreign countries, starting with analysis of the relationship between natural resource assets and economic development, based on the economic relationship between input and output, as well as analysis of the characteristics of various resources. In this way, the accounting methods suitable for national conditions can be formulated. (2) Increasing ecological value and social value accounting At present, the accounting of natural resource assets mainly considers physical and value quantity accounting. However, natural resources, in addition to having economic value, also have an external impact on ecological and social development. On the one hand, the development and utilization of natural resources may destroy the surrounding ecological environment, and on the other hand, may bring employment opportunities and huge economic value to a region, thereby driving development. Therefore, China should consider increasing the accounting of ecological value and social value in the accounting of natural resource assets. This is a huge project, which should be gradually improved with advances in science and technology. In the research process, China should explore the construction of a scientific and unified ecosystem accounting platform and carry out ecosystem accounting research. (3) Establishing a standardized accounting system for natural resource liabilities The establishment of natural resource liability accounting can improve the natural resource asset liability accounting system, manage the resource value, and timeously determine and reduce the impact of excessive consumption of natural resources on the natural environment. At present, natural resource liabilities are mainly accounted for through three aspects: excessive consumption of resources, ecological damage, and environmental pollution [5]. The definitions of these three aspects overlap, so that there is no way to accurately distinguish the contents, leading to overestimation of the accounting of natural resource liabilities. Therefore, China should further clarify the specific content of the accounting scope of natural resource liabilities, clarify the carrying capacity of various natural resources, designate the part exceeding the carrying capacity as liabilities, and strengthen the integration of liability statistics of various natural resources throughout the country. This would enable the formation of a unified statistical standard of natural resource liabilities. On this basis, a standard natural resource liability accounting system could be established. (4) Expanding formation scope of natural resource balance sheet First, intangible natural resources should be added to the scope of accounting. At present, the supervision of natural resources is based on more tangible natural resources. However, according to the classification of natural resources by the SEEA, some intangible resources, such as human, environmental, and climate resources, are also categorized as natural resources. Intangible natural resources have ecological value and play an important role in balancing the ecosystem. Although it is difficult to measure the assets and liabilities of intangible natural resources with current technology, inevitable technological advances would make it possible to include intangible natural resources in the preparation scope of a natural resource balance

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sheet in the future. Second, in the future, intangible natural resources should be integrated with tangible natural resources, natural resources should be integrated with the environment, [6] and both should be incorporated into the preparation of a natural resource balance sheet to provide an overall picture. In this way, an optimal balance sheet of natural resources would be formed. (5) Establishing an accounting and evaluation system for natural resource assets China should establish a follow-up evaluation mechanism to guide natural resource asset accounting, forming a circular system. China should learn from the evaluation of the value-added of various natural resource assets and the sustainability of natural resources in the United States, timeously find deficiencies in the accounting system, and continuously maintain control over natural resource accounting. Furthermore, the evaluation system should be combined with the responsibility evaluation mechanism of natural resource accounting personnel to encourage staff to fulfill their responsibilities and further improve the efficiency of natural resource asset accounting.

10.3 Innovation of Natural Resource Asset Mechanism 10.3.1 Improving the Natural Resource Trading Market The effective development, proper utilization, and strict supervision of natural resources rely on a sound natural resource market system, which can act as an “invisible hand” by aggregating all the economic relations generated during the circulation of natural resources. Establishing a well-functioning natural resource market system requires focus on five levels: the first-level market is the transfer market of natural resources; the second-level market is the transfer market of right to use; the thirdlevel market is the trading market of products derived from deep processing of natural resources; the fourth-level market is the market of debt or equity of natural resources; and the fifth-level market is the market of natural resources as financial derivatives [7]. While understanding all levels as a whole, the linkages between levels should also be analyzed for the sustainable development of natural resource markets and the effective allocation of natural resources. (1) Building an interconnected natural resource trading market By perfecting the property rights system, the natural resource market can be improved at different levels. For primary, secondary, and tertiary markets, emphasis can be placed on the construction of regional natural resource trading markets, built according to each region’s own conditions. For example, a regional trading market could be established based on the metropolitan area of the Yangtze River Delta to achieve coordination and linkage within the region. For the fourth- and fifth-level markets, local governments could be encouraged to jointly establish a national natural

