How well air and water pollution regulation is implemented depends very much on both the level of economic development and the actual environmental quality. Pollution pricing is closer to the dictates of environmental economics than China's formal regulatory statutes would suggest, and there is considerable scope for using economic instruments to reduce China's industrial pollution problems.
An analysis of provincial water pollution control shows that China's pollution levy system has been working much better than is commonly believed. Wang and Wheeler analyze China's experience with the water pollution levy, an emissions charge system that covers hundreds of thousands of factories. The levy experience has not been studied systematically, but anecdotal critiques have suggested that the system is arbitrarily administered and ineffective in controlling pollution. Critics view the levy as a local financing mechanism, but ineffective as a regulatory instrument. Enforcement is thought to vary widely, so that factories in different regions face different penalties for polluting. And it is widely believed that the levy provides little incentive to control pollution because official rates are below marginal abatement costs. Wang and Wheeler test the conventional critique of the levy system using solid new province level data for 1987-93. Their results suggest that the water pollution levy system is neither arbitrary nor ineffective. Across provinces and over time, variations in the effective levy rate are well explained by proxies for local valuation of environmental damage and community capacity to enforce local norms. During 1987-93, rapid development in many provinces led to sharp increases in the effective rate. Their results also suggest that the emissions intensity of Chinese industy was highly responsive to those increases, because marginal abatement costs were often lower than levy rates. And from 1987 to 1993, provincial pollution intensities fell at a median rate of 50 percent, and total discharges at a median rate of 22 percent. The results suggest several lessons for regulators in developing countries: * Local enforcement of national standards will determine the effective price of pollution in each area. Such regional heterogeneity is natural and legitimate. * The locally enforced price of pollution rises with industrial development. * Early in the regulatory process, industrial emissions intensity is highly responsive to changes in the price of pollution, mainly because marginal costs are often quite low in low to medium abatement ranges. In China, provincial adjustments of effective levy rates and other regulatory instruments have been sufficient to induce sharp declines in emissions intensity and reductions in total emissions from registered factories during a period of rapid industrial growth. This paper -- a product of the Environment, Infrastructure, and Agriculture Division, Policy Research Department -- is part of a larger effort in the department to identify appropriate policies for environmental regulation in developing countries. The study was funded by the Bank's Research Support Budget under research project The Economics of Industrial Pollution Control in Developing Countries (RPO 680-20).
China's unique combination of emissions charges and pollution abatement subsidies has given China's most heavily polluting industrial firms incentive to invest in pollution abatement.
China's unique combination of emissions charges and pollution abatement subsidies has given China's most heavily polluting industrial firms incentive to invest in pollution abatement.There have been extensive theoretical studies of firms' responses to environmental regulations and enforcement but few empirical analyses of firms expenditures on pollution abatement in response to different regulations and enforcement strategies.Wang and Chen empirically analyze the pollution abatement efforts of Chinese industrial firms under a system combining pollution charges and abatement subsidies.Using data on China's top industrial polluters and on regional development in China, they find that the combination of charges and subsidies used in China has provided effective incentives for the most heavily polluting industrial firms to abate pollution.Chinese industries operate under a unique pollution control system, a market-based instrument combining emissions charges and abatement subsidies. This combination of charges and subsidies has given firms incentive to invest in wastewater treatment facilities. The pollution levy, although low, has significantly improved investments in abatement.Wang and Chen found that the more pollution a firm generates, the more likely it is to invest in pollution abatement.This study was only of top polluters, which are closely monitored by environmental agencies, so the results may not be valid for other sources of industrial pollution.This paper - a product of Infrastructure and Environment, Development Research Group - is part of a larger effort in the group to identify appropriate policies for environmental regulation in developing countries. Hua Wang may be contacted at [email protected].
This Book Should Be Of Much Interest To Scholars In Law And Science, To The Environmental Economists And To All Sltudents Of Law Involved In Sustainable Development And Environment Protection.
øThe authors present an extensive survey of the empirical evidence on the determinants of environmental performance as well as the effects of environmental regulation on the costs of production, plant location, firm-level productivity, stock prices and
For years, China’s transformation from one of the world’s poorest nations was lauded as a triumph that lifted hundreds of millions of people out of poverty. There were always questions about data reliability and growth sustainability, but the general views on China have recently taken a decidedly sour turn. Concerns abound about state interference in the economy, an ageing population, and high debt level. Making Sense of China's Economy untangles China’s complex economic structure, evolving issues and curious contradictions, and explains some key features of this most puzzling of global economic powerhouses. This book reveals how factors such as demographics, the initial stage of development in 1978, the transition away from full state ownership and central planning, the dual urban-rural society, and a decentralised governance structure have combined to shape the economy, its development and its reforms. It shows how the pragmatic and adaptive nature of China’s policymaking upends familiar perspectives and hinders simple cross-country comparisons. The book also explores crucial topics including the property market, debt accumulation and environmental challenges. In this book, Tao Wang innovatively weaves the multiple strands of China’s economy into a holistic and organic tapestry that gives us unique insights from both a Chinese and an international perspective. This book is critical reading for business leaders, investors, policymakers, students, and anyone else hoping to understand China’s economy and its future evolution and impact, written by a specialist who has studied the country from both inside and out.
This impressive study compares the adoption of environmentally sound technology in industrial sectors in eight developing countries. In combining a variety of quantitative and qualitative methodologies on rich empirical data the authors open the technological change black box and are able to formulate clear conclusions on the drivers and barriers for technological change. A major contribution to better understanding and governing environmentally-sound technological change. Arthur P.J. Mol, Wageningen University, The Netherlands All theory is gray, but the golden tree of life springs ever green , says Goethe. This book is very green (that is empirical) about a green topic: the adoption of environmentally sound technologies in developing countries, using triangulation for assessing the factors behind such choices. A very nice study on an important topic. René Kemp, UNU-MERIT, Maastricht, The Netherlands Industries located in developing countries have made major improvements in environmental performance since the Rio Earth Summit of 1992. More specifically, their record in reducing energy-use and water-pollutant intensities has been better than developed countries. This significant new book investigates what motivates industries in developing countries to adopt environmentally sound technology (EST) a subject about which very little is actually known. The authors present the findings of a United Nations study of the factors that determined EST adoption by 105 manufacturing plants in four different sectors within eight developing countries. They explore both factors internal to the plants as well as external factors including governments, markets and civil society. Environment and Industry in Developing Countries will be of great interest to development assistance agencies supporting programmes for industrial environmental management in developing countries, and also to graduate school programmes in economic development, technology management, as well as in international business.
