Economic Determinants for China's Industrial SO2 Emission: Reduced vs. Structural form and the role of international trade

In this paper, basing on panel data on Chinese provincial level from 1991-2000, we test, firstly, the existence of EKC for industrial SO2 emission density. Following, we decompose the economical determinants of this SO2 emission density into: income effect (GDPPC), scale effect (Industrial GDP per km2) and composition effect (industrial capitalistic ratio). And in the third step, we study the direct and indirect role of international trade intensity ((X+M)/GDP). Instead of a supposed EKC, we find ever-increasing trend in industrial SO2 emission density with respect to income growth for most Chinese provinces when the three largest cities (Beijing, Tianjin and Shanghai) directly under central government are taken off from our database. Following, confirming Grossman (1995), we succeed in decomposing industrial SO2 emission density into its three famous economic “effects”. However, different from our expectation, the composition effect, measured by industrial capitalistic ratio K/L in this paper, instead of being a pollution-increasing role as generally accepted idea, turns out to lead industrial SO2 density to reduce as a technology-reinforcing factor. For the role of trade, besides the positive direct impact on industrial SO2 density, we find equally some “pollution haven” evidences. In addition, our results show for most provinces, their comparative advantage stays still in labour-intensive sectors, increase in the capitalistic ratio is proven to be environment-friendly through its technological “pollution-abatement” effect until this ratio reach the level of 83333 yuan/person, which can be considered as the threshold to distinguish capital-intensive sector. Due to these different aspect's effects, corresponding to the conclusion of ACT (1998, 2001), the total effect of trade on industrial SO2 pollution does not turn out to be an important factor for industrial SO2 emission density. Including all these co-related economic determinants into a more general graphical analysis, we find that, for most provinces whose actual income and capitalistic ratio stay still at moderate level, further income growth and capital accumulation are generally environment-friendly factor in openness process. However, the further enlargement of openness degree will result in environment deterioration for the provinces that have relatively low income and too low or too high capitalistic ratio. The necessary policy to reduce this possible deterioration is to adopt besides the open policy, the complementary policies aiming at reinforcing public consciences on environment quality (through income effect) and encouraging R&D activities to increase technological efficiency in pollution abatement.“pollution haven” hypothesis.;Decomposition;industrial SO2 emission;international trade;EKC;China

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

Estimation on Economic Cost of China's New De-sulfur Policy During Her Gradual Accession to WTO: The Case of Industrial SO2 Emission

To understand the potential impacts of China’s accession to WTO in her new de-sulphur policy (reduction of 10% of SO2 emission in 2005 with respect to that of 2000), we construct a CGE model in which the SO2 emission is linked directly to energy intermediary consumption in production. The positive externality of trade on China’s economy is also included. This model is then calibrated into a 55-sector Chinese SAM of year 1997. Four policy simulations (BaU, Open, Desulfur, Open+Desulfur) are made for 1997 till 2005 and the Divisia index decomposition method is used to analysis the simulation results. The principal results show the environmental impact of trade, though proven to be “negative”, stays rather modest. This is due to the effect of industrial composition transformation that deviates towards labor-intensive sector specialization under the new trade liberalization process. We also find supposed some modest trade externality effect to contribute to pollution reduction and we do not find proof for “pollution haven” hypothesis. Although seemingly to be quite ambitious, the new de-sulphur policy will only bring very slight economic growth lose. The most part of pollution reduction will be realized by the substitution between polluting and less or non-polluting energies. The combination of the trade liberalization and pollution control policies seems to give China more flexibility in adapting her economy to the new de-sulphurs objective. Considering different aspect together, the total economy loss due to new de-sulphur policy will be limited to only –0.18% under the presence of trade liberalization.Externality., Energy substitution, Industrial SO2 pollution, Trade, CGE

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

Economic structure, development policy and environmental quality : an empirical analysis of environmental Kuznets curves with Chinese municipal data

In many cases, the relationship between environmental pollution and economic development can be generally depicted by an inverted U-shaped curve, or an environmental Kuznets curve, where pollution increases with income at the beginning and decreases after a certain level of income. However, what determine the shape of an enviornmental Kuznets curve, such as the height and the turning point of the curve, have not been thoroughly studied. A good understanding of the determinants is vitally important to the development community, especially for the developing world, where income growth is a high priority and yet environmental pollution also needs to be carefully controlled. This study analyzes the impacts of economic structure, development strategy and environmental regulation on the shape of the environmental Kuznets curve with a city-level panel dataset obtained from China. The results show that economic structure, development strategy and environmental regulation can all have important implications on the relationship between environmental environmental quality and economic development but the impacts can be different at different development stages.Environmental Economics&Policies,Economic Theory&Research,Emerging Markets,Population Policies,Green Issues