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resource stock market. This stock market should be independent of the existing Shenzhen Stock Exchange or Shanghai Stock Exchange, owing to its complex nature, wide variety, and skills required in natural resources. In addition to establishing the stock market, it is necessary to strengthen the management of the trading platform, learn the international advanced management mode, and conduct all-round supervision and management of the characteristics of various natural resources and different trading rules at all levels of the market. For markets at different levels, an information sharing platform can be established to improve the overall efficiency, reduce various transaction costs, and create a world-class natural resource trading market. (2) Building an innovative natural resource financial market China should strengthen the communication and cooperation between the natural resource asset trading market and the financial market, and improve the financial market’s support for natural resource asset trading, mainly to innovate the fourthand fifth-level natural resource trading markets. Furthermore, China should expand the breadth and depth of the natural resource market through financial markets. First, a system for the transformation of natural resource assets into financial assets should be designed. The securitization of a natural resource needs to involve many processes and interests of many subjects, but China’s current Securities Law does not address the securitization of natural resources. China needs to improve relevant systems and supplement various system details, such as the basic repurchase system and quotation system, so as to reduce the possibility of hidden dangers in the future. Second, innovative financial products of natural resources should be encouraged. Creditors’ rights, equity, and financial derivatives can be adopted to increase the variety of transactions, and the right to use natural resources can be developed to carry out various financial services, such as pledge business, financial leasing business, deposit and loan business, option business, and factoring business. To meet diversified needs, all kinds of capital would flow in, increasing the degree of direct financing. Finally, with the improvement of the financial level of natural resource assets, the corresponding supervision of natural resources would be further strengthened, bringing further innovation and integration of the natural resource asset trading market and the financial market. (3) Establishing a comprehensive natural resource market evaluation system China’s overall management of natural resources is still in the initial stage, and the moment is opportune to carry out dynamic monitoring of natural resource markets and to construct an evaluation system. China should design an evaluation system for the multi-level natural resource trading market from the aspects of economy, society, and environment, and evaluate the overall operation of the natural resource trading market from this three-dimensional perspective. To establish clear evaluation criteria, China could integrate the following four aspects: natural resource transaction cost, market efficiency, customer satisfaction in the market, and whether the personnel in charge of each node in the market comply with the relevant responsibilities. The evaluation system of the market needs to form a closed loop, from market strategy to market design, then to market implementation, and finally to the whole market

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optimization, before entering the next cycle. In this way, the whole process could bring continuous improvements to the natural resource trading market. The evaluation criteria could guide the work focus of each stage to some extent. In the current early stages of development of the evaluation system, it could be integrated with the credit system of the natural resource market, and investors and financiers could be evaluated alongside the rationality of the market design, so as to reduce illegal and criminal acts related to natural resources.

10.3.2 Improving the Exit Audit System of Natural Resource Assets for Leading Cadres Exit audits of natural resource assets can better guarantee the exploitation and sustainable development of natural resources and promote the construction of an “ecological civilization” system. The Chinese government first proposed exit audits of natural resource assets for leading cadres in 2013, but nearly a decade later, the system still has difficulties, including the extraction and use of relevant data, an imperfect audit index evaluation system, auditors insufficient skills in natural resources, and the existence of traditional audit technology. The exit audit system of natural resource assets for leading cadres still needs to be improved. (1) Improving the index evaluation system A sound and reasonable index evaluation system provides a unified index for audit work and can guide auditors in carrying out their work. A good evaluation index system needs to be combined quantitatively and qualitatively. The index not only needs to quantitatively evaluate the economic benefits brought by natural resource asset management, but also qualitatively evaluate its environmental gains and losses from the perspective of ecological environmental protection. China should establish a unified index evaluation system, and include as many indicators as possible. When auditors perform audit work, they can use their own skills to select indicators that conform to specific conditions and set corresponding weights. Finally, the index system should be implemented systematically and incorporated into the assessment of leading cadres when they leave office to improve responsibility for protecting and managing resources. (2) Improving the comprehensive professional ability of Auditors The premise of the audit work is to ensure that staff have the professionalism, independence, and objectivity of the audited content. However, at present, the nature of exit audits of natural resource assets for leading cadres puts forward new requirements for professional knowledge that auditors need to master, and there is a need to maintain independence and objectivity. The primary task of audit staff is to improve their professional ability in the field of natural resource assets. The professional quality of auditors can be improved from the following three aspects. First, the training of

