Economy

In Press
Jing Cao, Mun Sing Ho, Yating Li, Richard G. Newell, and William A. Pizer. In Press. “Chinese residential electricity consumption estimation and forecast using micro-data.” Resource and Energy Economics. Publisher's VersionAbstract
Based on econometric estimation using data from the Chinese Urban Household Survey, we develop a preferred forecast range of 85–143 percent growth in residential per capita electricity demand over 2009–2025. Our analysis suggests that per capita income growth drives a 43% increase, with the remainder due to an unexplained time trend. Roughly one-third of the income-driven demand comes from increases in the stock of specific major appliances, particularly AC units. The other two-thirds comes from non-specific sources of income-driven growth and is based on an estimated income elasticity that falls from 0.28 to 0.11 as income rises. While the stock of refrigerators is not projected to increase, we find that they contribute nearly 20 percent of household electricity demand. Alternative plausible time trend assumptions are responsible for the wide range of 85–143 percent. Meanwhile we estimate a price elasticity of demand of −0.7. These estimates point to carbon pricing and appliance efficiency policies that could substantially reduce demand.
Submitted
Jing Cao, Mun S. Ho, Dale W. Jorgenson, and Chris P. Nielsen. Submitted. “China’s Emissions Trading System and an ETS-Carbon Tax Hybrid.” Energy Economics.
Jing Cao, Mun S. Ho, Wenhao Hu, and Dale W. Jorgenson. Submitted. “Urban Household Consumption in China.” Review of Economics and Statistics.
Jing Cao, Mun S. Ho, Wenhao Hu, and Dale W. Jorgenson. Submitted. “Urban Household Consumption in China.” European Economic Review.
Xueli Zhao, Xiaofang Wu, Chenghe Guan, Chris P. Nielsen, and Bo Zhang. Submitted. “Drivers of agricultural greenhouse gas emissions across the world.” Environmental Research Letters.
2018
Jing Cao, Mun S. Ho, and Govinda R. Timilsina. 2018. “Carbon Tax for Achieving China's NDC: Simulations of Some Design Features Using a CGE Model.” Climate Change Economics, 9, 3. Publisher's VersionAbstract
China has set a goal of reducing its CO2 intensity of GDP by 60–65% from the 2005 level in 2030 as its nationally determined contribution (NDC) under the Paris Climate Change Agreement. While the government is considering series of market and nonmarket measures to achieve its target, this study assesses the economic consequences if the target were to meet through a market mechanism, carbon tax. We used a dynamic computable general equilibrium model of China for the analysis. The study shows that the level of carbon tax to achieve the NDC target would be different depending on its design features. An increasing carbon tax that starts at a small rate in 2015 and rises to a level to meet the NDC target in 2030 would cause smaller GDP loss than the carbon tax with a constant rate would do. The GDP loss due to the carbon tax would be smaller when the tax revenue is utilized to cut existing distortionary taxes than when it is transferred to households as a lump-sum rebate.
Jaume Freire-González and Mun S. Ho. 2018. “Environmental fiscal reform and the double dividend: evidence from a dynamic general equilibrium model.” Sustainability, 10, 2. Publisher's VersionAbstract
An environmental fiscal reform (EFR) represents a transition of a taxation system toward one based in environmental taxation, rather than on taxation of capital, labor, or consumption. It differs from an environmental tax reform (ETR) in that an EFR also includes a reform of subsidies which counteract environmental policy. This research details different ways in which an EFR is not only possible but also a good option that provides economic and environmental benefits. We have developed a detailed dynamic CGE model examining 101 industries and commodities in Spain, with an energy and an environmental extension comprising 31 pollutant emissions, in order to simulate the economic and environmental effects of an EFR. The reform focuses on 39 industries related to the energy, water, transport and waste sectors. We simulate an increase in taxes and a reduction on subsidies for these industries and at the same time we use new revenues to reduce labor, capital and consumption taxes. All revenue recycling options provide both economic and environmental benefits, suggesting that the “double dividend” hypothesis can be achieved. After three to four years after implementing an EFR, GDP is higher than the base case, hydrocarbons consumption declines and all analyzed pollutants show a reduction.
