Including the Costs and Benefits of Green Taxes
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From the reviews of the book:
- "(T)he most comprehensive report on economic costs and human health impacts of air pollution ever undertaken in China." - KAN Haidong, Department of Environmental Health, School of Public Health, Fudan University.
- The Lancet: "The encouraging -- indeed politically crucial -- observation is that such 'green taxes' would yield a double dividend: reducing environmental and health damage while enhancing economic growth. That last win-win finding should be an offer that a government cannot refuse." – Anthony J. McMichael, National Centre for Epidemiology and Population Health, The Australian National University. Click here for full book review.
- "[Should] appeal to a broad readership. ... The first three chapters ... provide an easily understandable synopsis ... perfect for readers ... or for faculty teaching a broad survey course on China ... This volume is to be commended as a very accessible presentation of an ambitious and thorough research undertaking." - Robert W. Mead, Department of Economics, University of California-Fullerton.
- : "[I]mpressively integrated" ... "The multidisciplinary framework... allows for a total picture to emerge" ... "At a time when Beijing should be considering not only its local pollution problem, but also its global greenhouse gas emissions, [the book's policy] suggestions are a welcome addition to the debate ..." - Sam Geall.
- “In contrast the World Bank report Cost of Pollution in China: economic estimates and physical damages (2007), which caught the attention of the mainstream mass media …, this edited volume by Mun Ho and Chris Nielsen stands as a solemn, solid, and scholarly defence of the same alarming message - air pollution causes significant damage to the Chinese population and economy. ... Reader-friendly ... This book is a methodological breakthrough in the research on the environment-health nexus in China ...” – WU Fengshi, Department of Politics and Public Administration, Chinese University of Hong Kong. .
- The China Journal (July 2008): "[C]omprehensive, timely and policy-relevant ... rigorous ... designed to suit the needs of both non-experts and experts ... potential to become a key reference for scholars and regulators ..." - WANG Xuehong, Crawford School of Economics and Government, The Australian National University
- : "At last, there is a comprehensive, detailed analysis of air pollution and air pollution damage in China. ... This book is a significant contribution to environmental studies of China ... I would whole-heartedly recommend this text to science, economy and policy professionals studying the environment of China." - Jack Patrick Hayes, School of Social Sciences, Norwich University. .
- "This book informs public policy debates and contributes to an interdisciplinary discussion of air pollution in China. It is timely and insightful, and should be of interest to scholars, journalists, policy makers, and students concerned about environmental protection and public issues in China today." - Joseph Tse-Hei LEE, Department of History, Pace University.
- Vaclav Smil, University of Manitoba, author of China's Environmental Crisis and other books on energy, food, and environment in China: "There is no such detailed, comprehensive analysis of this topic. ... a commendable effort."
- Haakon Vennemo, Director, ECON: "Clearing the Air is essential for anyone seriously interested in China's environment. Well researched and well written, the book documents what is known - and not known - about air pollution damage in China.
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About the Research in Clearing the Air
This multi-component assessment by a Harvard and Tsinghua collaborative team integrates studies to estimate and compare the national health damages of ambient air pollution in China by sector. It uses these estimates to assess the effects of green tax policies on emissions of air pollutants and greenhouse gases, human health, and the economy.
Results are presented in a comprehensive volume with sections for both non-expert and expert readers, Clearing the Air: The Health and Economic Damages of Air Pollution in China (Ho and Nielsen 2007, MIT Press). Advised by Dale W. Jorgenson (Samuel Morris University Professor), the initiative was developed and managed by Mun S. HO (Harvard Institute for Quantitative Social Science) and Chris P. Nielsen (Harvard School of Engineering and Applied Sciences). The Tsinghua University component was led by HAO Jiming (Academician and Professor, Department of Environmental Science and Engineering). Additional Harvard faculty playing key roles were Jonathan I. Levy and James K. Hammitt of the Harvard School of Public Health.
The lead policy conclusion below is followed by descriptions of three major research components, and then discussion of estimates of total damages from China's air pollution (such as premature mortalities and percent of GDP).
Click here for the OECD Environmental Review of China, citing the book findings, and testimony on it by Mun Ho at the US-China Economic and Security Commission (see pp. 144-161).
A more recent phase of integrated research by the same Harvard-based team, sharply enhancing the methods of Clearing the Air and applying them to cost-and-benefit assessments of national control strategies for GHGs and air pollutants, is reported in a new book, Clearer Skies Over China: Reconciling Air Quality, Climate, and Economic Goals, also from MIT Press.
Lead Policy Conclusion
Clearing the Air’s integrated modeling analyses foremost show that:
Green tax policies in China could not only reduce health damages of air pollution and reduce carbon emissions but, depending on the use of the revenues, sustain or even increase China’s economic growth. In any case, the costs of such policies are modest compared to the benefits.
This highly encouraging result indicates that tax-based policy approaches should be prominently on the table for consideration and further evaluation if China seeks a comprehensive national strategy for controlling both domestic air pollution and carbon emissions. This and many other policy conclusions are discussed further in the book.
From the Economy to Emissions, and Policy
In the largest continuous activity of the China Project, Jorgenson, Ho, and colleagues have developed, updated, and refined a 34-sector dynamic model used to evaluate the growth, energy use, and emissions trajectory of China’s economy. For more information on the model see the link on "China's Economy and Energy Use".
In Clearing the Air, this economic model incorporates results of the environment and health components described in the next two sections to estimate the health and economic damages of ambient air pollutants by detailed industries (Ho and Jorgenson 2007a). These estimates are then used to analyze the effects of market-based environmental policies on economic growth, production structure, and energy use on the one hand, and the effects on pollutant emissions and health damages on the other (Ho and Jorgenson 2007b). These policies are in the form of so-called “green” (or “Pigouvian”) taxes, which are taxes on fuels or outputs scaled to the amount of damages they cause. The national framework allows the team to assess the effects of such policies not just on economic activities directly affected by policies, but also indirect reverberations throughout the economy as it responds to changes in prices. See the last sections below for a summary of policy implications of the integrated modeling analyses.