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existing auditors should be strengthened. The National Audit Office should formulate scientific training plans for government audit institutions at all levels, invite experts to provide professional technical guidance, and conduct unplanned assessments of auditors on natural resource accounting and basic resource knowledge. The office should keep up with trends and train auditors on big data technology for natural resource asset audits. Second, the audit team should be optimized. Government audit institutions at all levels can form partnerships with colleges and universities to train skilled professionals in natural resources, environmental protection, and data mining. On the one hand, this could improve the overall professional knowledge level of natural resources; on the other hand, it could facilitate the innovation of new audit technology. Third, cooperation between audit departments and natural resource departments should be strengthened. Communication and cooperation between the audit department and the natural resource department could help them understand the relevant knowledge of natural resources in a short time, improve their professional quality, and enable them to complete their work more effectively. At the same time, the departments could control and test the performance of leading cadres, bring the management behavior of leading cadres into the audit scope, and develop an optima natural resources audit system for leading cadres departing office. (3) Using new technological innovation audit methods There are large volumes of data and a large number of indicators in the exit audits of natural resource assets, and thus, auditors need to use Geographic Information System, spatial analysis, remote sensing image, image recognition, and other technologies to comprehensively analyze the relevant data and indicators. To deal with the huge and growing volumes of data in audits, it is very important to optimize data analysis algorithms with big data technology. First, natural resources are digitized from both qualitative and quantitative perspectives by means of information technology to build a natural resource management information system. Second, data mining techniques can be innovated to automatically weed out unnecessary and erroneous data. Finally, neural network technology is used to optimize the algorithm of the audit analysis model to help auditors reduce audit workload.

10.4 Establishing a Land and Resources Planning System 10.4.1 Improving the Spatial Planning System Land and resources spatial planning is a comprehensive deployment activity for state-owned land resources. In the future, the rational development of territorial space planning should correctly handle the balance between land resource protection, economic development, and population growth, and scientific planning should be undertaken from the perspective of development. Due to China’s vast territory and rich natural resources, the whole system and contents of land and resources spatial

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planning are complex and huge. Even though land and resources planning has been in place for many years, and the system as a whole has been continuously improved and enriched, there are still problems in the process of implementation. The problems include an imperfect national spatial planning management system, separation of powers and responsibilities between departments; lack of an optimal legal and regulatory guarantee system; backward territorial space planning technology; and weak consciousness of environmental protection. Given the existing problems in the spatial planning of land resources, further improvements are necessary to make efficient use of land resources and maximize the function of the spatial planning system. (1) Construction of land spatial planning management system China needs to develop a comprehensive hierarchical management system for its territorial space and establish management plans at the national, provincial, and county levels. At the national level, unified management of land and resources should be carried out. However, due to the complexity of land and resources planning and the lack of flexibility in step-by-step implementation, territorial spatial planning needs to be decentralized at different levels. Lower-level departments must meet the instructions of higher-level departments and make reasonable planning based on local regional characteristics. Local authorities should have the power to ensure that planning is more rational and flexible. It is necessary to strengthen the control of higher-level departments over lower-level departments. After clarifying the type of land planning, it is necessary to supervise it to ensure that the nature of actual land use is consistent with the type of land planning. Even if the vertical management system is optimized, the construction of a horizontal management system cannot be ignored. Although different functions exist between different planning departments at the same level, there is overlap. It is necessary to clearly distinguish the rights and responsibilities of different departments, avoid overlap and dislocation of regulation between different departments, and avoid the phenomenon of “passing the buck.” In addition, different departments have high skills barriers when dealing with resources outside their fields of expertise; this is not conducive to cooperation between departments. Therefore, the breadth of knowledge of employees should be improved to ensure that overall advantages are achieved. (2) Strengthening the informatization development of land spatial planning First, territorial space planning requires the integration of multiple regulations. To avoid confusion of territorial space planning information, network information platforms should be established to ensure the accuracy of territorial space planning decisions. The establishment of network information platforms would enable better collection of the huge data of land and resources; the platform could use big data and other important technical means to integrate the obtained data and ensure timely updates in the database. This would help all departments to obtain the required data, and facilitate overall territorial space planning. Second, while establishing the information platform, data security should be ensured. Land management departments must modernize information security prevention and control technology, rely

