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Pollution charges, community pressure, and abatement cost of industrial pollution in China

  • Hua Wang
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The author evaluates the strength of the effect that community pressure and pollution charges have on industrial pollution control in China, and estimates the marginal cost of pollution abatement. He examines a well-documented set of plant-level data, combined with community-level data, to assess the impact of pollution charges and community pressure on industrial behavior in China. He constructs and estimates an industrial organic water pollution discharge model for plants that violate standards for pollution discharge, pay pollution charges, and are constantly under community pressure to further abate pollution. He creates a model and estimates implicit prices for pollutiondischarges from community pressure, which are determined jointly by the explicit price, the pollution levy. He finds that the implicit discharge price is at least as high as the explicit price. In other words, community pressure not only exists, but may be as strong an incentive as the pollution charge is for industrial firms to control pollution in China. The author's modeling approach also provides a way to estimate the marginal cost of pollution abatement. The empirical results show that the current marginal cost of abatement is about twice the effective charge rate in China.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2337.

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Date of creation: 31 May 2000
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Handle: RePEc:wbk:wbrwps:2337
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  1. 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.
  2. Pargal, Sheoli, et al, 1997. "Formal and Informal Regulation of Industrial Pollution: Comparative Evidence from Indonesia and the United States," World Bank Economic Review, World Bank Group, vol. 11(3), pages 433-50, September.
  3. 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.
  4. Hua Wang & Wheeler, David, 1996. "Pricing industrial pollution in China : an econometric analysis of the levy system," Policy Research Working Paper Series 1644, The World Bank.
  5. Hua Wang & Wheeler, David, 2000. "Endogenous enforcement and effectiveness of China's pollution levy system," Policy Research Working Paper Series 2336, The World Bank.
  6. Dasgupta, Susmita & Wheeler, David, 1997. "Citizen complaints as environmental indicators : evidence from China," Policy Research Working Paper Series 1704, The World Bank.
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