It's been one year since the first "waste bank" opened in Nuanshui village in East China's Jiangxi province and the locals can already see the difference.

The once countless plastic bags that were scattered all over the village in Longtoushan township are now nowhere to be found.

"We used to go out every day to collect trash, but now the villagers voluntarily bring it to the bank," said Dong Weiwei, the township's environmental sanitation official and the head of the bank, where villagers can exchange garbage for rewards.

"The streets are clean and tidy, and so is the river," villager Zhu Caiying said.

The waste bank in Nuanshui opened in April last year, and since then more than 700 villagers - about one-fifth of the population - have collected more than 20 metric tons of garbage: mostly cigarette butts, used plastic bags, batteries and drinks cans.

Collectors are rewarded with items such as tissues, pencils and notebooks for their efforts protecting the environment.

For example, 80 used plastic bags, 40 batteries or 200 cigarette butts can be exchanged for a bar of soap.

A total of 97 such banks are now in operation in the city of Dexing, which administers Longtoushan township.

"I never thought garbage could have an economic value," 66-year-old Wang Xiuying said.

Untreated garbage has been a major issue in rural China due to a lack of funds for organized garbage collection and bad habits when it comes to waste disposal.

"The plastic bags were everywhere. We had six cleaners collecting them every day, but people just kept throwing them away," Zhang Chunlian, the township head, said a year ago.

Now all that has changed.

With an annual expenditure of about 20,000 yuan ($2,900) per bank, the program is both more effective and more economical than the previous system. The government used to spend more than 100,000 yuan per village per year on sanitation.

Similar "environmental protection stations" have also been set up at 18 primary schools in Dexing since August.

Sixth-grader Yu Hongping picks up water bottles and used batteries on her way to school.

"I can exchange them for stationery and notebooks, and my parents also support me," she said.

The aim of the waste banks is to discourage littering, promote garbage sorting and, eventually, reduce the amount of waste, according to Dong.

Despite their success in rural areas, officials have found the waste banks hard to duplicate in cities.

A district in Nanchang, capital of Jiangxi province, initiated a similar project in 2012, but it was canceled shortly afterward due to the large amount of urban household waste. There were so many categories of garbage and so few that could be exchanged, that the project was inefficient and ineffective.

"The way waste banks work in rural areas does not fit urban areas. Cities should establish garbage sorting systems according to local conditions," said Wang Jifa, head of Dexing's urban management bureau.

Officials are also working to expand waste bank operations by providing door-to-door garbage collection in the countryside and recycle old clothing and quilts, which local residents said was their biggest concern.

But clothes take up so much space that they have become a new headache for the waste banks.

"The waste collected is currently either sold at recycling stations to support the operation of the banks, or burned or buried in landfills, which is not good enough. We are working hard to build a unified urban-rural waste disposal system that we hope can transform waste into resources," said local official Tong Quanfeng.