# Economy

2013
Chris P Nielsen, Mun S Ho, Yu Zhao, Yuxuan Wang, Yu Lei, and Jing Cao. 2013. “Summary: Sulfur Mandates and Carbon Taxes for 2006-2010.” In Clearer Skies Over China: Reconciling Air Quality, Climate, and Economic Goals, Pp. 59-102. Cambridge, MA: MIT Press. Publisher's VersionAbstract

A groundbreaking U.S.–Chinese inquiry into the effects of recent air pollution controls and prospective carbon taxes on China's economy and environment.

China's carbon dioxide emissions now outstrip those of other countries and its domestic air quality is severely degraded, especially in urban areas. Its sheer size and its growing, fossil-fuel-powered economy mean that China's economic and environmental policy choices will have an outsized effect on the global environmental future. Over the last decade, China has pursued policies that target both fossil fuel use and atmospheric emissions, but these efforts have been substantially overwhelmed by the country's increasing energy demands. With a billion citizens still living on less than $4,000 per year, China's energy and environmental policies must be reconciled with the goals of maintaining economic growth and raising living standards. This book, a U.S.–Chinese collaboration of experts from Harvard and Tsinghua University, offers a groundbreaking integrated analysis of China's economy, emissions, air quality, public health, and agriculture. It first offers essential scientific context and accessible summaries of the book's policy findings; it then provides the underlying scientific and economic research. These studies suggest that China's recent sulfur controls achieved enormous environmental health benefits at unexpectedly low costs. They also indicate that judicious implementation of carbon taxes could reduce not only China's carbon emissions but also its air pollution more comprehensively than current single-pollutant policies, all at little cost to economic growth. 2012 Jing Cao, Mun S Ho, and Dale W Jorgenson. 2012. “An integrated assessment of the economic costs and environmental benefits of pollution and climate control.” In The Chinese Economy: A New Transition, edited by Masahiko Aoki. London: Palgrave Macmillan. Publisher's Version 2011 Jintai Lin and Michael B. McElroy. 2011. “Detection from space of a reduction in anthropogenic emissions of nitrogen oxides during the Chinese economic downturn.” Atmospheric Chemistry and Physics, 11, Pp. 8171-8188. Publisher's VersionAbstract Rapid economic and industrial development in China and relatively weak emission controls have resulted in significant increases in emissions of nitrogen oxides (NOx) in recent years, with the exception of late 2008 to mid 2009 when the economic downturn led to emission reductions detectable from space. Here vertical column densities (VCDs) of tropospheric NO2 retrieved from satellite observations by SCIAMACHY, GOME-2 and OMI (both by KNMI and by NASA) are used to evaluate changes in emissions of NOx from October 2004 to February 2010 identifying impacts of the economic downturn. Data over polluted regions of Northern East China suggest an increase of 27–33% in 12-month mean VCD of NO2 prior to the downturn, consistent with an increase of 49% in thermal power generation (TPG) reflecting the economic growth. More detailed analysis is used to quantify changes in emissions of NOx in January over the period 2005–2010 when the effect of the downturn was most evident. The GEOS-Chem model is employed to evaluate the effect of changes in chemistry and meteorology on VCD of NO2. This analysis indicates that emissions decreased by 20% from January 2008 to January 2009, close to the reduction of 18% in TPG that occurred over the same interval. A combination of three independent approaches indicates that the economic downturn was responsible for a reduction in emissions by 9–11% in January 2009 with an additional decrease of 10%attributed to the slow-down in industrial activity associated with the coincident celebration of the Chinese New Year; errors in the estimate are most likely less than 3.4 %. 2009 Jing Cao, Richard Garbaccio, and Mun S Ho. 2009. “China's 11th Five-Year Plan and the environment: Reducing SO2 emissions.” Review of Environmental Economics and Policy, 3, 2, Pp. 189-208. Publisher's VersionAbstract China's rapid economic growth has been accompanied by a high level of environmental degradation. One of the major sources of health and ecosystem damages is sulfur dioxide (SO2). Reducing SO2 emissions is a priority of China's environmental authorities, and the 11th Five-Year Plan (2006–2010) includes the target of reducing total SO2 emissions by 10 percent from the 2005 level. Given the rapid increase in SO2 emissions that is expected to occur in absence of intervention, attaining this target will require a significant effort. This article examines the two major policy measures the government is taking to achieve the SO2 target: a shutdown of many small, inefficient power plants and the installation of desulfurization equipment on existing and new coal-fired plants. We present results from a joint U.S.