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on information technology to encrypt data, and identity access rights, so as to the data from being stolen and to ensure land security. A monitoring and evaluation mechanism should be established to monitor the overall dynamics of land and space planning, incorporate the “three lines” (i.e., state; provinces, including autonomous regions and municipalities directly under the central government; and counties) into the one map supervision and implementation system of land and space planning, clarify the physical boundaries of the “three lines” as a whole, and facilitate strict management. Finally, a modern information mapping system should be introduced. The administrative departments of land information should attach importance to the influence of science and technology on surveying and mapping geographic information technology; and apply information surveying and mapping to the analysis of management areas of land planning, surveying and defining land resources, developing and arranging land resources, real-time monitoring of land resources, and planning and designing land space. Surveying and mapping personnel should update their knowledge of modern surveying and mapping information technology and integrate it optimally with their existing knowledge; this would promote rational development of land and resources. (3) Establishing a correct awareness of ecological protection With rapid economic development, ecological protection and green development have become important priorities. In land and space planning, it is important to implement the concept of “green water and green mountains are golden mountains and silver mountains,” coordinate development and protection in the delimitation of the “three zones and three lines,” (i.e., refers to three types of space, namely urban space, agricultural space and ecological space, corresponding to the demarcated urban development boundary, permanent basic farmland protection red line and ecological protection red line respectively) [8] change the concept of the economy, integrate awareness of ecological and environmental protection into planning, and balance the relationship between ecological protection and economic development. The red line of ecological protection should be scientifically determined, and boundaries for urban and rural development areas should be reasonably defined. There should be strict adherence when areas are marked for no development, and no occupation of land with ecological functions and agricultural and livestock production for economic development. While actively raising awareness, China should also increase passive measures.

10.4.2 Improving the Rural Land Resource Planning System China’s natural geographical conditions and natural resource endowment have resulted in unbalanced development between urban and rural areas and chronic poverty in some areas. At present, China is in the stage of transformation from poverty alleviation to rural revitalization. Rural natural resources are the basis for farmers to survive. Rational use of natural resources has an important impact on the

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long-term development of rural areas; in particular, the relevant policies of rural land resources play a positive role in rural areas, and should be the focus of research. At present, the management of rural land resources is characterized by disorder and corruption, which restrict the revitalization of rural areas. China should take active measures to solve relevant problems at this critical point, so as to achieve orderly, legal, and standardized management of rural land resources. (1) Strengthening the guarantee of land for rural revitalization First, the overall planning and layout of rural land should be based on the differences of urbanization development stages, take rural industrial development rule as the criterion, use the characteristics of different types of industries as the starting point, and comprehensively consider the county level to plan the spatial layout of rural land as a whole. This can be achieved by controlling the proportion and area for rural industrial development and farmers’ housing demand, exploring the paid withdrawal system of homesteads, and taking the stock of homesteads as guidance to ensure reasonable land demand by farmers for housing [9]. Second, a pilot reform of the land approval system for industrial integration and development in rural areas should be carried out. Detailed rules for the implementation of land for industrial integration development should be formulated according to relevant policies and in combination with the actual situation of each province. According to the decentralized layout of the three major industries in rural areas, diversified land use modes should be explored based on local conditions. However, it should be noted that the land for the integrated development of rural industries should not be used for projects unrelated to rural agricultural resources, such as pure commerce and pure industry, and should not be changed or sublet without authorization. Third, it should scientifically delimit various spatial control boundaries, such as the ecological protection red line, permanent basic farmland, historical and cultural protection line, and village construction boundaries. Rural production business must be carried out without encroaching on the red line. Occupation of cultivated land in violation of laws should be strictly prohibited and non-agricultural activities should be curbed. (2) Improving the policy means of cultivated land protection First, the objectives of cultivated land protection should be clarified and cultivated land monitoring and supervision strengthened. The provincial, municipal, and county governments should, according to the results of the third national land survey, clarify the objectives of a new round of cultivated land protection. Land and space use control should be gradually refined to agricultural land and cultivated land use control, and the different control objectives among cultivated land, permanent basic farmland, and grain field should be clarified. Permanent basic farmland and cultivated land should be comprehensively verified and restored, and the transformation of permanent basic farmland and cultivated land to non-agricultural land and other uses should be dynamically controlled by means of field inspection and information technology. The government at the provincial level should lead the government at the municipal level to record and map the cultivated land, and control its long-term use. Second, China should strengthen the balance between occupation and compensation and

