The establishment of the Ministry of Natural Resources and the Ministry of Ecology and Environment, recently approved in the State Council’s institutional reform plan, has drawn widespread attention.

　　In the afternoon of March 25, Li Wenjun, a professor at Peking University and head of the Natural Resource Management Research Lab at the School of Environmental Science and Engineering, said in an exclusive interview with a reporter from First Finance that for many years, there have been numerous discussions—and even heated debates—regarding institutional reforms aimed at addressing the shortcomings in the natural conservation management system. The current institutional reform plan, which adjusts and reorganizes the functions of several relevant agencies, appears to be a culmination of these previous discussions.

　　Commissioned jointly by the He Ren Charitable Foundation, the Paulson Institute, and the National Development and Reform Commission, the research team led by Li Wenjun has been undertaking the project “Research on the Direction and Path for Reforming the Natural Conservation Management System” since the beginning of 2017. “Compared with the current State Council institutional reform plan, the proposal is broadly consistent with the recommendations previously put forward in this study,” said Li Wenjun.

　 The Four Challenges Facing the Ministry of Natural Resources

　　First Finance: In this round of institutional reform by the State Council, the Ministry of Natural Resources and the Ministry of Ecology and Environment have been established. From an expert’s perspective, could you analyze which key issues this reform primarily addresses?

　　Li Wenjun: The newly established Ministry of Natural Resources and the Ministry of Ecology and Environment have broadly addressed three key issues: From the perspective of property rights, the agency responsible for acting as the trustee for the state’s ownership of natural resources has been transferred from the State Council to the respective competent authorities, shortening the chain of delegation and agency and thereby enhancing management efficiency. From the standpoint of ecosystem integrity, “mountains, rivers, forests, farmland, lakes, and grasslands” are being protected as a holistic entity. And from the perspective of institutional setup, decision-makers (the Ministry of Natural Resources) have been separated from implementers (the Administration of Forestry and Grassland), while implementers have been separated from supervisors (the Ministry of Ecology and Environment).

　　First Finance: In your view, what challenges will the newly established Ministry of Natural Resources face?

　　Li Wenjun: No system can ever be completely perfect. Under the current new management system, the Ministry of Natural Resources may face challenges in four key areas:

　　First, the Ministry of Natural Resources manages both public-interest natural resources (such as various protected areas) and commercially operated natural resources (such as minerals), and therefore requires differentiated management approaches. Public-interest natural resources should be managed based on the principles of resource conservation and protection; typically, the government serves as the primary provider and manages these resources through public finance, and they must not be treated as assets for commercial exploitation. In contrast, commercially operated natural resources emphasize their asset-based nature and can only achieve efficient utilization and allocation through market mechanisms.

　　The multiple attributes of a resource mean that the same resource often simultaneously serves both economic and public-interest functions—for example, the pastoral economic function of grasslands and their public-interest function as ecological barriers. These two functions are mutually causal and inseparable. This raises the question of how the newly established Forestry and Grassland Administration should coordinate with and check and balance other relevant departments, such as the Ministry of Agriculture and Rural Affairs.

　　Most public-benefit natural resources, such as grasslands and forests, are collectively owned. It is a question for the future to consider how the Ministry of Natural Resources—acting as the agent for the “owner of national natural resource assets”—should manage these collectively owned natural resources.

　　Moreover, there’s the issue of how revenue from public-interest, universally accessible natural resources should be allocated between the central and local governments—for example, the allocation of tourism revenues. In addition, the newly established National Forestry and Grassland Administration is primarily responsible for managing various types of protected areas; yet the management approaches differ significantly depending on the specific type of protected area.

　　First Finance: Regarding the issues existing in China’s natural conservation management system, what are your recommendations?

　　Li Wenjun: Traditionally, the goal of environmental protection has been to reduce negative environmental externalities, whereas the conservation of natural resources and ecosystems aims to maintain or enhance positive environmental externalities. Consequently, the nature of their management objects and their respective management objectives differ. Although there is some overlap between the two—such as pollution control benefiting both resource and ecosystem conservation—when it comes to specific management tasks, such overlaps are relatively rare. Therefore, specialized agencies should be responsible for managing publicly beneficial natural resources and ecosystems.

　　We also recommend establishing an independent Natural Ecology and Environmental Quality Supervision Center directly under the State Council, which would assume supervisory responsibilities and be tasked with resource monitoring, assessment of conservation efforts, and ecological early warning, thereby achieving a separation between management and supervision.

　　Handle the relationship between the central and local authorities well.

　　First Finance: In terms of natural resource management, it is crucial to strike a good balance between central and local authorities. What problems currently exist?

　　Li Wenjun: For a long time, in China’s management of natural resources, the division of powers, responsibilities, and benefits between the central and local governments has been unclear, primarily manifesting in two aspects: resource ownership and funding mechanisms.

　　With regard to resource ownership, China’s Constitution stipulates that the State Council acts as the agent for state-owned natural resource ownership. However, in actual practice, the State Council often further delegates specific matters to either the central or local governments to exercise these ownership functions on its behalf. As for the five rights associated with public-interest natural resource ownership—namely, the right of possession, the right of management, the right of use, the right to benefit, and the right to ensure community development—it remains unclear under existing laws and regulations how these rights should be divided between the central and local authorities. Moreover, in terms of management authority, a territorial management model is currently being implemented. Yet not all types of resources are suitable for territorial management—for instance, ecological conservation efforts spanning administrative boundaries.

　　In terms of funding mechanisms, the central government has not established a dedicated fiscal account for nature conservation, and expenditure responsibilities largely consist of phased project expenditures (such as natural forest protection). In local fiscal expenditures, the management of fiscal revenues derived from protected areas lacks effective regulatory mechanisms or statutory (or policy-based) restrictions.