–China study that we participated in, which estimated the costs and benefits of these policies. We then estimate the economy-wide impacts of the two policies using a multisector model of the Chinese economy. We find that in the aggregate, the economic benefits of the shutdown of the small power plants are large enough to offset the costs of the desulfurization equipment, even without considering the substantial environmental benefits from the reduction of emissions of SO2 and other pollutants. Xiaoqi Guo and James K Hammitt. 2009. “Compensating wage differentials with unemployment: Evidence from China.” Environmental and Resource Economics, 42, 2, Pp. 187-209. Publisher's VersionAbstract We estimate the economic value of mortality risk in China using the compensating-wage-differential method. We find a positive and statistically significant correlation between wages and occupational fatality risk. The estimated effect is largest for unskilled workers. Unemployment reduces compensation for risk, which suggests that some of the assumptions under which compensating wage differentials can be interpreted as measures of workers’ preferences for risk and income are invalid when unemployment is high. Workers may be unwilling to quit high-risk jobs when alternative employment is difficult to obtain, violating the assumption of perfect mobility, or some workers (e.g., new migrants) may be poorly informed about between-job differences in risk, violating the assumption of perfect information. These factors suggest our estimates of the value per statistical life (VSL) in China, which range from approximately US$30,000 to US$100,000, may be biased downward. Alternative estimates adjust for heterogeneity of risk within industry by assuming that risk is concentrated among low-skill workers. These estimates, which are likely to be biased downward, range from US$7,000 to US$20,000. This study developed a new approach to the valuation of health risk in China, for monetizing health damages of environmental degradation. Jing Cao, Mun S Ho, Dale W Jorgenson, Rouen Ren, Linlin Sun, and Ximing Yue. 2009. “Industrial and aggregate measures of productivity growth in China, 1982-2000.” Review of Income Wealth , 55, s1, Pp. 485-513. Publisher's VersionAbstract We estimate productivity growth for 33 industries covering the entire Chinese economy using a time series of input–output tables covering 1982–2000. Capital input is measured using detailed investment data by asset and labor input uses demographic information from household surveys. We find a wide range of productivity performance at the industry level. We then show how these industry growth accounts may be consistently aggregated to deliver a decomposition of aggregate GDP growth. For the 1982–2000 period aggregate TFP growth was 2.5 percent per year; decelerating from a rapid rate in the early 1980s to negative growth during 1994–2000. The main source of growth during the 1982–2000 period was capital accumulation, with a small negative contribution from the reallocation of factors across industries. Jing Cao, Mun S Ho, and Dale W Jorgenson. 2009. “The local and global benefits of green tax policies in China.” Review of Environmental Economics and Policy, 3, 2, Pp. 231-250. Publisher's VersionAbstract This article describes a multidisciplinary study of market-based policies for controlling air pollution in China. While previous studies have examined the costs and benefits of pollution control separately, this approach determines them together using an economy–environment model for China. We employ air dispersion simulations and population maps to calculate health damages due to air pollution. This provides estimates of incremental damages for industry output and fuel use. Based on these marginal damages, we simulate the effect of “green taxes” on the economy and show that the environmental benefits exceed the aggregate costs, ignoring adjustment costs for individual sectors. Rui Wang. 2009. “The structure of Chinese urban land prices: Estimates from benchmark land price data.” Journal of Real Estate Finance and Economics, 39, 1, Pp. 24-38. Publisher's VersionAbstract Taking the recent benchmark land prices published by the Chinese city governments, the paper estimates commercial and residential land price curves of Chinese cities using cross-sectional data, controlling for urban population size and income level. The urban land leasing price–distance relationship is estimated based on the argument that monocentric urban structure is representative for Chinese cities. Both population size and income level are found to positively affect urban land price and price–distance gradients. Commercial land prices are higher than residential land prices except in suburbs or outer central