The Reform of the Compensation System for Ecological and Environmental Damage in China: Natural Resources, Environmental Enforcement, and Legislation

The establishment of the Compensation System for Ecological and Environmental Damage promises to be a milestone development in China’s environmental regulations. Historically, China has used two main legal tools—direct regulation and public interest litigation—to cope with the ecological and environmental damage under its current environmental laws and management systems, but they are unable to effectively break the paradox of “polluted by the enterprises, suffered by the public, paid by the government.” China’s new Compensation System for Ecological and Environmental Damage is becoming a feasible method to comprehensively remedy China’s damaged environment by imposing negotiation and litigation against liable parties that engage in environmental pollution and ecological destruction. This article examines the new system’s theoretical basis, framework, specific designs, and relationships with other existing systems. Additionally, this article provides an empirical overview of China’s Ecological and Environmental Damage reform practice, including its features of non-retrospective liability, high compensation, and insufficient legal support. Given the law’s current reform status, this article introduces two main pathways to address the problems facing authorities and liable parties. It then demonstrates that future steps for devising the new system should rely on systematic legislation derived from four core aspects: the legislative framework & primary principles, liability mechanisms, dispute settlements, and fund management