From Emissions to Exposures
Two teams modeled air dispersion and human exposure to particulate matter and sulfur dioxide from burning fossil fuels, using the "intake fraction" approach developed for data-limited contexts common in less-developed countries (Levy and Greco 2007). One was led by Jonathan Levy and ZHOU Ying (Harvard School of Public Health, HSPH) and used an atmospheric "puff" model to estimate intake fractions of primary and secondary pollutants from the electric power sector (Zhou et al. 2007).
A major second effort was led by HAO Jiming, LIU Bingjiang, and WANG Shuxiao of Tsinghua University (Department of Environmental Science and Engineering, DESE). They deployed teams to five cities to collect data on four major emitting sectors: chemicals, iron and steel, cement, and transportation. LIU developed a national database of plants for a fifth critical sector: electric power.
To analyze the data, Tsinghua scholars served research residencies at the Harvard School of Engineering and Applied Sciences, including post-doctoral fellowships held by WANG (now an associate professor at Tsinghua DESE) and LIU (now Deputy Director, Department of Total Emission Control, Ministry of Environmental Protection). They used the data to model air dispersion and exposures to emissions from hundreds of sources in the five sectors (Wang et al. 2007; Liu and Hao 2007). Regression analyses of the resulting intake fractions (based on the approach of Levy et al. 2002) produce sector intake fractions, which are incorporated into the economic model to estimate health damages.
Valuing Health Impacts
James K. Hammitt and ZHOU Ying (HSPH) conducted a contingent valuation study to estimate the economic value of preventing adverse health effects in China (Zhou and Hammitt 2007). The CV surveys were conducted in urban and rural areas of Beijing and Anhui province, facilitated by former Project co-chair XU Xiping (then HSPH, now at the University of Illinois - Chicago), and local institutes. Combined with population exposures estimated by intake fractions and dose-response relationships from literature, these valuations (and those of Wang and Mullahy 2006, an earlier study initiated and sponsored by the China Project) are used to monetize health damages of air pollution in the economic model.
National Damage Estimates: Number of Premature Deaths and Percent of GDP
The lead conclusion above reflects the main policy-related objective of Clearing the Air, in parallel to its research aims of advancing methods and published scholarship to build and encourage future research. Indeed the book emphasizes the developmental state of research capacities and inherent uncertainties behind all national environmental assessments in China. These include our own and related efforts like the damage modeling framework developed around the same time by the World Bank and China's State Environmental Protection Administration (SEPA, now the Ministry of Environmental Protection).
Estimates of aggregate national environmental damages, in health or economic terms, draw attention from popular media. They should best be qualified with strong caveats about their inherent imprecision and limits for policy inference. National air pollution damage estimates are among the results of Clearing the Air, though the book stresses caution in their interpretation. Several of our main estimates, reflecting different assumptions, are below. Other assumptions and estimates are described in the book.
|Annual cases of premature mortality
||Health damage as a percentage of GDP
|Cases / Assumptions|
|Acute mortality only (particles and sulfur dioxide)|
|1||Low-end assumptions (dose-response and valuation)||62,000||0.65%|
|2||Base case assumptions (dose-response and valuation)||93,700||1.84%|
|3||High-end assumptions (dose-response and valuation)||125,000||3.81%|
|Chronic mortality only (particles only)|
|4||Base case assumption (valuation)||561,000||4.36%|
Case 2 is treated as the primary base case in Clearing the Air. The epidemiological assumptions of Case 4 are closest to those of the World Bank-SEPA approach, though its objectives, methods, and capabilities differ substantially.
The first three cases consider acute mortality only, applying published epidemiological results from studies on Chinese populations. The fourth case includes chronic mortality for particles, but applies epidemiological results from studies on U.S. populations because no analogous “cohort" studies have been conducted in China (as they take decades and are very costly).
To emphasize one of many tradeoffs researchers face in all such studies in China, it is highly advisable to include long-term pollution effects on mortality, estimated by cohort studies, while it is also problematic to try to transfer epidemiological results across dramatically different national conditions. As shown above, a single choice — here, whether to assume U.S. cohort mortality research applies to Chinese conditions — can strongly affect the totals. Many other types of assumptions also affect such aggregate damages, including ones related to the economy imbedded in the percent-of-GDP formulations. As China builds up its body of research in these areas, we believe it is necessary to report at least several estimates under a range of assumptions rather than spotlight any point estimate without qualification. Indeed doing so is essential to help identify priorities for new research to narrow these very uncertainties.
The more immediately relevant implications for policy of Clearing the Air result from its comparisons of outcomes under different policies, because they are evaluated using the same assumptions. In this case the influence of imprecisely known parameters is at the margin, rather than added repeatedly into a total. Such conclusions therefore will be more robust to the uncertainties than attempted point estimates of total damages to the public health or economy of an entire nation. These comparative analyses also move beyond simply scaling the damages to evaluating which response strategies might perform best. For these reasons, even with the parameter uncertainties, they can help inform China's deliberations now on optimal policy responses to its air pollution and carbon dioxide emissions.
 The World Bank-SEPA initiative covered environment broadly and improved estimation of pollution damages, which in a policy context represent prospective benefits, damages that could be avoided. Our research is limited to emissions affecting air quality and climate, but it evaluates not just benefits but also costs — both direct and indirect ("general equilibrium") ones — in order to assess pollution control options in a complete, economy-wide benefit-cost framework.