This is the summary of my research and thesis done here at the University of Oslo on the environmental problems and environmental preferences in China.
This thesis begins with a description on the environmental problems along with the economic development. Even though GDP total in China increases each year, environment becomes worse and worse. Local environmental problems include air pollution, water pollution, solid waste and noise pollution. Particles, dust, SO2, CO, NOX from coal burning increases year by year. Coal smoke pollution is the main source of air pollution. TSP (total suspended particular) is the principal air pollutant in urban areas. Acid rain is another effect from coal burning. Acid rain expands more than one third of the country now. Water pollution is mainly caused by industrial and urban sewage that are discharged in river, lake. Industrial solid waste store-up and garbage from cities occupy large land space, pollute the air, surface water and underground water. Meanwhile, increased traffic in the city increases the noise as well.
Actually, National Environmental Protection Administration in China has some good policies for environment. However, the local government seems not to execute. They take more care of economic growth. Provincial government s incentives are not in line with national welfare priorities. This is seen by many as the main reason that environmental problems in China come into crisis.
In order to monitor the environment, Chinese government has carried out two studies to calculate the environmental costs. The project Economic Measure and Research on the Loss of Environmental pollution in China was undertaken by the State Environmental Protection Administration and Economic Policy Research Center (Xia, 1998). Another project Estimation of Economic Loss Caused by the Environment and Ecology Problems in the 90 s is completed by the Environment and Development Research Center of Chinese Academy of Social Sciences (Zheng, 1995). Also, David Norse, together with some Chinese researchers, has studied environmental cost of rice production in China (Norse et al. 2001; Huang et al. 2001). Chang, Seip and Vennemo have studied the environmental cost of water pollution in Chinese cities (Chang, Seip and Vennemo, 2001). By calculating environmental cost, we can know how much China have sacrificed on environment for the economic growth. It helps us to look at the economical achievement objectively, and take some methods to reduce the environment loss.
In the model A presented in section 4, I discuss environmental preferences and environmental quality in 3 kinds of situation: i.) social planner s decision which takes account into both ordinary people and leader s preferences on environment and material production; ii.) local leader s decision which only includes leader s preference, i.e., to maximize material production; iii.) leader s decision taking environmental quality into account, in which leaders begin to think about environment. In different situation, we get different environmental quality. In the first situation, social planner s decision, the environmental quality is best; in the second situation, local leader s decision, environmental quality is worst; in the third situation, leader s preferences is influenced by knowledge on the environment, for instance, green accounting. Population s welfare has been taken account into leaders consideration, and the environmental quality is better than the second situation.
Model B is a two period model. I discuss about the ordinary people and the leader s preferences on allocation of material production in period one and period two. If the ordinary people have a higher discount rate than the leaders, the ordinary people will tend to need all they can on consumption mainly in period 1, and not able to think so far ahead. When there is an uncertain political environment, the leaders may still have a higher discount rate than the ordinary people. The leaders don t know how long they will be in power, so they are interested in achieving much now, and leave environment to next period. When leaders have an insecure position, their discount rate is tending to be high.
To improve environment in China, I proposed some suggestions for the environmental policy in China. First is to make environmental cost visible, as well as to make the leadership aware the scale of environmental degradation and the cost of economic growth. This can be achieved by setting up Green GDP or green accounting. Green GDP is an adjustment of GDP. In Green GDP, environmental cost caused by economical activities has been deducted from traditional GDP. Green accounting, also named as environmental accounting, is physical and monetary accounts of environmental assets and the costs of their depletion and degradation (United Nations, 1997). Second is to change the current indices of measuring officials political achievement. Once environmental quality is put into the indices of measuring officials political achievement, the leadership would invest more in the environment sector.
Economic growth and environmental protection complement one another. Without economic growth, we don t have enough capital, technology, equipment to protect and administrate ecological environment. In the contrary, without good environment, it s difficult to keep healthy, not to say economic growth.