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Equilibrium pollution and economic development in China

Published online by Cambridge University Press:  25 June 2003

Hua Wang  and
David Wheeler
Hua Wang
Affiliation:
Development Research Group, World Bank, 1818 H St. N.W., Washington, DC 20433 USA. Email: [email protected].
David Wheeler
Affiliation:
Development Research Group, World Bank, 1818 H St. N.W., Washington, DC 20433 USA. Email: [email protected].
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Abstract

This paper develops and estimates a structural equilibrium pollution model, in which the price and quantity of industrial pollution are jointly determined by the intersection of environmental demand and supply functions. The industrial environmental demand function relates industrial pollution intensity to the local price of pollution, while controlling for characteristics such as sector, scale, and ownership. The local environmental supply function specifies the pollution price imposed by the host community as pollution rises. The model provides a good fit to available data on provincial variations in China's pollution levy, or industrial emissions charge. Our results also suggest that Chinese industry has reduced emissions significantly in response to the levy.

Type
Theory and Applications
Information
Environment and Development Economics , Volume 8 , Issue 3 , July 2003 , pp. 451 - 466
Copyright
© 2003 Cambridge University Press

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