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Welfare loss of China's air pollution: How to make personal vehicle transportation policy

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  • Chen, Su-Mei
  • He, Ling-Yun

Abstract

Given China's notorious air pollution, particularly fine particulate matter (PM2.5) pollution, a detailed understanding of socio-economic costs of air pollution and potential impacts of its abatement policies is crucial for policy-making if sustainable development is to be realized. To provide the first study of its kind for China, this paper builds an integrated assessment framework based on a computable general equilibrium (CGE) model. We find China's air pollution (PM2.5, ozone, and coarse particles ranging from 2.5 to 10μm) to be a staggering threat to human health, economy and residential welfare. Furthermore, there is empirical evidence for much more importance of the PM2.5 issue. In addition, we investigate the impacts of alternative personal vehicle transportation policies. In terms of gross benefits, the results indicate that the total substitution of plug-in hybrid electric vehicles (PHEVs) for the existing personal internal combustion engine vehicles (ICEVs) would be more beneficial to national air quality and human health than the combination of stringent fuel economy and emission standards for ICEVs, even in the Chinese case of coal-heavy electric grids.

Suggested Citation

  • Chen, Su-Mei & He, Ling-Yun, 2014. "Welfare loss of China's air pollution: How to make personal vehicle transportation policy," China Economic Review, Elsevier, vol. 31(C), pages 106-118.
    • Handle: RePEc:eee:chieco:v:31:y:2014:i:c:p:106-118
    DOI: 10.1016/j.chieco.2014.08.009
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    References listed on IDEAS

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    More about this item

    Keywords

    Welfare loss; PM2.5 pollution; China; Personal vehicle transportation policy;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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