IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v86y2020ics0140988319304554.html
   My bibliography  Save this article

Marginal abatement cost, air pollution and economic growth: Evidence from Chinese cities

Author

Listed:
  • Ji, D.J.
  • Zhou, P.

Abstract

The directional distance function (DDF) with multiple bad outputs allows estimation of conditional marginal abatement cost (MAC) that would be more informative than the unconditional MAC estimated with a single pollutant. Applying a multi-pollutant parametric output DDF approach, we estimate the MACs of CO2, SO2, and NOx emissions for 105 Chinese cities in 2006–2014. It is found that the period medians of the MACs for the three emissions all increase over time, while the medians of the MACs for different cities tend to vary significantly. A goodness-of-fit criterion is developed and used to evaluate the fit of alternative models, which demonstrates the superiority of the multi-pollutant model. We have also shown that there exists a positive relationship between MAC and economic growth. Finally, several policy implications are suggested for reducing the overall emission abatement costs of China.

Suggested Citation

  • Ji, D.J. & Zhou, P., 2020. "Marginal abatement cost, air pollution and economic growth: Evidence from Chinese cities," Energy Economics, Elsevier, vol. 86(C).
    • Handle: RePEc:eee:eneeco:v:86:y:2020:i:c:s0140988319304554
    DOI: 10.1016/j.eneco.2019.104658
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988319304554
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2019.104658?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Munasinghe, Mohan, 1999. "Is environmental degradation an inevitable consequence of economic growth: tunneling through the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 29(1), pages 89-109, April.
    2. Rodríguez, Miguel & Pena-Boquete, Yolanda & Pardo-Fernández, Juan Carlos, 2016. "Revisiting Environmental Kuznets Curves through the energy price lens," Energy Policy, Elsevier, vol. 95(C), pages 32-41.
    3. Burtraw, Dallas & Krupnick, Alan & Palmer, Karen & Paul, Anthony & Toman, Michael & Bloyd, Cary, 2003. "Ancillary benefits of reduced air pollution in the US from moderate greenhouse gas mitigation policies in the electricity sector," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 650-673, May.
    4. Zhou, X. & Fan, L.W. & Zhou, P., 2015. "Marginal CO2 abatement costs: Findings from alternative shadow price estimates for Shanghai industrial sectors," Energy Policy, Elsevier, vol. 77(C), pages 109-117.
    5. Elliott, Robert J.R. & Sun, Puyang & Chen, Siyang, 2013. "Energy intensity and foreign direct investment: A Chinese city-level study," Energy Economics, Elsevier, vol. 40(C), pages 484-494.
    6. Chunbo Ma and Atakelty Hailu, 2016. "The Marginal Abatement Cost of Carbon Emissions in China," The Energy Journal, International Association for Energy Economics, vol. 0(China Spe).
    7. Wei, Chu & Löschel, Andreas & Liu, Bing, 2013. "An empirical analysis of the CO2 shadow price in Chinese thermal power enterprises," Energy Economics, Elsevier, vol. 40(C), pages 22-31.
    8. Zheng Song & Kjetil Storesletten & Fabrizio Zilibotti, 2011. "Growing Like China," American Economic Review, American Economic Association, vol. 101(1), pages 196-233, February.
    9. Zhou, P. & Wang, M., 2016. "Carbon dioxide emissions allocation: A review," Ecological Economics, Elsevier, vol. 125(C), pages 47-59.
    10. Rolf Färe & Shawna Grosskopf & Carl A. Pasurka & William L. Weber, 2012. "Substitutability among undesirable outputs," Applied Economics, Taylor & Francis Journals, vol. 44(1), pages 39-47, January.
    11. Brock, William A. & Taylor, M. Scott, 2005. "Economic Growth and the Environment: A Review of Theory and Empirics," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 28, pages 1749-1821, Elsevier.