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encourage compensation before occupation; each province should formulate corresponding supplementary cultivated land indicators based on regions and cities, so as to balance the supplementary cultivated land indicators among cities through the adjustment and replacement system of indicators. The focus should be on the quality of supplementary cultivated land; verifying the location, area, and other relevant data of new cultivated land; and reporting to the warehouse. Third, a compensation mechanism should be established for cultivated land ecological protection, and a cultivated land protection fund should be set up, with income derived from land transfer as a part of the fund. Compensation should be given to the subject undertaking the task of cultivated land protection according to the specific situation, so as to engender a strong sense of responsibility. (3) Improving the policy of linking the increase and decrease of land use First, China should prioritize the interests of the people, improve farmers’ right to information and right to comment on the implementation of the policy linking the increase and decrease of land, and provide sufficient right of appeal and prosecution for “black box” behavior in the operation of index transactions. To guarantee the rights of farmers, rural collective land should be the priority and the benefits of land resource development and utilization should be distributed among rural collective organizations by an income distribution system of land index transactions. Second, there should be reasonable arrangements for restoration. Based on regional economic conditions, some remote villages with relatively difficult and backward conditions and villages with combined development of urban and rural areas can be targeted for restoration. In considering increases urban land construction, the focus should be on inefficient urban land for secondary development. In considering intensive use of construction land, the focus should be on small villages with small populations, and vacant land and vacated homesteads in villages should be rationally developed. Third, the market mechanism should be used to establish a national construction land index trading market, balance the supply and demand of indicators, promote cross-regional transactions of indicators, and realize effective allocation of land resources. Fourth, cooperation should be strengthened among departments responsible for agriculture, rural areas, and tourism, among others. China should jointly formulate a strategy of linking growth and reduction with industrial development to boost rural revitalization and support the development of rural tourism and other undertakings.

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10.5 Strengthening the Trade Mechanism of Natural Resources 10.5.1 Export Control Reform of China’s State-Owned Natural Resources The conflict between China and World Trade Organization (WTO) members, such as the United States and the European Union, on natural resource export restrictions has long existed [10]. There have been two well-known major cases in China’s trade process, namely the “raw materials case” in January 2012 and the “rare earth case” in March 2012. In both cases, the final ruling went against China. Natural resources are a very important part of export control. They are not only scarce and exhaustible, but also strategic. From time to time, China’s measures to control the export of natural resources have been challenged by other countries. To better protect natural resources, China not only needs to improve the relevant export control laws, but also should add some indirect measures. (1) Improving the natural resource export control law In recent years, China has accelerated the formulation and promulgation of laws related to the export control of natural resources. On October 17, 2020, the Export Control Law was officially promulgated and came into force on December 1, 2020. The Export Control Law integrates and summarizes previously decentralized laws and supervision. However, China should formulate clearer laws on the export of natural resources. First, as a member of the WTO, China has to abide by its rules. In formulating new laws, China we should link the relevant legal provisions with the WTO rules on natural resource exports. Second, it is necessary to clearly formulate the relevant export management process system in the law. The export of natural resources must be in strict accordance with the relevant processes. Each resource should be classified accordingly, and the control object should be clearly defined, so as to avoid multiple management heads and to reduce the conflict of interest between various departments; this would improve the efficiency of the whole process. Third, China’s emergency mechanism is insufficient. China should establish a corresponding emergency mechanism in laws on natural resource export supervision. There should be a specific response mechanism to deal with each special case. In the event of an international lawsuit, a professional legal team should be able to prepare corresponding plans timeously and provide specific and sufficient evidence to prove China’s legitimacy in the lawsuit. Fourth, the catalog of export management needs to be integrated to improve its integrity and accuracy. At present, there are two main catalogs for export products, namely, the Catalog for the administration of import and export licenses of dual-use items and technologies and the Military export administration list; These could be integrated into one catalog to categorize products and technologies according to the scarcity of resources. Fifth, China needs to clearly stipulate the purpose of protecting natural resources and protecting the environment

