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Water pollution abatement by Chinese industry : cost estimates and policy implications

Author

Listed:
  • Dasgupta, Susmita
  • Huq, Minul
  • Wheeler, David
  • Chonghua Zhang

Abstract

Using factory-level data provided by China's National Environmental Protection Agency and the Tianjin Environmental Protection Bureau, the authors of this report estimate the costs of water pollution abatement for Chinese industry. Using their econometric results, they analyze the cost-effectiveness of current pollution control policy in China and make the conclusions that follow. (1) For each pollutant, marginal abatement costs exhibit great differences by sector, scale, and degree of abatement. (2) The benefits of stricter discharge standards should be weighed carefully against the costs. (3) Emissions charges as low as $1 per ton would be sufficient to induce 80 percent abatement of suspended solids, chemical oxygen demand, and biological oxygen demand, respectively. (4) The current regulatory system provides an economic incentive to abate by charging a levy on pollution that exceeds the standard. The results of this analysis suggest, however, that changing to a full emissions charge system would greatly reduce overall abatement costs. The approach the authors recommend for measuring the costs of abatement is to use joint abatement cost functions that relate total costs to treatment volume and the simultaneous effect of reductions in suspended solids, chemical oxygen demand, biological oxygen demand, and other pollutants. Tests of alternative functional forms suggest that a simple (constant elasticity) model fits the data as well as a complex (translog) model does, permitting sophisticated policy experiments with relatively simple calculations.

Suggested Citation

  • Dasgupta, Susmita & Huq, Minul & Wheeler, David & Chonghua Zhang, 1996. "Water pollution abatement by Chinese industry : cost estimates and policy implications," Policy Research Working Paper Series 1630, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1630
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    References listed on IDEAS

    as
    1. Wayne B. Gray & Ronald J. Shadbegian, 1993. "Environmental Regulation and Manufacturing Productivity at the Plant Level," NBER Working Papers 4321, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Dasgupta, Susmita & Lucas, Robert E. B. & Wheeler, David, 1998. "Small manufacturing plants, pollution, and poverty : new evidence from Brazil and Mexico," Policy Research Working Paper Series 2029, The World Bank.
    2. Theodore Panayotou, 2000. "Environmental Sustainability and Services in Developing Global City Regions," CID Working Papers 55, Center for International Development at Harvard University.
    3. Dasgupta, Susmita & Hettige, Hemamala & Wheeler, David, 2000. "What Improves Environmental Compliance? Evidence from Mexican Industry," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 39-66, January.
    4. 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.
    5. Pargal, Sheoli & Mani, Muthukumara & Huq, Mainul, 1997. "Inspections and emissions in India : puzzling survey evidence about industrial pollution," Policy Research Working Paper Series 1810, The World Bank.
    6. Hettige, Hemamala & Mani, Muthukumara & Wheeler, David, 2000. "Industrial pollution in economic development: the environmental Kuznets curve revisited," Journal of Development Economics, Elsevier, vol. 62(2), pages 445-476, August.
    7. Rita Pandey, 2005. "Estimating Sectoral and Geographical Industrial Pollution Inventories in India: Implications for Using Effluent Charge Versus Regulation," Journal of Development Studies, Taylor & Francis Journals, vol. 41(1), pages 33-61.
    8. Yinger Zheng & Haixia Zheng & Xinyue Ye, 2016. "Using Machine Learning in Environmental Tax Reform Assessment for Sustainable Development: A Case Study of Hubei Province, China," Sustainability, MDPI, Open Access Journal, vol. 8(11), pages 1-20, November.
    9. Theodore Panayotou, 2000. "Environmental Sustainability and Services in Developing Global City Regions," CID Working Papers 55A, Center for International Development at Harvard University.
    10. Hua Wang, 2000. "Pollution charges, community pressure, and abatement cost of industrial pollution in China," Policy Research Working Paper Series 2337, The World Bank.
    11. 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.
    12. Lan, Jing & Munro, Alistair & Liu, Zhen, 2017. "Environmental regulatory stringency and the market for abatement goods and services in China," Resource and Energy Economics, Elsevier, vol. 50(C), pages 105-123.
    13. Dasgupta, Susmita & Huq, Mainul & Wheeler, David, 1997. "Bending the rules : discretionary pollution control in China," Policy Research Working Paper Series 1761, The World Bank.
    14. 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.
    15. Dasgupta, Susmita, 1999. "Opportunities for improving environmental compliance in Mexico," Policy Research Working Paper Series 2245, The World Bank.
    16. Hua Wang & Wheeler, David, 2000. "Endogenous enforcement and effectiveness of China's pollution levy system," Policy Research Working Paper Series 2336, The World Bank.
    17. Di Falco, Salvatore, 2. "Economic Incentives for Pollution Control in Developing Countries: What Can We Learn from the Empirical Literature?," Politica Agricola Internazionale - International Agricultural Policy, Edizioni L’Informatore Agrario, issue 2.
    18. repec:spr:grdene:v:18:y:2009:i:4:d:10.1007_s10726-008-9146-6 is not listed on IDEAS
    19. Ronaldo Seroa da Motta & Alban Thomas & Arnaud Reynaud & José Gustavo Féres, 2006. "Demanda Por Água E Custo De Controle Da Poluição Hídrica Em Indústrias Da Bacia Do Rio Paraíba Do Sul," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 67, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].

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