Surviving success : policy reform and the future of industrial pollution in China

China's recent industrial growth, a remarkable success story, has been clouded by hundreds of thousands of premature deaths and incidents of serious respiratory illness caused by exposure to industrial air pollution. Seriously contaminated by industrial discharges, many of China's waterways are largely unfit for direct human use. This damage could be substantially reduced at modest cost. Industrial reform combined with stricter environmental regulation has reduced organic water pollution in many areas and has curbed the growth of air pollution. But much higher levels of emissions controls (of particulates and sulfur dioxide) are warranted in China's polluted cities. For the cost-benefit analysis that led to this conclusion, the authors developed threescenarios projecting pollution damage under varying assumptions about future policies. Their findings are: Even if regulation is not tightened further, continued economic reform should have a powerful effect on pollution intensity. Organic water pollution will stabilize in many areas and actually decline in some. Air pollution will continue growing in most areas but at a much slower pace than industrial output. The cost of inaction would be high--most of China's waterways will remain heavily polluted, and many thousands of people will die or suffer serious respiratory damage. Continuing current trends in tightened regulation for water pollution will lead to sharp improvements; adopting an economically feasible policy of much stricter regulation will restore the health of many waterways. The stakes are even higher for air pollution because regulatory enforcement has weakened in many areas in the past five years. Reversing that trend will save many lives at extremely modest cost. China's National Environmental Protection Agency (NEPA) has recommended a tenfold increase in the air pollution levy; adopting NEPA's very conservative recommendation would produce a major turnaround in most cities. For representative Chinese cities, a fiftyfold increase in the levy is probably warranted economically. To be cost-effective, heavy sources of particulate and sulfur dioxide emissions should be targeted for abatement. Reducing emissions from large private plants is so cheap that only significant abatement makes sense -- at least 70 percent abatement of sulfur dioxide particulates and even greater abatement of particulates in large urban industrial facilities.Public Health Promotion,Water and Industry,Environmental Economics&Policies,Pollution Management&Control,Sanitation and Sewerage,Water and Industry,Environmental Economics&Policies,Health Monitoring&Evaluation,Pollution Management&Control,TF030632-DANISH CTF - FY05 (DAC PART COUNTRIES GNP PER CAPITA BELOW USD 2,500/AL

Fiscal Centralization and Decentralization in Russia and China

In this paper we review the fiscal evolution of China and Russia, asking how the process of creating a separate, tax-financed public sector in the two countries differed. We observe that the size of China's budget sector was consistently smaller than in Russia and that budget decentralization was consistently greater. We see both pros and cons in China's decentralization. Local governments that were allowed to keep marginal increases in local tax revenue had incentives to pursue growth-supporting policies, including support for foreign investment and export-oriented production. However, in the absence of financial markets, there were barriers to investment outside the local region, resulting in inefficient use of capital and protectionism. Fiscal deficits and rapid expansion of credit have threatened stability in both countries, but China has proved more successful than Russia in managing macroeconomic policies. Finally, we argue that Russia's status as a petro-state makes management of the public sector particularly difficult. In Russia, recentralization has been associated with expansion of state ownership of enterprises and production by territorial governments, state ministries, state banks, and the natural monopolies.Fiscal decentralization, Russia, China, regional growth

Why has China Grown so Fast? The Role of Structural Change

Can others learn from China's remarkable growth rate? We explore some indirect determinants of Chinas growth success including the degree of openness, institutional change and sectoral change, based on a cross-province dataset. Our methodology is the informal growth regression, which permits the introduction of some explanatory variables that represent the underlying as well as the proximate causes of growth. We first address the problem of model uncertainty by adopting two approaches to model selection, Bayesian Model Averaging and the automated General-to-Specific approach, to consider a wide range of candidate predictors of growth. Then variables flagged as being important by these procedures are used in formulating our models, in which the contribution of factors behind the proximate determinants are examined using panel data system GMM. All three forms of structural change - relative expansion of the trade sector, of the private sector, and of the non-agricultural sector - are found to raise the growth rate. Moreover, structural change in all three dimensions was rapid over the study period. Each change primarily represents an improvement in the efficiency of the economy, moving it towards its production frontier. We conclude that such improvements in productive efficiency have been an important part of the explanation for China's fast growth. --Economic growth,Structural change,Openness,Institutional change,China

How the Chinese system of charges and subsidies affects pollution control efforts by China's top industrial polluters

There have been extensive theoretical studies of firms'responses to environmental regulations ad enforcement but few empirical analyses of firms'expenditures on pollution abatement in response to different regulations and enforcement strategies. The authors 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. The authors 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.Sanitation and Sewerage,Environmental Economics&Policies,Pollution Management&Control,Public Health Promotion,Water and Industry,Water and Industry,Environmental Economics&Policies,Pollution Management&Control,TF030632-DANISH CTF - FY05 (DAC PART COUNTRIES GNP PER CAPITA BELOW USD 2,500/AL,Sanitation and Sewerage

China’s Energy Economy: A Survey of the Literature

This paper reviews literature on China’s energy economics, focusing especially on: i) the relationship between energy consumption and economic growth, ii) China’s changing energy intensity, iii) energy demand and energy -capital and -labor substitution, iv) the emergence of energy markets in China, vi) and policy reforms in the energy industry. After reviewing the literature, the study presents the main findings and suggests some topics for further study.China; Energy; Literature

What is the Role of Openness for China's Environment? An Analysis Based on Divisia Decomposition Method From the Regional Angle

Observing the weakness in the previous structural analyses on EKC formation, in this paper, author deepens the analysis into the detailed data of production and SO2 emission intensity of China’s 29 industrial sectors (occupying over 98% of the total industrial production) in each province during 1991-2001. With the aid of Divisia Index Decomposition method, the variation of the provincial-level industrial SO2 emission with regard to the original level of 1990 is decomposed into the contribution from its three determinants: the variations in its production scale, its composition transformation and its technique character changes. The following analysis aims to reveal regional differences in environmental impact of industrialization and to further interrogate the potential links between these regionspecific environmental impacts of industrialization and development of commercial openness in each province.Openness, pollution, China, Decomposition, region

What is the Role of Openness for China's Environment? An Analysis Based on Divisia Decomposition Method From the Regional Angle

Observing the weakness in the previous structural analyses on EKC formation, in this paper, author deepens the analysis into the detailed data of production and SO2 emission intensity of China's 29 industrial sectors (occupying over 98% of the total industrial production) in each province during 1991-2001. With the aid of Divisia Index Decomposition method, the variation of the provincial-level industrial SO2 emission with regard to the original level of 1990 is decomposed into the contribution from its three determinants: the variations in its production scale, its composition transformation and its technique character changes. The following analysis aims to reveal regional differences in environmental impact of industrialization and to further interrogate the potential links between these regionspecific environmental impacts of industrialization and development of commercial openness in each province.Openness;pollution;China;Decomposition;region