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in the Export Control Law, which would indicate that it attaches importance to the protection of the environment and natural resources. (2) Implementing indirect restrictive measures China’s export dependence has always been at a medium high level, showing an upward trend year by year. The export control of various natural resources has always been the primary task. Previously, China adopted policies of direct export restrictions in the export control of natural resources, such as tariffs and quotas. The fundamental purpose of this practice was not to protect natural resources and the environment, and other countries complained about it. Therefore, it is particularly important to implement indirect restrictive measures to protect natural resources. This would not only enable China to achieve the purpose of restricting resource exports and protecting natural resources and the environment, but also be permissible in the WTO system. Resource taxes are a good measure to indirectly restrict the export of natural resources. Resource taxes can substitute for tariffs. Levying resource taxes on natural resources from exploration and exploitation to production and consumption can increase the cost of natural resources, thereby increasing the price, and the demand in the international market would be reduced. China should further improve and implement the resource tax system. First, the tax scope of resource taxes should be expanded and the tax items related to natural resources increased. At present, the tax scope of China’s resource tax involves only mineral products (including energy minerals, metal minerals, non-metallic minerals, and water and gas minerals) and salt. China should also include renewable natural resources among the resource tax items, including those whose existing stocks are about to deplete and those with weak regeneration capacity, long regeneration cycle, and high regeneration cost, such as forest, land, ocean, and grassland resources. China needs to fully consider resources subject to export restrictions and integrate the tariffs that had to be cancelled into the resource tax rate. Second, China should refine the tax rate. China’s overall tax rate on natural resources is lower than that of other countries, which is not conducive to the protection of natural resources and environment. Therefore, China should appropriately raise the tax rate. Moreover, China does not have a particularly detailed plan for the formulation of tax rates. Tax rates should be designed and formulated according to the renewability, scarcity, strategic nature, and export restrictions of different resources. Third, taxes should be levied at the exploitation stage on natural resources and should be collected based on volume. China’s Resource Tax Law currently stipulates that resource tax need not be paid on the resources used by enterprises for continuous production of taxable products. The resource tax is levied at the sales stage, which is not conducive to curbing the waste of natural resources from the source. Therefore, the tax payable needs to be calculated according to the mining quantity rather than the sales quantity. For natural resources levied on an ad valorem basis, if the state needs to restrict exports, it should change the existing price setting based on the sales price to the standard price setting in the international market.

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Moreover, China needs to establish a consultation mechanism for export restrictions on scarce natural resources. China should strictly abide by the relevant provisions of the WTO. When imposing export restrictions, China should promptly inform importing countries that it has established export restrictions in order to ensure that the Chinese economy is not harmed and to protect natural resources and the environment. China should also establish a corresponding compensation mechanism. If the relevant export restrictions cause certain losses to the importing countries, China can pay corresponding compensation in time and under reasonable circumstances.

10.5.2 Natural Resource Supervision from a Global Perspective Nowadays, various adverse currents are emerging in the world, such as efforts to oppose economic globalization, trade liberalization, and international cooperation. However, for problems related to natural resources, global supervision and cooperation in the field of natural resources is necessary. The concept of “ecological civilization” is a global by nature, and requires that China’s natural resource supervision be more actively integrated into the global natural resource supervision system by building a community of natural resource interests. To promote the overall stability of global natural resources, to establish strategic partnerships for natural resources, and to strengthen China’s voice in the global natural resource regulatory system, China should further improve the natural resource regulatory system from a global perspective. (1) Strengthening top-level design and building a cooperation platform First, the top-level design of a global natural resource regulatory system needs to be strengthened. China should clarify the path of international cooperation and exchange in the field of natural resource supervision, and determine its role there in. A special fund for international exchanges and cooperation among various countries in the field of natural resource supervision should be established. As a member of the World Conservation Union, China should actively offer advice, assume responsibility for the supervision of global natural resources, and prioritize the goal of protecting the global ecological environment. Second, a cooperation platform needs to be built. China should strengthen close cooperation with the EU and other institutions. The key is to establish an international research platform for exchanges and cooperation in the supervision of natural resources, such as natural resource asset accounting and natural resource diversity management. China should also encourage domestic organizations responsible for the supervision of natural resources to actively communicate with international organizations and jointly establish an international information exchange mechanism, transaction consultation mechanism, and cooperative investment mechanism. (2) Developing advantages and strengthening resource exchange