    12. Du, Limin & Hanley, Aoife & Wei, Chu, 2015. "Estimating the Marginal Abatement Cost Curve of CO2 Emissions in China: Provincial Panel Data Analysis," Energy Economics, Elsevier, vol. 48(C), pages 217-229.
    13. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    14. Baker, Erin & Clarke, Leon & Shittu, Ekundayo, 2008. "Technical change and the marginal cost of abatement," Energy Economics, Elsevier, vol. 30(6), pages 2799-2816, November.
    15. Adam Rose & Zhong Zhang, 2004. "Interregional burden-sharing of greenhouse gas mitigation in the United States," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 9(4), pages 477-500, October.
    16. Zhang, Yue-Jun & Wang, Ao-Dong & Da, Ya-Bin, 2014. "Regional allocation of carbon emission quotas in China: Evidence from the Shapley value method," Energy Policy, Elsevier, vol. 74(C), pages 454-464.
    17. Fare, Rolf & Grosskopf, Shawna & Weber, William L., 2006. "Shadow prices and pollution costs in U.S. agriculture," Ecological Economics, Elsevier, vol. 56(1), pages 89-103, January.
    18. David Maradan & Anatoli Vassiliev, 2005. "Marginal Costs of Carbon Dioxide Abatement: Empirical Evidence from Cross-Country Analysis," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 141(III), pages 377-410, September.
    19. Hailu, Atakelty & Veeman, Terrence S., 2000. "Environmentally Sensitive Productivity Analysis of the Canadian Pulp and Paper Industry, 1959-1994: An Input Distance Function Approach," Journal of Environmental Economics and Management, Elsevier, vol. 40(3), pages 251-274, November.
    20. Selden Thomas M. & Song Daqing, 1995. "Neoclassical Growth, the J Curve for Abatement, and the Inverted U Curve for Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 162-168, September.
    21. Fare, Rolf & Grosskopf, Shawna & Noh, Dong-Woon & Weber, William, 2005. "Characteristics of a polluting technology: theory and practice," Journal of Econometrics, Elsevier, vol. 126(2), pages 469-492, June.
    22. Limin Du & Aoife Hanley & Chu Wei, 2015. "Marginal Abatement Costs of Carbon Dioxide Emissions in China: A Parametric Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(2), pages 191-216, June.
    23. Lee, Sang-choon & Oh, Dong-hyun & Lee, Jeong-dong, 2014. "A new approach to measuring shadow price: Reconciling engineering and economic perspectives," Energy Economics, Elsevier, vol. 46(C), pages 66-77.
    24. Zhou, P. & Zhou, X. & Fan, L.W., 2014. "On estimating shadow prices of undesirable outputs with efficiency models: A literature review," Applied Energy, Elsevier, vol. 130(C), pages 799-806.
    25. Lee, Chia-Yen & Zhou, Peng, 2015. "Directional shadow price estimation of CO2, SO2 and NOx in the United States coal power industry 1990–2010," Energy Economics, Elsevier, vol. 51(C), pages 493-502.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. D'Adamo, Idiano & Gastaldi, Massimo & Morone, Piergiuseppe, 2020. "The post COVID-19 green recovery in practice: Assessing the profitability of a policy proposal on residential photovoltaic plants," Energy Policy, Elsevier, vol. 147(C).
    2. Ming Fang & Chiu-Lan Chang, 2022. "Nexus between fiscal imbalances, green fiscal spending, and green economic growth: empirical findings from E-7 economies," Economic Change and Restructuring, Springer, vol. 55(4), pages 2423-2443, November.
    3. Yunfei An & Xunpeng Shi & Qunwei Wang & Jian Yu & Dequn Zhou & Xiaoyong Zhou, 2023. "China's manufacturing firms' willingness to pay for carbon abatement: A cost perspective," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 5477-5486, December.
    4. Xin Nie & Jianxian Wu & Han Wang & Weijuan Li & Chengdao Huang & Lihua Li, 2022. "Contributing to carbon peak: Estimating the causal impact of eco‐industrial parks on low‐carbon development in China," Journal of Industrial Ecology, Yale University, vol. 26(4), pages 1578-1593, August.
    5. Qingwei Shi & Hong Ren & Weiguang Cai & Jingxin Gao, 2020. "How to Set the Proper CO 2 Reduction Targets for the Provincial Building Sector of China?," Sustainability, MDPI, vol. 12(24), pages 1-22, December.
    6. Dong-Hyun Oh & JongWuk Ahn & Sinwoo Lee & Hyundo Choi, 2021. "Measuring technical inefficiency and CO2 shadow price of Korean fossil-fuel generation companies using deterministic and stochastic approaches," Energy & Environment, , vol. 32(3), pages 403-423, May.
    7. Zhang, Guo-Xing & Yang, Yang & Su, Bin & Nie, Yan & Duan, Hong-Bo, 2023. "Electricity production, power generation structure, and air pollution: A monthly data analysis for 279 cities in China (2015–2019)," Energy Economics, Elsevier, vol. 120(C).
    8. Bei Gao & Zuoren Sun, 2023. "Marginal CO 2 and SO 2 Abatement Costs and Determinants of Coal-Fired Power Plants in China: Considering a Two-Stage Production System with Different Emission Reduction Approaches," Energies, MDPI, vol. 16(8), pages 1-26, April.
    9. Xu, Lan & Yang, Jun & Cheng, Jixin & Dong, Hanghang, 2022. "How has China's low-carbon city pilot policy influenced its CO2 abatement costs? Analysis from the perspective of the shadow price," Energy Economics, Elsevier, vol. 115(C).
    10. Zhang, Qianxiao & Shah, Syed Ale Raza & Yang, Ling, 2022. "An Appreciated Response of Disaggregated Energies Consumption towards the Sustainable Growth: A debate on G-10 Economies," Energy, Elsevier, vol. 254(PA).
    11. Wang, Ailun & Hu, Shuo & Li, Jianglong, 2021. "Does economic development help achieve the goals of environmental regulation? Evidence from partially linear functional-coefficient model," Energy Economics, Elsevier, vol. 103(C).
    12. Zhou, Yi & Zhou, Wenji & Wei, Chu, 2023. "Environmental performance of the Chinese cement enterprise: An empirical analysis using a text-based directional vector," Energy Economics, Elsevier, vol. 125(C).
    13. Wang, Ailun & Hu, Shuo & Lin, Boqiang, 2021. "Emission abatement cost in China with consideration of technological heterogeneity," Applied Energy, Elsevier, vol. 290(C).
    14. Pei Liu & Jiajun Xu & Xiaojun Yang, 2023. "Spatial Difference and Convergence of Ecological Common Prosperity: Evidence from the Yellow River Basin in China," IJERPH, MDPI, vol. 20(4), pages 1-22, February.
    15. Wu, F. & Wang, S.Y. & Zhou, P., 2023. "Marginal abatement cost of carbon dioxide emissions: The role of abatement options," European Journal of Operational Research, Elsevier, vol. 310(2), pages 891-901.
    16. Luo, Shunjun & Zhang, Shaohui, 2022. "How R&D expenditure intermediate as a new determinants for low carbon energy transition in Belt and Road Initiative economies," Renewable Energy, Elsevier, vol. 197(C), pages 101-109.
    17. Quinn, Barry & Gallagher, Ronan & Kuosmanen, Timo, 2023. "Lurking in the shadows: The impact of CO2 emissions target setting on carbon pricing in the Kyoto agreement period," Energy Economics, Elsevier, vol. 118(C).
    18. Wen, Xiaojie & Yao, Shunbo & Sauer, Johannes, 2022. "Shadow prices and abatement cost of soil erosion in Shaanxi Province, China: Convex expectile regression approach," Ecological Economics, Elsevier, vol. 201(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tang, Kai & Yang, Lin & Zhang, Jianwu, 2016. "Estimating the regional total factor efficiency and pollutants’ marginal abatement costs in China: A parametric approach," Applied Energy, Elsevier, vol. 184(C), pages 230-240.
    2. Wu, Yinyin & Yu, Jie & Song, Malin & Chen, Jiandong & Hou, Wenxuan, 2021. "Shadow prices of industrial air pollutant emissions in China," Economic Modelling, Elsevier, vol. 94(C), pages 726-736.
    3. Zhou, Yi & Zhou, Wenji & Wei, Chu, 2023. "Environmental performance of the Chinese cement enterprise: An empirical analysis using a text-based directional vector," Energy Economics, Elsevier, vol. 125(C).
    4. Ma, Chunbo & Hailu, Atakelty & You, Chaoying, 2019. "A critical review of distance function based economic research on China’s marginal abatement cost of carbon dioxide emissions," Energy Economics, Elsevier, vol. 84(C).
