COMMENTARY
Data and Transparency Key for China's Pollution Clean-up

https://doi.org/10.1016/j.ecolecon.2021.106963Get rights and content

Highlights

  • Lacking transparent methods and data have plagued understanding of China's pollution clean-up cost.

  • We evaluate China's approach to estimate pollution costs for its air, water and soil clean-up plans.

  • We estimate a $900 billion USD shortfall in China's pollution clean-up.

  • To meet this gap, transparent data are necessary to stimulate needed investment..

Abstract

In the last few years, China released national cross-sector action plans to address its air, water, and soil pollution. These action plans establish targets and timelines for pollution reduction, taking aim at high-polluting sectors and articulating strategies for controlling emissions. In this perspective, we demonstrate the need for transparent, accurate methods and data appraising the financial expenditures and investments required to fund these plans. Applying a unique dataset on project-specific abatement costs derived from official but largely non-public Chinese data sources, we calculate the cost of China's pollution clean-up to be $1.1 trillion USD. Given slowing economic growth, we assess a roughly $900 billion USD shortfall based on analysis of existing public environmental expenditure and local government investment, necessitating private sector funds and new finance mechanisms if the plans' benefits are to be fully realized. To spur these new approaches, we argue that additional data disclosure and transparency regarding cost calculations are needed. We identify key questions and next steps for further research and policy discussion on what data are needed to underpin these improved estimates of China's pollution clean-up costs.

Introduction

China adopted national cross-sector plans to address environmental hazards in the country's air, water, and soil. The State Council - China's highest policymaking body - released the first action plan, for air pollution control, in 2013; a plan for water followed in 2015, and a plan for soil in May 2016 (Supplementary Table 1). The State Council - China's chief administrative body - announced that all three action plans will be implemented by the end of 2020, indicating that these efforts are key to achieve the country's environmental protection targets laid out in the 13th Five-Year-Plan (2016–2020). The plans establish targets and timelines for pollution reduction, taking aim at high-polluting sectors and articulating strategies for controlling emissions nationwide.

If China is able to achieve the goals articulated in these plans, the nation's people and environment would measurably benefit. China's Ministry of Environmental Protection (MEP, now the Ministry of Ecology and Environmental Protection or MEE) 2015 State of the Environment report found that 78.4% of the country's cities exceeded air pollution limits, while 61.3% of monitored groundwater sites were determined to be of “poor” or “very poor” quality (Ministry of Environmental Protection (MEP), China, 2016). In 2014, the first results of a national soil pollution survey revealed that more than one-fifth of the country's monitored soil is contaminated (Ministry of Environmental Protection and Ministry of Land and Resources, China, 2014). More than 1.5 million premature deaths occur each year in China due to air pollution, and water pollution leads to another 6000 premature deaths (Forouzanfar et al., 2016). China's plan for air, if fully implemented, would prevent more than 100,000 of these chronic disease deaths annually and stimulate $300 billion USD in net GDP, adding three million jobs (Clean Air Alliance of China (CAAC), 2015). One study estimates that in 2017 alone, the improvements in air quality in 74 of China's largest cities saved nearly 50,000 lives compared to 2013 (Huang et al., 2018).

In this perspective, we argue that additional data disclosure and transparency regarding pollution costs is urgently needed for China to address its massive pollution problems and realize the clean-up plans' full benefits to human and environmental health. The plans are currently at various implementation stages. The first phase of the Air Plan (2013–2017) was recently completed, with a second, three-year phase taking effect in 2018 (State Council, China, 2018). The other two plans for water and soil are underway with end of 2020 target completion dates. Paying for the plans is one of the primary hurdles to achieving each plans' pollution reduction targets, and the true costs of rehabilitating China's environment has been difficult to discern due to a dearth of transparent methodologies and credible data describing cost estimates.

To address this gap in this perspective piece, we evaluate China's current Total Emissions Control (TEC) approach to estimate investment costs for implementing its three major pollution clean-up plans using a unique dataset we derived on project-specific abatement costs from official but largely non-public Chinese data sources. Based on this method used by Chinese environmental regulatory bodies, we estimate the investment cost of China's pollution clean-up to be $1.1 trillion USD and assess a roughly $900 billion USD shortfall based on analysis of existing public environmental expenditure and local government investment. Private sector funds and new finance mechanisms are needed, then, if China is able to fully implement these plans. But China's TEC approach and existing pollution cost data are inadequate to spur these innovations and investments. We discuss what data and additional transparency measures are needed to underpin improved estimates of China's pollution clean-up costs.

Section snippets

Data Challenges in Calculating the Total Cost of China's Pollution Clean-up

Governments and independent analysts have used various approaches to measure pollution clean-up costs. Most estimation methods of direct and indirect costs are based on macroeconomic modeling. When the appropriate empirical data is available, however, direct compliance cost methodologies can be used to estimate pollution clean-up measures' economic effects. This approach measures a policy's impact on a firm or industry's change in production costs, usually incurred through technology

Assessments Reveal a Gap in Public Funding

Given this magnitude of China's pollution clean-up, both public and private investment will be needed to implement the three pollution control plans. This level of financing amounts to one of the largest environmental clean-ups in history, given the costs of the U.S. Clean Water Act alone is estimated to have cost $650 billion USD (Keiser and Shapiro, 2019). Meeting this investment demand will be challenging with China's slowest economic growth in 30 years - 6.6% in 2018 and 6.1% in 2019 (World

Improved Data Needed to Support New Environmental Policy Measures

China's government has experimented with a range of environmental management tools, many adopted or adapted from other nations, but the lack of verifiable, transparent data to support these efforts have led to false starts for some environmental programs. The government created a sulfur-dioxide emissions trading scheme in the early 1990s modeled after the U.S.'s successful Acid Rain program and has tried to implement several provincial pilots, but insufficient regulatory capacity, lack of a

Conclusion and Next Steps

The data disclosed in this analysis is a promising step in the right direction, and yet government-led data collection, analysis, and disclosure will have to be greatly expanded in order to create the financial environment needed to meet the goals of China's broad-sweeping, cross-sectoral pollution clean-up plans. With the Fourteenth Five Year Plan (2021–2025) to be unveiled in 2021 , the government has released indications that green development, and in particular, green finance will be key

Data Availability Statement

Data for Fig. 1 are publicly available and compiled from China's National Bureau of Statistics, www.stats.gov.cn, and are available from the corresponding author upon reasonable request. Data for the Pollution Plans' assessment and Fig. 2 are available in the Supplementary materials.

Declaration of Competing Interest

None.

Acknowledgements

This research was supported by Climateworks Foundation Grant No. 15-0869 and a Tan Chin Tuan Foundation Chinese Research Programme Award to A. Hsu. We thank Yihao Xie of Yale-NUS College, Tina Huang of the Yale School of Environment, and Max Song for valuable research and translation assistance.

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