wiAbstractj
@Factory-level data are used to estimate water pollution abatement
costs for Chinese industry. Joint abatement cost functions are
utilized which 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 very simple
(constant elasticity) model fits the data as well as a complex
(translog) model, permitting sophisticated policy experiments
with relatively simple calculations. From the results, the cost-effectiveness
of current pollution control policy in China is analysed. Basic
conclusions are (1) The benefits of stricter discharge standards
should be weighed carefully against the costs. For the sample
of 260 factories, a shift across the existing range of standards
entails a present-value difference of US$330 million in abatement
costs. (2) Emissions charges as low as US$1.00/ton would be sufficient
to induce 80% abatement of suspended solids for cost-minimizing
factories. Charges of US$3, US$15 and US$30 per ton would be sufficient
to induce 90% abatement of TSS, COD and BOD. (3) The current regulatory
system provides an economic incentive to abate by charging a levy
on pollution in excess of the standard. However, the results suggest
that changing to a full emissions charge system would greatly
reduce overall abatement costs. For the 260 factories in the sample,
the current overall abatement rate could be attained under a charge
system at a reduced annual cost whose present value is US$344
million.x
I. Introduction
II. Industrial pollution control in China
III. The data
IV. The determinants of abatement costs
@The direct abatement cost function
@Cost function specification
V. Econometric results
@Water pollution: cost estimates and policy
VI. Abatement costs and policy alternatives in China
@Marginal cost variations by sector, scale and abatement rate
@The cost of tighter effluent standards
@The impact of emissions charges
@Cost savings with emissions charges
VII. Summary and conclusions
Acknowledgements
References