sustainability-10-00501.pdf
Bo Zhang, Yaowen Zhang, Xueli Zhao, and Jing Meng. 2018. “Non-CO2 Greenhouse Gas Emissions in China 2012: Inventory and Supply Chain Analysis.” Earth's Future, 6. Publisher's VersionAbstract
Reliable inventory information is critical in informing emission mitigation efforts. Using the latest officially released emission data, which is production based, we take a consumption perspective to estimate the non-CO2 greenhouse gas (GHG) emissions for China in 2012. The non-CO2 GHG emissions, which cover CH4, N2O, HFCs, PFCs, and SF6, amounted to 2003.0 Mt. CO2-eq (including 1871.9 Mt. CO2-eq from economic activities), much larger than the total CO2 emissions in some developed countries. Urban consumption (30.1%), capital formation (28.2%), and exports (20.6%) derived approximately four fifths of the total embodied emissions in final demand. Furthermore, the results from structural path analysis help identify critical embodied emission paths and key economic sectors in supply chains for mitigating non-CO2 GHG emissions in Chinese economic systems. The top 20 paths were responsible for half of the national total embodied emissions. Several industrial sectors such as Construction, Production and Supply of Electricity and SteamManufacture of Food and Tobacco and Manufacture of Chemicalsand Chemical Products played as the important transmission channels. Examining both production- and consumption-based non-CO2 GHG emissions will enrich our understanding of the influences of industrial positions, final consumption demands, and trades on national non-CO2 GHG emissions by considering the comprehensive abatement potentials in the supply chains.
zhang_et_al-2018-earths_future.pdf
Bo Zhang, Shihui Guan, Xiaofang Wu, and Xueli Zhao. 2018. “Tracing natural resource uses via China's supply chains.” Journal of Cleaner Production, 196, Pp. 880-888. Publisher's VersionAbstract
This paper makes an in-depth analysis on demand-driven natural resource requirements in China via the methods of thermodynamic input-output analysis and structural path analysis, in order to reveal the connections between the country's rapid economic development and its intensive use of natural resources. The main natural resources investigated include crops, forestry, rangeland, aquatic products, coal, crude oil & natural gas, ferrous metal ores, nonferrous metal ores, nonmetallic minerals and other primary energy, and exergy is adopted as a common metric for the resource accounting. In 2012, the total domestic resource exergy input into Chinese economic system amounted to 130.1 EJ, of which 44.6% was induced by investment demands. The embodied resource use (ERU) in China's exports was equivalent to over one fifth of its domestic resource supply. The two integrative sectors of Manufacturing and Construction accounted for 44.1% and 28.7% of the national total ERU, respectively. We identified critical supply chain paths starting from resource extraction to final demand, as well as key industrial sectors in driving the extraction, transmission and final use of embodied resources. The top 50 paths were responsible for 30.4 EJ of the ERU. The identification of resource supply chains from a systemic perspective is of great importance when resource and environmental policies are to be applied to concrete industrial sectors and other economic agents. Integrated approaches that take account of consumption-based resource indicators should be developed for resource conservation and cleaner production, particularly for the economic system with a complex supply network.
2017
Changyi Liu, Yang Wang, and Rong Zhu. 2017. “Assessment of the economic potential of China's onshore wind electricity.” Resources, Conservation and Recycling, 121, Pp. 33-39. Publisher's VersionAbstract

