Seeking damages

With no law governing pollution compensation in China, victims can become double losers. Former eco-official Zhang Kunmin tells Meng Si why legislation is needed – but will still take 10 years to emerge.

Compensation paid to victims of major environmental incidents in China in recent years has failed to meet public expectations. The Ministry of Environmental Protection (MEP) has published a document outlining its views on the issue – which it hopes will start a process that leads ultimately to legislation and a fairer compensation system. Here Zhang Kunmin, former deputy director of the State Environmental Protection Agency (now the MEP) tells Meng Si why change is needed.

Meng Si: Why did environmental compensation concern you initially? Why do you think it’s important?

Zhang Kunmin: In 1985, I was transferred from Tsinghua University into the state environmental protection system and, for 10 years, held the post of deputy director of the State Environmental Protection Agency, where I had responsibility for regulations and policy.

Conditions were tough then. The state had made it clear that environmental protection was a fundamental policy, but our actual powers and funding were out of sync with the seriousness of the task. Even so, we were committed and really hoped our efforts would see China avoid the “pollute first, clean up later” path that developed nations had taken. Looking now at how environmental protection has evolved in China, it seems we still failed to avoid that route. It’s worth thinking hard about why.

After retiring, I taught in Japan for three years, and I visited Minamata city, where Minamata disease occurred, and talked this over with a number of Japanese academics. There are three main lessons to take from Japan. First, an economy that doesn’t care about the environment is uneconomic. For example, prior to the UN Conference on Environment and Development in 1992, Japan reviewed the economic costs of three major public incidents, including the problems at Minamata, and calculated that compensation and restoration costs in this case were 103 times higher than what it would have cost to prevent it in the first place.

Second, once an environmental problem arises, it takes a huge amount of time to deal with it fully. Minamata disease was first identified in 1956, but it took 48 years for the process of local court judgements and appeals to lead to a Supreme Court decision in 2004. And then it wasn’t until 2009 – 53 years after the problem emerged – that a law on assisting the victims was passed.

Third, Japanese scholars repeatedly emphasise that the environment cannot truly be protected until people’s legal rights are guaranteed.

China is undergoing accelerated industrialisation and explosive urbanisation, and facing grave environmental challenges. We need to examine Japan’s experience and learn from it.

MS: What is the state of environmental compensation in China today? What problems are there?

ZK: In some of China’s pollution cases, those hit first are the factory workers and their relatives and other nearby residents. Workers generally won’t complain about pollution from their own factory, and some types of pollution are initially hard to detect. The problem isn’t exposed until it gets really bad or the company takes too many liberties. But even then, confirming and quantifying the damage caused is a real challenge. The damage caused by environmental pollution is hidden, it’s accumulative and it’s delayed. Also, due to China’s stage of development and financial and technological considerations, national standards can’t be fixed too high. This makes identifying and compensating for environmental losses extremely difficult.

China already has a fairly complete set of environmental laws and regulations. On paper, the means are there to resolve just about any issue. But in actual practice, that doesn’t happen – we lack the necessary personnel, standards and mechanisms, and so in many cases justice doesn’t get done.

The environmental authorities are administrative bodies and can only investigate and then impose fines as provided for in legislation. Often those fines are very limited, while compensation relies on negotiation between the polluter and the victim – there’s still no law to rely on for that [an obligation to pay compensation for environmental damage is recognised in, for example, China’s Environmental Protection Law, but no law explicitly sets forth how environmental damages are to be calculated]. With limited fines and low compensation, breaking the law is often cheaper than following it, and that further emboldens some irresponsible firms.

The level of fines that can be imposed are set out in the applicable laws or regulations, but the amounts are very low – and even lower when you take inflation into account. We felt they were low when the legislation was being formulated, but the industry bodies have their own considerations. So the outcome was that the fines were, in our opinion, set at a low level. There are no state laws or regulations on compensation. In the Zijin Mining pollution case last year, neither the public nor the media were happy with the level of compensation set.

