Financing Models for Soil Remediation in China

This report analyzes the financing challenges and models for soil remediation in China, where 16.1% of soil is contaminated. It highlights a critical funding gap, noting that while the government has allocated billions, the total need may reach trillions of yuan. The report discusses the failure of the 'polluter pays' principle due to historical land ownership ambiguities and suggests diversifying investment through green bonds, PPPs, and international loans to attract social capital.

• A 2014 nationwide survey revealed that 16.1% of China's total soil is contaminated, with 1.1% being seriously contaminated. Pollution is more severe in southern China, particularly in the Yangtze River Delta, the Pearl River Delta, and the northeast old industrial base, with heavy metal pollution prevalent in the southwest and south central areas.
• Soil contamination in China is primarily inorganic, with cadmium being the most serious pollutant, accounting for 7% over the standard. Cadmium levels have increased by more than 50% in southwest and coastal regions, and by 10–40% in the north, northeast, and western regions.
• There is a massive funding gap for soil remediation in China. While the '12th Five-Year Plan' allocated 30 billion yuan (USD 4.546 billion) from the Central Government, total investment needs for soil remediation may reach dozens of trillion yuan. For mine land restoration alone, minimum investment is estimated at 0.54 trillion yuan (USD 82.4 billion), potentially reaching 3.46 trillion yuan (USD 528.2 billion).
• The 'polluter pays' principle is often impractical in China due to historical legacy issues. Many former landowners have closed or restructured, and the transfer of industrial pollutants from urban to rural areas makes it difficult to define responsibility. Consequently, the government often bears the costs for historically contaminated sites and farmland.
• China's public land ownership system contributes to ambiguity regarding pollution control rights and responsibilities, unlike the private ownership systems in the US, UK, and Germany which facilitate tracking accountability through 'potential responsible persons'.
• The soil remediation market in China is emerging and growing rapidly. Signed contracts increased from 1.274 billion yuan (USD 193.1 million) in 2014 to 2.128 billion yuan (USD 322.5 million) in 2015. The number of enterprises involved grew from 500 in 2014 to over 900 in 2015, and by May 2017, there were more than 2,600 companies with soil-related businesses.
• Foreign investment, such as World Bank loans, offers advantages including longer terms (up to 50 years for soft loans) and lower interest rates. However, it faces challenges such as overly complex regulatory requirements and slow project cycles due to the need for both domestic and international approvals.
• The report identifies several systemic barriers to soil remediation financing, including an imperfect pricing system where government-approved prices do not reflect real value, a lack of specific tax exemptions or policy incentives, and a legal system that lacks clear provisions on soil pollution accountability.

APA

Dong, Z., Qu, A., Duan, Y., Li, H., Yuan, Z., & Guo, Z. (2018). Financing Models for Soil Remediation in China. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/financing-models-soil-remediation-china.pdf

Chicago

Dong, Zhanfeng, Aiyu Qu, Yunting Duan, Hongxiang Li, Zilin Yuan, and Zhixin Guo. Financing Models for Soil Remediation in China. International Institute for Sustainable Development, 2018. https://www.iisd.org/system/files/publications/financing-models-soil-remediation-china.pdf.

Wikipedia

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BibTeX

@techreport{dong2018financing, author = {Dong, Zhanfeng and Qu, Aiyu and Duan, Yunting and Li, Hongxiang and Yuan, Zilin and Guo, Zhixin}, title = {{Financing Models for Soil Remediation in China}}, institution = {International Institute for Sustainable Development}, year = {2018}, month = aug, url = {https://www.iisd.org/system/files/publications/financing-models-soil-remediation-china.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }