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

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Author Info
Hua Wang
Ming Chen

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Abstract

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.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2198.

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Date of creation: 31 Oct 1999
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Handle: RePEc:wbk:wbrwps:2198

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Keywords: 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;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Pashigian, B Peter, 1982. "A Theory of Prevention and Legal Defense with an Application to the Legal Costs of Companies," Journal of Law & Economics, University of Chicago Press, vol. 25(2), pages 247-70, October.
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  4. Wayne B. Gray & Ronald J. Shadbegian, 1995. "Pollution Abatement Costs, Regulation, and Plant-Level Productivity," NBER Working Papers 4994, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Arora Seema & Cason Timothy N., 1995. "An Experiment in Voluntary Environmental Regulation: Participation in EPA's 33/50 Program," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 271-286, May. [Downloadable!] (restricted)
  6. Burrows, Paul, 1981. "Controlling the monopolistic polluter: Nihilism or eclecticism?," Journal of Environmental Economics and Management, Elsevier, vol. 8(4), pages 372-380, December. [Downloadable!] (restricted)
  7. Pargal, Sheoli & Hettige, Hemamala & Singh, Manjula & Wheeler, David, 1997. "Formal and informal regulation of industrial pollution : comparative evidence from Indonesia and the United States," Policy Research Working Paper Series 1797, The World Bank. [Downloadable!]
  8. Pargal, Sheoli & Wheeler, David, 1996. "Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1314-27, December. [Downloadable!] (restricted)
  9. J.B. Smith & W A. Sims, 1985. "The Impact of Pollution Charges on Productivity Growth in Canadian Brewing," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 410-423, Autumn. [Downloadable!] (restricted)
  10. Wayne B. Gray & Ronald J. Shadbegian, 1997. "Environmental Regulation, Investment Timing, and Technology Choice," NBER Working Papers 6036, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Conrad Klaus, 1993. "Taxes and Subsidies for Pollution-Intensive Industries as Trade Policy," Journal of Environmental Economics and Management, Elsevier, vol. 25(2), pages 121-135, September. [Downloadable!] (restricted)
  12. Eli Berman & Linda T.M. Bui, 1998. "Environmental Regulation and Productivity: Evidence from Oil Refineries," Papers 0091, Boston University - Industry Studies Programme.
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  13. Hettige, Hemamala & Huq, Mainul & Pargal, Sheoli & Wheeler, David, 1996. "Determinants of pollution abatement in developing countries: Evidence from South and Southeast Asia," World Development, Elsevier, vol. 24(12), pages 1891-1904, December. [Downloadable!] (restricted)
  14. Thomas Alban, 1995. "Regulating Pollution under Asymmetric Information: The Case of Industrial Wastewater Treatment," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 357-373, May. [Downloadable!] (restricted)
  15. Barbera, Anthony J. & McConnell, Virginia D., 1990. "The impact of environmental regulations on industry productivity: Direct and indirect effects," Journal of Environmental Economics and Management, Elsevier, vol. 18(1), pages 50-65, January. [Downloadable!] (restricted)
  16. Hartman, Raymond S. & Huq, Mainul & Wheeler, David, 1997. "Why paper mills clean up : determinants of pollution abatement in four Asian countries," Policy Research Working Paper Series 1710, The World Bank. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hua Wang & Nlandu Mamingi & Benoit Laplante & Susmita Dasgupta, 2003. "Incomplete Enforcement of Pollution Regulation: Bargaining Power of Chinese Factories," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 24(3), pages 245-262, March. [Downloadable!] (restricted)
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  2. Ringler, Claudia & Vu Huy, Nguyen, 2004. "Water allocation policies for the Dong Nai River Basin in Vietnam: an integrated perspective," EPTD discussion papers 127, International Food Policy Research Institute (IFPRI). [Downloadable!]
  3. Maximilian Auffhammer & Richard Carson, 2007. "Forecasting the Path of China's CO2 Emissions Using Province Level Information," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series 971, Department of Agricultural & Resource Economics, UC Berkeley. [Downloadable!]
    Other versions:
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