The assessment of the economic potential of wind electricity is of critical importance for wind power development in China. Based on the wind resource data between 1995 and 2014 and geological assumptions, this paper calculates economic potential of China’s onshore wind electricity. Furthermore, it builds an econometric model to update the net-present-value model, based on a survey sample of various wind farms. Results show that the economic potential of China’s onshore wind electricity is 8.13 PWh per year with a feed-in-tariff price at 0.60 yuan (about 9.6 U.S. cents) per kilowatt-hour.

Haikun Wang, Yanxu Zhang, Xi Lu, Weimo Zhu, Chris P. Nielsen, Jun Bi, and Michael B. McElroy. 2017. “Trade‐driven relocation of air pollution and health impacts in China.” Nature Communications, 8, 738. Publisher's Version
Nan Zhong, Jing Cao, and Yuzhu Wang. 2017. “Traffic congestion, ambient air pollution and health: Evidence from driving restrictions in Beijing.” Journal of the Association of Environmental and Resource Economists, 4, 3, Pp. 821–856. Publisher's VersionAbstract

Vehicles have recently overtaken coal to become the largest source of air pollution in urban China. Research on mobile sources of pollution has foundered due both to inaccessibility of Chinese data on health outcomes and strong identifying assumptions. To address these, we collect daily ambulance call data from the Beijing Emergency Medical Center and combine them with an idiosyncratic feature of a driving restriction policy in Beijing that references the last digit of vehicles’ license plate numbers. Because the number 4 is considered unlucky by many in China, it tends to be avoided on license plates. As a result, days on which the policy restricts license plates ending in 4 unintentionally allow more vehicles in Beijing. Leveraging this variation, we find that traffic congestion is indeed 22% higher on days banning 4 and that 24-hour average concentration of NO2 is 12% higher. Correspondingly, these short term increases in pollution increase ambulance calls by 12% and 3% for fever and heart related symptoms, while no effects are found for injuries. These findings suggest that traffic congestion has substantial health externalities in China but that they are also responsive to policy. 

2016
Energy and Climate: Vision for the Future
Michael B. McElroy. 2016. Energy and Climate: Vision for the Future. 1st ed. New York: Oxford University Press. Publisher's VersionAbstract

The climate of our planet is changing at a rate unprecedented in recent human history. The energy absorbed from the sun exceeds what is returned to space. The planet as a whole is gaining energy. The heat content of the ocean is increasing; the surface and atmosphere are warming; mid-latitude glaciers are melting; sea level is rising. The Arctic Ocean is losing its ice cover. None of these assertions are based on theory but on hard scientific fact. Given the science-heavy nature of climate change, debates and discussions have not played as big a role in the public sphere as they should, and instead are relegated to often misinformed political discussions and inaccessible scientific conferences. Michael B. McElroy, an eminent Harvard scholar of environmental studies, combines both his research chops and pedagogical expertise to present a book that will appeal to the lay reader but still be grounded in scientific fact. 

In Energy and Climate: Vision for the Future, McElroy provides a broad and comprehensive introduction to the issue of energy and climate change intended to be accessible for the general reader. The book includes chapters on energy basics, a discussion of the contemporary energy systems of the US and China, and two chapters that engage the debate regarding climate change. The perspective is global but with a specific focus on the US and China recognizing the critical role these countries must play in addressing the challenge of global climate change. The book concludes with a discussion of initiatives now underway to at least reduce the rate of increase of greenhouse gas emissions, together with a vision for a low carbon energy future that could in principle minimize the long-term impact of energy systems on global climate.

Jing Cao, Mun S. Ho, and Huifang Liang. 2016. “Household energy demand in urban China: Accounting for regional prices and rapid economic change.” The Energy Journal, 37. Publisher's VersionAbstract

Understanding the rapidly rising demand for energy in China is essential to efforts to reduce the country's energy use and environmental damage. In response to rising incomes and changing prices and demographics, household use of various fuels, electricity and gasoline has changed dramatically in China. In this paper, we estimate both income and price elasticities for various energy types using Chinese urban household micro-data collected by National bureau of Statistics, by applying a two-stage budgeting AIDS model. We find that total energy is price and income inelastic for all income groups after accounting for demographic and regional effects. Our estimated electricity price elasticity ranges from - 0.49 to -0.57, gas price elasticity ranges from -0.46 to -0.94, and gasoline price elasticity ranges from -0.85 to -0.94. Income elasticity for various energy types range from 0.57 to 0.94. Demand for coal is most price and income elastic among the poor, whereas gasoline demand is elastic for the rich.

