Environment and Resources

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Environment and Resources
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Discussion Topics

• Facts
• Trend of pollution
• Trend of the stock of natural resources
• Explanations of the trends
• Economic growth
• Institutional features
• Policies and programs
• Sustainable growth

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Trend of Air Pollution

• Evidence from eleven cities
• SO2 Declining
• NOx First rising and then declined (around
  1998)
  
• TSP Declining
• Has air pollution really declined?
• Measurement issues
• Health consequence of different components of TSP
  may be very different
  
• Mis-reporting to comply with increasingly
  stringent pollution regulation
  
• Migration of pollution industries

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Air Pollution and Mortality (Brajer and Mead,
2004)

• Data
• Pollution and population figures for 38 Chinese
  cities.
  
• Pollution data are mostly from annual
  environmental report posted on the Internet by
  municipal environmental protection bureaus.

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Trend of Water Pollution

• Increasing pollution in groundwater mainly due to
  organic material from industrial and domestic
  sources
  
• Actual deterioration of water may be more severe
  than suggested by table 8.2 and 8.3
  
• Increasing sample
• Smaller rivers are not included
• Residential waste water steadily increased while
  industrial waste water continued to decline.
  
• Is mis-reporting possible?

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Trend of Solid Waste
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Trend of Forests

• Forested area has declined before early 1980s and
  has increased since.
  
• Afforested area for timber purpose is less and
  less important since early 1980s

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Trend of Water Resource

• Unevenly distributed water across China
• Water supply seems to be decreasing due to
  increasing residential consumption and industrial
  production

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Trend of Land Resource

• Declining arable land
• Desertification Land degradation in arid,
  semi-arid, and dry sub-humid areas
  
• Industrialization
• Real estate development

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Explaining the Trends

• Economic growth
• Institutional characteristics
• Government regulation and programs

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Economic Growth and Environment

• Environmental Kuznets Curves
• Environment first deteriorates as economy grows.
  When the economy growth reaches a certain level,
  environmental quality starts to improve.
  
• Evidence generally suggests that China is still
  on the rising part of the (environment
  deterioration) Kuznets Curve.

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Green Net National Product

• Subtracting both the depreciation of natural
  capital (renewable and nonrenewable) and the
  pollution damages from NNP.
  
• Empirical evidence seems to suggest that the
  growth model of China is sustainable, despite the
  huge damage that has been done to the
  environment.
• We need to be cautious for the empirical results
  because it relies on problematic data.

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Relevant Institutional Features

• Lack of property rights for environment
• Tragedy of commons (e.g. air, water)
• Insufficient account of external costs and of
  benefits for future generations
  
• Water
• Coal consumption (external costs, e.g. health,
  are not sufficiently charged)
  
• Weak enforcement of remedies by the Government
• Lack of incentive for local governments to
  enforce (collusion between local governments and
  firms)
  
• Growing involvement in international
  environmental diplomacy

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Anti-Pollution Institution and Policies (Vermeer,
1998)

• State Environmental Protection Agency (SEPA)
• A nation-wide control network built in the 1980s
• Partly supported by foreign project funding
• Employees doubled between 1985 and 1995 to 88,000
  people.
  
• Very limited power TVEs hardly monitored
  inspection is uneven and infrequent.

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Important Programs and Policies

• Pollution charges
• Tradable pollution permits
• Environmental zones (acid rain, SO2)
• Grain for Green
• Government compensate farmers to set aside land
  to grow trees.
  
• South to North Water Transfer Project
• Information disclosure
• Greenwatch
• More stringent environmental standards (e.g.
  gasoline, vehicle emission)

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Chinas Pollution Levy System

• The idea of a pollution charge system was adopted
  in 1978.
  
• By 1982, 27 of 29 provinces in China established
  some pollution levy system.
  
• Process
• Self-reporting
• Verification and collection of levies by local
  environmental authorities.
  
• Effective levy rates vary significantly across
  Chinese provinces.

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Distribution of Effective Pollution Levies
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Water Pollution Levy Rate in 1993
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Wastewater Charge
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Air pollution charge
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Total Charge