China has established 69 million hectares of new forests over the last three decades, most of them in Southern China. These new forests massively reduced erosion, but their contribution to meet the rapidly increasing timber demand is yet insufficient. China already imports about 50 % of their national timber demand. This scoping study assessed the feasibility to provide incentives for the adoption of close-to-nature forest management through the national carbon market. The latter is expected to be established in 2017. The study was conducted in Hunan province, where KfW is supporting the successful introduction of close-to-nature forestry at scale. UNIQUE was contracted given its insights in forest carbon markets and experience in developing forest carbon projects in China.

• Assessing the status of forest carbon markets in China and related policy instruments.
• Clarifying suitable forest management interventions and means to promote harvested wood products.
• Analyzing investment options, related costs, and carbon benefits.
• Reviewing transferability of the proposed approaches to other provinces.