2015
Haikun Wang, Yanxia Zhang, Xi Lu, Chris P Nielsen, and Jun Bi. 2015. “Understanding China's carbon dioxide emissions from both production and consumption perspectives.” Renewable and Sustainable Energy Reviews, 52, Pp. 189-200. Publisher's VersionAbstract

China is now the largest emitter of CO2 in the world, having contributed nearly half of the global increase in carbon emissions between 1980 and 2010. The existing literature on China’s carbon emissions has focused on two dimensions: the amount of CO2 emitted within China’s geographical boundaries (a production-based perspective), and the drivers of, and responsibility for, these emissions (a consumption-based perspective). The current study begins with a comprehensive review of China’s CO2 emissions, and then analyzes their driving forces from both consumption and production perspectives, at both national and provincial levels. It is concluded that China’s aggregate national CO2 emissions from fossil fuel consumption and cement production maintained high growth rates during 2000-2010. National emissions reached 6.8–7.3 billion tons in 2007, nearly 25% of which were caused by net exports (i.e., exports minus imports) to other countries. However, emission characteristics varied significantly among different regions and provinces, and considerable emission leakage from the developed eastern regions to inland and western areas of the country was found. The objectives of China’s policies should therefore be broadened from continued improvement of energy efficiency to accelerating regional technology transfer and preventing mere relocation of carbon-intensive economic activities from developed coastal regions to less developed, inland provinces. To rapidly and effectively cut down China’s carbon emissions, moreover, its energy supply should be aggressively decarbonized by promoting renewable and low carbon energy sources.

2014
Yanxia Zhang, Haikun Wang, Sai Liang, Ming Xu, Weidong Liu, Shalang Li, Rongrong Zhang, Chris P Nielsen, and Jun Bi. 2014. “Temporal and spatial variations in consumption-based carbon dioxide emissions in China.” Renewable & Sustainable Energy Reviews, 40, Pp. 60-68. Publisher's VersionAbstract

China’s CO2 emissions have sharply increased in recent years with soaring economic development and urbanization. Consumption-based accounting of CO2 emissions could provide new insights for allocating regional mitigation responsibility and curbing the emissions. A multi-regional input–output model is used to study the trends and disparities of consumption-based emissions from Chinese provinces during the period 2002–2007. Results show that China’s consumption-based CO2 emissions grew from 3549 Mt in 2002 to 5403 Mt in 2007 with an annual average growth rate of 8.8%. The annual growth rate in the richer eastern region was over 10% because of a rapid increase in capital investment and the growth of urban consumption. Consumption-based CO2 emissions embodied in interprovincial trades contributed only 10% (351 Mt) to the national total of such emissions in 2002, but 16% (864 Mt) in 2007. Given low per capita emissions currently, China’s consumption-based emissions have much room to grow because of further development of urbanization and stimulation of domestic demand. The government should pay greater attention to controlling CO2 emissions from a consumption-based perspective.

2013
Chris P Nielsen and Mun S Ho. 2013. “Atmospheric Environment in China: Introduction and Research Review.” In Clearer Skies Over China: Reconciling Air Quality, Climate, and Economic Goals, Pp. 3-58. Cambridge, MA: MIT Press. Publisher's Version
Clearer Skies Over China: Reconciling Air Pollution, Climate, and Economic Goals
2013. Clearer Skies Over China: Reconciling Air Pollution, Climate, and Economic Goals. Cambridge, MA: MIT Press. Publisher's Version
Jing Cao, Mun S Ho, and Dale W Jorgenson. 2013. “The Economics of Environmental Policies in China.” In Clearer Skies Over China: Reconciling Air Quality, Climate, and Economic Goals, Pp. 329-372. Cambridge, MA: MIT Press. Publisher's Version
Chris P Nielsen and Mun S Ho. 2013. “Op-ed: Clearing the air in China.” New York Times (Sunday Review), October 27 , Pp. SR4. Publisher's Version

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