People who damage large areas of grassland now face up to five years' imprisonment, according to a new judicial interpretation that aims to prevent conflicts arising from illegal mining and construction.
The Supreme People's Court said judges are also advised to levy heavy fines to those who illegally occupy or convert the use of pastureland covering an area larger than 1.33 hectares, or more than double the size of a soccer field.
The threshold will be halved for re-offenders, according to the judicial interpretation, released on Thursday.
Yu Housen, a spokesman for the supreme court, said grasslands account for more than 41 percent of China's territory and have tremendous ecological significance.
At least 45 million people, around 3.5 percent of China's population, live on grasslands, mostly in the Xinjiang Uygur, Inner Mongolia and Tibet autonomous regions.
Yu said the environment of grassland areas has been degraded every year, and the land has been used for cultivation, mining, road building and urban construction.
"Some of these projects permanently damage the environment, while the damage from others can only be undone at a high cost," he said.
Inner Mongolia, one of China's major pastureland areas, has seen 947 cases of grasslands being illegally used for crop cultivation, while mineral reserves have also prompted illegal occupation and economic exploitation, he said.
The judicial interpretation is expected to help ease concerns over environmental costs by curbing the illegal conversion of land use.
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