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China is committed to a path of peaceful development and pursues a policy of peaceful utilization of international natural resources. China should give full play to its advantages in the world, take the market mechanism as the basis, use its experience in natural resource management, reasonably strengthen the exchange of resources with other countries, and promote the optimal allocation of natural resources worldwide. First, China is a developing country with a huge market. With economic development, the demand for foreign goods in the domestic market is gradually increasing. China can strengthen the management of its own market, adopt new technologies for the management of natural resources, and participate in the market for natural resources. Second, China has long attached importance to natural resource technology, continuously increased investment in such technology, and achieved excellent performance. Therefore, China can increase the management of natural resource technology, improve its own technical level, and introduce undeveloped resources by exporting technology to some undeveloped countries. Third, China should provide subsidies to natural resource importing enterprises to attract more natural resources to flow into China through international trade. China can also encourage enterprises to invest and build factories in resource-rich countries and transport natural resources back to China in the form of finished products, so as to reasonably protect China’s natural resources.

10.6 Improving the Multi-agent Natural Resource Supervision System 10.6.1 Improving the Government Administrative Law Enforcement System Natural resources are a gift from nature and the origin of human existence. However, advances in science and technology have led to the abuse of natural resources by people. The public goods nature of natural resources means that the government has to intervene on behalf of the public to rectify this situation; the government should assume the main responsibility for environmental management. Therefore, the Chinese government needs to constantly improve the law enforcement system and strengthen its leading role. (1) Establishing a uniform definition and statistical standards for natural resources At present, China’s natural resources are managed in a decentralized manner. Each regional department looks at the problem of natural resources from the region’s own perspective, which to some extent ignores the whole and obscures the overall picture of natural resources, leading to the lack of a unified standard for the definition of various natural resources. Although this system reflects measures taken in accordance with local conditions to a certain extent, different standards for natural resources have led to illegal activities, whose perpetrators take advantage of the lack of definition of

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natural resources. This is not conducive for centralized management by the government and will further cause unaccounted losses of natural resources. Therefore, while adjusting measures to local conditions, all government departments should adopt a unified approach, strengthen the overall awareness of natural resources, establish unified definitions and standards for natural resources as soon as possible, and clearly identify the differences of various natural resources. (2) Concretizing the legal system of natural resources First, China’s existing laws on natural resources, such as the Fishery Resources Protection Law and Land Management Law, list relevant principles and systems from a macro perspective. To enable the government to better comply with the law, China needs to make relevant laws more systematic and specific, and formulate specific provisions to make them operable. Second, China’s natural resource laws do not give the government the right of enforcement, but rely more on “soft restraint,” which obliges cooperation through inspection. As a result, when some parties that break the law do not fulfill their obligations, law enforcement officials have no clear disciplinary rules for enforcement. Giving natural resource authorities enforcement powers, instead of requiring them to apply to courts for enforcement, could improve the efficiency of enforcement and ensure timely implementation. (3) Enhancing the professional competence and diligence of government staff China should conduct unified management of natural resources from the overall perspective of natural resources. Maintaining a holistic perspective requires governments to re-examine the interrelationships and interactions of various natural resources. First, to improve the quality of supervision, China needs to set up lectures and study groups on a regular basis so that the staff can study in a targeted way, strengthen the professional knowledge reserve of grassroots supervisors, improve the overall quality and skillfully use new natural resource detection software. Second, it is necessary to improve the relevant staff’s sense of responsibility and to improve the assessment mechanism of leadership ability. To design a scientific and reasonable assessment system, the weights of indicators related to the supervision of natural resources should be determined by experts to ensure that the indicators are specific, reasonable, and able to be carried out in practice. (4) Handling the relationship between the central and local governments First, for a long time, in the management of natural resources, the division of powers and responsibilities between the central government and local governments has been unclear, making it difficult for the central government to directly supervise natural resources effectively; thus, powers and responsibilities have devolved to local governments. The goals and performance of the central and local governments differ, leading to the principal–agent problem. The central government focuses on the integration of natural resource protection, the economy, and the ecological environment; meanwhile, local governments, under pressure to increase GDP, pay more attention to the economic value of natural resources than their protection. Although the principal– agent problem is inevitable, the central government can establish a target responsibility system for local governments, so that their overall goal is biased toward

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protecting all three categories (natural resources, the economy, and the ecological environment). Second, natural resources are diverse, varied in nature, and widely distributed. Each region can determine its development direction and construct its own development plan based on its resource endowment advantages. This means that China’s regulatory system for natural resources needs to form a hierarchical regulatory model, giving full play to the initiative and enthusiasm of local governments under the unified leadership of the central government.