　　In terms of revenue distribution, the goal of universal public benefit in the protection of public-interest natural resources is also not adequately reflected. For example, high-priced admission fees and concession revenues from scenic spots often flow directly into local governments’ treasuries, lacking corresponding oversight mechanisms and policy restrictions. Moreover, the secondary distribution of these revenues also lacks a truly public-benefit orientation, which is a major factor driving local governments to overexploit resources in pursuit of economic gains.

　　First Finance: In light of this, what are your recommendations?

　　Li Wenjun: We recommend adopting a centrally managed model for national-level protected areas that possess the highest or particularly important conservation value. For other protected areas, provided that responsibilities and authorities are clearly defined, we suggest adopting a management model that combines central and local administration.

　　Central direct administration means that the Ministry of Natural Ecology Protection, directly under the State Council, is responsible for all ownership and responsibilities related to protected areas—including the establishment of protected-area management agencies and personnel appointments, all duties pertaining to conservation and community development, and all financial expenditures. The model combining central and local administration primarily assigns the responsibility for community development within protected areas to local governments, while the revenues generated from the management of resources within these protected areas are controlled by the local governments. All other aspects remain consistent with those under central direct administration.

　　For locally designated protected areas, it is recommended to encourage innovation in management models through various approaches. For example, the management authority of these protected areas could be entrusted to civil or non-profit organizations via public service outsourcing. At the same time, it is necessary to develop and implement well-defined institutional frameworks and arrangements specifically tailored to the management of outsourced public services.

　　It is essential to fully recognize that, in terms of both quantity and quality of resources, the natural resources and ecosystems that can be managed through formal institutions represent only a small fraction of China’s land resources. Therefore, beyond formal institutional frameworks, we should encourage local communities to establish community-conserved areas, thereby fully harnessing the role of communities and the public in nature conservation.

　　"Progressive Advancement" Drives Reform

　　First Finance: Could you share some insights into foreign experiences in natural resource management?

　　Li Wenjun: Our research in this area is primarily led by Associate Professor Xu Jianhua from the School of Environmental Science. Taking the United States as an example, the country’s comprehensive system of protected areas is governed at various levels—federal, state, tribal, and local—and the degree of protection varies accordingly. Among these, the highest-level and most comprehensively protected areas are those administered by the federal government. These areas are primarily dedicated to preserving pristine natural environments and historical and cultural heritage, providing resources for recreation, education, and scientific research for both current and future generations.

　　More than half of the United States’ land area is privately owned. Publicly owned lands primarily include areas designated for public services, unutilized lands, and areas that private owners are unable to use. These publicly owned lands are managed by federal, state, and local governments. In general, statistics compiled by international organizations—such as the United Nations Environment Programme and the International Union for Conservation of Nature—cover only protected areas on lands administered by the federal government. The federal government establishes protected areas with varying degrees of restriction in order to strike a balance between conservation and utilization, as well as between broader public interests and local needs. Moreover, U.S. government agencies and conservation organizations also manage privately owned protected lands through private land trusts and conservation easements. State and local governments manage important state parks, state-owned forests, wildlife and habitat areas, and other resource management zones.

　　U.S. protected lands are owned by federal, state, and local governments. The U.S. federal government owns approximately 263 million hectares of land, accounting for about 30% of the nation’s total land area of 919 million hectares. The federally owned protected lands are primarily managed by four major federal agencies: the U.S. Fish and Wildlife Service, the National Park Service, the Bureau of Land Management, and the Forest Service.

　　The funding for the four major management agencies comes primarily from direct appropriations by Congress, as well as voluntary donations from individuals and organizations. For example, the federal government’s annual appropriations for national parks account for 70% to 80% of the parks’ total operating funds. In addition, the National Park Service and the Fish and Wildlife Service also generate revenue from entrance fees and service charges collected at national parks or national wildlife refuges. As for the U.S. Bureau of Land Management, its funding operates under a “separate revenue and expenditure” policy. Although the Bureau of Land Management earns billions of dollars each year from the lands it manages, these revenues are directly deposited into the federal treasury. Its expenditures are mainly financed through appropriations from Congress, with a small portion coming from compensation fees for services provided to other government agencies and the public, fees authorized by Congress, and donations. The funds allocated by Congress are channeled into the financial systems of protected area management agencies either as grants or as earmarked expenses.

　　The National Park Service and the Fish and Wildlife Service derive their revenues from entrance fees and operational income. The Forest Service’s primary revenue sources are timber harvest revenues and operational income. In terms of taxation, U.S. law provides for tax exemptions for federal forests. The Bureau of Land Management’s main revenue streams include helium sales, sales of public lands and resources, fees for holding mineral rights, income from the sale of timber and raw materials, and other miscellaneous revenues. Among the federally owned lands managed by the Bureau of Land Management that are open for recreational use, more than 99% of these areas do not charge the public any fees.

　　First Finance: You suggest taking the realization of the public welfare nature of protected areas as the ultimate goal, and gradually achieving the goal of low or even zero admission fees in stages. Regarding the distribution of revenue generated by local governments, you propose gradually returning conservation benefits to the conservation efforts themselves, also in stages. What considerations underlie this approach?

　　Li Wenjun: We believe that reform should proceed in a “gradual and incremental” manner. At this stage, many local governments are heavily reliant on tourism revenues from protected areas, making it impossible in the short term to fully realize the public-benefit nature of natural resources. During the initial pilot phase of national parks, we identified several common issues: Since funding primarily comes from local governments, central government financial support is relatively limited. Therefore, we need corresponding incentive mechanisms and institutional frameworks to ensure that local governments have sufficient funds to cover their expenditures. Given the insufficient financial capacity of municipal and county governments, the formulation and implementation of policies tend to be weak.