    5. Boussemart, Jean-Philippe & Leleu, Hervé & Shen, Zhiyang, 2017. "Worldwide carbon shadow prices during 1990–2011," Energy Policy, Elsevier, vol. 109(C), pages 288-296.
    6. Wu, F. & Wang, S.Y. & Zhou, P., 2023. "Marginal abatement cost of carbon dioxide emissions: The role of abatement options," European Journal of Operational Research, Elsevier, vol. 310(2), pages 891-901.
    7. Wang, Zhaohua & Song, Yanwu & Shen, Zhiyang, 2022. "Global sustainability of carbon shadow pricing: The distance between observed and optimal abatement costs," Energy Economics, Elsevier, vol. 110(C).
    8. Ke Wang & Linan Che & Chunbo Ma & Yi-Ming Wei, 2017. "The Shadow Price of CO2 Emissions in China's Iron and Steel Industry," CEEP-BIT Working Papers 105, Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology.
    9. Wang, Ailun & Hu, Shuo & Lin, Boqiang, 2021. "Emission abatement cost in China with consideration of technological heterogeneity," Applied Energy, Elsevier, vol. 290(C).
    10. Zhang, Ning & Huang, Xuhui & Qi, Chao, 2022. "The effect of environmental regulation on the marginal abatement cost of industrial firms: Evidence from the 11th Five-Year Plan in China," Energy Economics, Elsevier, vol. 112(C).
    11. Du, Limin & Hanley, Aoife & Wei, Chu, 2015. "Estimating the Marginal Abatement Cost Curve of CO2 Emissions in China: Provincial Panel Data Analysis," Energy Economics, Elsevier, vol. 48(C), pages 217-229.
    12. Rakesh Kumar Jain & Surender Kumar, 2018. "Shadow price of CO2 emissions in Indian thermal power sector," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(4), pages 879-902, October.
    13. Wu, Jianxin & Ma, Chunbo & Tang, Kai, 2019. "The static and dynamic heterogeneity and determinants of marginal abatement cost of CO2 emissions in Chinese cities," Energy, Elsevier, vol. 178(C), pages 685-694.
    14. Zeng, Shihong & Jiang, Xue & Su, Bin & Nan, Xin, 2018. "China's SO2 shadow prices and environmental technical efficiency at the province level," International Review of Economics & Finance, Elsevier, vol. 57(C), pages 86-102.
    15. Wei, Xiao & Zhang, Ning, 2020. "The shadow prices of CO2 and SO2 for Chinese Coal-fired Power Plants: A partial frontier approach," Energy Economics, Elsevier, vol. 85(C).
    16. Silva, Felipe & Fulginiti, Lilyan E. & Perrin, Richard K., 2016. "Did technical change in agricultural production decrease the emission of pollutants on the Amazon Forest during 1990-2009?," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230092, Southern Agricultural Economics Association.
    17. Hai-Ying Gu & Qing-Mi Hu & Tian-Qiong Wang, 2019. "Payment for Rice Growers to Reduce Using N Fertilizer in the GHG Mitigation Program Driven by the Government: Evidence from Shanghai," Sustainability, MDPI, vol. 11(7), pages 1-17, April.
    18. Zhang, Ning & Huang, Xuhui & Liu, Yunxiao, 2021. "The cost of low-carbon transition for China's coal-fired power plants: A quantile frontier approach," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    19. Xian, Yujiao & Wang, Ke & Wei, Yi-Ming & Huang, Zhimin, 2019. "Would China’s power industry benefit from nationwide carbon emission permit trading? An optimization model-based ex post analysis on abatement cost savings," Applied Energy, Elsevier, vol. 235(C), pages 978-986.
    20. Zhou, P. & Zhou, X. & Fan, L.W., 2014. "On estimating shadow prices of undesirable outputs with efficiency models: A literature review," Applied Energy, Elsevier, vol. 130(C), pages 799-806.

    More about this item

    Keywords

    Marginal abatement cost; Shadow price; Directional distance function; City;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • 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
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:86:y:2020:i:c:s0140988319304554. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.