When environmental protection officials inspect factories, it’s akin to guerrilla warfare. To save electricity and money the companies only run equipment meant to reduce pollution in the day time, or only when someone is coming to check up on them – when they leave, it gets switched off again. It’s a game of cat and mouse. That’s what happens when polluters don’t pay an appropriate price for the damage they cause and neither criminal or civil punishments follow. The costs of breaking the law are too low.

Although the criminal law recognises certain environmental breaches as crimes and sets out penalties accordingly, the courts still need sufficient evidence to proceed with arrests. But it’s often very hard to evaluate the evidence of environmental damage, and there are no dedicated personnel or standards for doing so. Even if the laws are in place, it’s rare that they get applied effectively.

MS: Academics have long called for legislation on environmental compensation. Why are we only now seeing movement on this from the environmental authorities?

ZK: As a developing nation, we are still building our legal system and there are a huge number of laws that need to be written – so there’s a queue. And, according to state procedures, they must be considered one by one, so getting a law onto the statute books is often very difficult. The law on prevention of solid-waste pollution took a whole decade.

In fact, some legal experts have been discussing an environmental compensation law for years. It’s true that China has plenty of laws directly relevant to management of the environment (nine, not including the Natural Resources Law). Some other government departments want to know why we’ve got so many laws. But look at Japan: in 1970 they made 14 environmental laws in just one year. We need to do as much as possible to make sure leaders and other departments understand the special nature of the environment, and the urgency of legislation.

The Ministry of Environmental Protection has recently published its “Opinions on Assessment of Losses to Environmental Pollution”. Being ministerial opinions, these will be submitted to the State Council, but do not then need to be considered by every ministry, so that avoids difficulties at the first stage. I think it is an appropriate thing to do. We’ve already recognised the importance and urgency of this, so let’s first have a go ourselves, then push that forward step by step, and ultimately there’s bound to be legislation. My estimate would be that it’ll take 10 years before we see a law on environmental compensation. That’s quite fast by current standards.

MS: What are the challenges of turning an environmental-compensation system into a judicial process?

ZK: One challenge is working out what level to set compensation at: it can’t be too high, or too low. So this requires analysis of the system and its participants, and fair treatment of both the polluter and the victim. Also, the legislation can’t rely just on the environmental authorities – they also need to get the full support of the judicial authorities.

The “Opinions on Assessment of Losses to Environmental Pollution” say that that assessment should gradually be brought into the judicial appraisal system. Bringing in judicial and financial methods will greatly increase the force of environmental-compensation decisions. In the past, those have been lacking and we’ve relied just on administrative measures.

But I’m confident that the public want to see this law – it reflects international experience and fits with the overall trend. It will succeed.

MS: What about public participation in formulating environmental compensation law? How do you ensure that the public has as much of a say in the process as the often powerful polluters?

ZK: To do anything well, you need active participation from all parties. That requires consultation mechanisms so that the system constrains interested parties, but can also be revised – through certain legal processes – be revised in accordance with the will of those concerned, as circumstances change.

The system-participant analysis I mentioned just now requires that, when you establish a system, you consider the opinions and needs of all concerned parties – including businesses and the authorities that supervise them.

Currently we describe polluters and victims as the strong and weak parties, as the victims have almost no backing, while the polluters enjoy fairly clear-cut support. But once there’s a law and a system, then all government departments and the media can support the victims. I’m not worried about that. Public opinion is gradually strengthening. You could say that the environmental authorities are, of all government bodies, the most enthusiastic about environmental NGOs and public participation. 

Zhang Kunmin is former deputy director of
the State Environmental Protection Agency (SEPA) – now the Ministry of Environmental Protection – and deputy chair of the China Society for Sustainable Development. 

Meng Si is managing editor in
chinadialogue’s Beijing office. 

Homepage image from Webfee shows a Jiangsu villager complaining about the health impacts of a local chemicals factory.