10.6.2 Building a Public Supervision Platform The public is the biggest stakeholder in the sustainable development of natural resources and should assume the main responsibility for natural resource regulation. In natural resource management, more attention should be paid to the public participation mechanism, giving full play to the power of the public, and forming an invisible participation supervision network for the whole society. However, the public’s understanding of natural resources is not sufficient, the channels for public participation are narrow, and the participation system and complaint reporting system need to be improved. In this regard, China should build a public supervision platform, so that the public is no longer in a weak position to supervise natural resources and can effectively protect their rights and interests. (1) Strengthening the basic guarantee of public supervision First, China urgently needs to establish a platform for the disclosure of natural resource information. The public’s supervision of natural resources should be based on the disclosure of information and obtaining the information required by applying for disclosure on a reasonable basis. To establish an effective and optimal natural resource information disclosure platform, two criteria need to be met. The first is to clarify the scope and process of natural resource information disclosure. All natural resource information that does not involve the state, trade secrets, and private personal data should be disclosed in a timely manner. Public information should be classified according to various natural resources on a holistic basis so that the public can search for the information they need. For some enterprises and other organizations with special requirements for natural resource information, it is necessary to enhance the procedures for applying for public information according to law, so that they can obtain information timeously and efficiently according to certain procedures. It is also important to determine how to disclose natural resource information and the time requirements for disclosure of different types of natural resource information. The platform information should be enhanced with timeous government bulletins and media commentary, and the platform information should be updated through multiple channels. Second, the publicity and education of natural resource knowledge for the public should be strengthened, such as through an education platform, media publicity, and

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popularization of the diversified knowledge of government departments. This would make the public aware of the scarcity of natural resources and give them knowledge to protect natural resources, in their own interests, improving public awareness and enabling them to actively participate in natural resource management. (2) Improving the public participation system First, it is necessary to embed the public’s demands into the relevant policies of natural resource supervision, and to establish whether the public’s demands can be reflected as an important evaluation indicator of the merits of natural resource policies. When formulating policies, it is necessary to incorporate suggestions from the public to make policies more scientific and democratic. Specific provisions should be made on the ways, procedures, and steps for the public to exercise their rights, so that people can express opinions and suggestions on safeguarding their legitimate rights and interests under the protection of the law. Moreover, public scrutiny and whistleblowing need to be encouraged. China’s constitution clearly stipulates that citizens have the right and obligation to report crimes committed by others. However, at present, Chinese citizens are not enthusiastic about reporting illegal use of natural resources. The complaint reporting system needs to be improved. First, the confidentiality system should be improved. The confidentiality of whistleblowers who are not willing to disclose their names should be maintained by the reporting center, so as not to deter them from reporting. Second, there should be clear reward procedures and standards. At present, China has not set specific supervision or reward procedures for reporting illegal acts related to natural resources. China should reward those who make significant contributions by linking the rewards to the value of natural resources or by considering the economic, legal, and social effects of the reports. Third, the efficiency of reporting needs to be improved. On April 1, 2021, the Ministry of Natural Resources’ 12,336 natural resources reporting hotline ceased operating, and the wechat public account 12,336 for reporting illegal evidence related to natural resources stopped receiving reports. Instead, the 12,336 hotline was integrated into the 12,345 government service convenience hotline. Although the 12,345 hotline is beneficial for integrated reporting of natural resources, a single reporting hotline is not optimal. China should enrich reporting channels through weibo, email, and other ways. The government could establish a reporting information sharing platform, classify and register the reports from various platforms, timeously transmit the information to the correct administrative departments, and timeously provide feedback to the informants.

10.7 Summary China has entered a new era of ecological civilization. At present, wastage, destruction, and loss of natural resources in China is very common, reflecting problems in the supervision of natural resources. In the future, China needs to speed up the realization of sustainable development. First, it needs to manage natural resources,

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and timeously establish and improve the natural resource supervision system. In the process of improving the supervision system, China should continuously adhere to the principles of sustainable development, efficient and high-quality utilization, fairness and justice, and overall coordination. On this basis, China needs to improve the system of natural resource assets and accelerate the reform and innovation of the natural resource asset mechanism. It is necessary not only to improve the coordination of land and resources at a regional level, but also to consider how to manage international natural resources at a global level. While strengthening the leading role of the government, it is also necessary to enhance the supervisory role of the public.

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