China is home to some of the world’s important forest ecosystems and global biodiversity hotspots. However, the predominance of monoculture forests has left them highly susceptible to diseases and pests, while rapid economic development has made ecological conditions fragile. As a result, these rich natural resources face biodiversity degradation, soil erosion, and flash floods.
To help China address these challenges, the World Bank approved a $150 million loan in 2019 for the Forest Ecosystem Improvement in the Upper Reaches of Yangtze River Basin Program. Implemented in Sichuan Province, this program was the first Program-for-Results (PforR) operation in China’s forestry sector supported by the World Bank. PforR loans link disbursement of funds to the achievement of specific results and support institutional building and innovation.
“The goal of our program is to achieve a vibrant, stable, healthy, and high-quality forest ecosystem that is multifunctional and sustainable,” said Professor Lu Yuanchang, a forestry expert and World Bank consultant.
Improving forest ecosystem management
The program was implemented in 35 counties in Sichuan Province, starting in May 2020. A variety of approaches were adopted to improve forest quality and management, including afforestation and reforestation, diversified species planting, natural forest regeneration, landscape protection, forest tending with supplementary planting, rehabilitation of degraded forests, and assisted natural regeneration. These efforts aimed to build a high-quality and sustainable forest ecosystem.
To create mixed forests in suitable areas, the program selected target trees and removed surrounding interfering trees and shrubs to provide space for their growth. A similar approach was adopted for regenerating natural forests, where surrounding shrubs were cleared to facilitate seed germination and accelerate natural regrowth. For degraded and monoculture forests, broadleaf tree species were selected for intercropping and underplanting, fostering interactions and basic ecological relationships between different tree species to improve forest ecology and enhance productivity. The program also set timber maturation goals and implemented tending measures throughout different stages of tree growth.
Engaging communities key to success
The program carried out consultation and capacity-building activities in 378 towns and 2,477 villages, providing technical training and employment opportunities to over 10 thousand farmers. By the time the program closed in December 2023, 85 percent of households in the community had participated, with women making up 52 percent of direct participants.
The program has already improved village people’ day-to-day lives. “Most of us now work on the forest farm, doing tasks like weeding, clearing shrubs and planting trees. It has changed our lives,” said Li Zhengjiu from Dongxi village. “We used to earn a relatively low income of 1000-2000 yuan a month from farming. This project has made a big difference for us. Now we can earn 3000-4000 yuan a month.”
Farmers had a high degree of autonomy in selecting tree species, ensuring that new plantations met both ecological and economic needs. “We, the village people of Guanba village, made the decision through the village committee meetings, and the entire village agreed. We planted medicinal trees such as huangbo, duzhong, and ginkgo,” said local resident Taipei Lei. “As a result, we are benefiting more. Now, we can find jobs and earn money. In the future, when the medicinal trees grow into a forest, we can also reap some economic benefits.”
Building institutional capacity and promoting carbon solutions
The program supported technical and institutional capacity building for sustainable forest management, including the development of incentive-based ecological compensation mechanisms and a market-based inclusive forest carbon trading framework. It has shaped the future carbon market setup in Sichuan and conducted eco-compensation policy reviews, including payments for environmental services.
A major achievement was the approval of the Sichuan Inclusive Forest Carbon Offset Methodology, which laid the foundation for the establishment of the first forest carbon trading platform in Bazhong City. In May 2023, the city successfully piloted the first forest management carbon-trading project in Sichuan Province.
Supported by the program, long-term provincial and county forest management plans were developed, and the first provincial forest management technical guidelines were approved and adopted. “The program has provided guidance, explored methods, found a path, as well as fostered talents for Sichuan’s sustainable forest management,” said Chen Xiaozhong, director of the Sichuan Provincial Forestry Administration.
Achieving impactful results
As of the end of December 2023, the program had completed afforestation of 130,000 hectares, including promoting natural regeneration on 6,700 hectares, establishing new mixed forests on 29,500 hectares, and transforming 93,100 hectares of degraded and monoculture forests into mixed forests. The proportion of mixed forests in the program area increased from 6 percent to 62 percent. The single-species forests have been replaced with a combination of mixed coniferous and broadleaf forests.
New mixed-species plantations, rehabilitated degraded forests, and improved forest quality have significantly strengthened forest ecosystem functions. These improvements have enhanced water-holding capacity and promoted soil conservation, biodiversity conservation, and carbon sequestration in the program area. Innovative models have strengthened the resilience of forest ecosystems to natural disasters associated with climate change.
The program has made a significant contribution to global public goods through carbon sequestration and storage by the improved or restored forest ecosystems. A GHG accounting assessment at program closure found that the program is estimated to generate 23.53 million tCO2eq of carbon sequestration over a period of 30 years, and 3.90 million tCO2eq within the five years of project duration.
The success of this program has also encouraged its replication and scaling up nationwide. The National Reserve Forests Program (NRFP) in Sichuan adopted similar approaches and financing models. As of December 2023, it had leveraged US$11.5 billion, which will generate about 80 times more carbon sequestration than the World Bank-supported program itself.