urban areas, where the land prices of different uses converge. In most situations, commercial use price gradients are larger than those of residential use. 2007 Chris P Nielsen and Mun S Ho. 2007. “Air pollution and health damages in China: An introduction and review.” In Clearing the air: The health and economic damages of air pollution in China, edited by Chris P Nielsen and Mun S Ho. Cambridge, MA: MIT Press. Publisher's VersionAbstract An interdisciplinary, quantitative assessment of the health and economic costs of air pollution in China, and of market-based policies to build environmental protection into economic development. China's historic economic expansion is driven by fossil fuels, which increase its emissions of both local air pollutants and greenhouse gases dramatically. Clearing the Air is an innovative, quantitative examination of the national damage caused by China's degraded air quality, conducted in a pathbreaking, interdisciplinary U.S.-China collaboration. Its damage estimates are allocated by sector, making it possible for the first time to judge whether, for instance, power generation, transportation, or an unexpected source such as cement production causes the greatest environmental harm. Such objective analyses can reset policy priorities. Clearing the Air uses this information to show how appropriate "green" taxes might not only reduce emissions and health damages but even enhance China's economic growth. It also shows to what extent these same policies could limit greenhouse gases, suggesting that wealthier nations have a responsibility to help China build environmental protection into its growth. Clearing the Air is written for diverse readers, providing a bridge from underlying research to policy implications, with easily accessible overviews of issues and summaries of the findings for nonspecialists and policymakers followed by more specialized, interlinked studies of primary interest to scholars. Taken together, these analyses offer a uniquely integrated assessment that supports the book's economic and policy recommendations. 2007. Clearing the air: The health and economic damages of air pollution in China. Cambridge, MA: MIT Press. Publisher's VersionAbstract An interdisciplinary, quantitative assessment of the health and economic costs of air pollution in China, and of market-based policies to build environmental protection into economic development. China's historic economic expansion is driven by fossil fuels, which increase its emissions of both local air pollutants and greenhouse gases dramatically. Clearing the Air is an innovative, quantitative examination of the national damage caused by China's degraded air quality, conducted in a pathbreaking, interdisciplinary U.S.-China collaboration. Its damage estimates are allocated by sector, making it possible for the first time to judge whether, for instance, power generation, transportation, or an unexpected source such as cement production causes the greatest environmental harm. Such objective analyses can reset policy priorities. Clearing the Air uses this information to show how appropriate "green" taxes might not only reduce emissions and health damages but even enhance China's economic growth. It also shows to what extent these same policies could limit greenhouse gases, suggesting that wealthier nations have a responsibility to help China build environmental protection into its growth. Clearing the Air is written for diverse readers, providing a bridge from underlying research to policy implications, with easily accessible overviews of issues and summaries of the findings for nonspecialists and policymakers followed by more specialized, interlinked studies of primary interest to scholars. Taken together, these analyses offer a uniquely integrated assessment that supports the book's economic and policy recommendations. Ying Zhou and James K Hammitt. 2007. “The economic value of air-pollution-related health risks in China: A contingent valuation study.” In Clearing the air: The health and economic damages of air pollution in China, edited by Mun S Ho and Chris P Nielsen. Cambridge, MA: MIT Press. Publisher's VersionAbstract An interdisciplinary, quantitative assessment of the health and economic costs of air pollution in China, and of market-based policies to build environmental protection into economic development. China's historic economic expansion is driven by fossil fuels, which increase its emissions of both local air pollutants and greenhouse gases dramatically. Clearing the Air is an innovative, quantitative examination of the national damage caused by China's degraded air quality, conducted in a pathbreaking, interdisciplinary U.S.-China collaboration. Its damage estimates are allocated by sector, making it possible for the first time to judge whether, for instance, power generation, transportation, or an unexpected source such as cement production causes the greatest environmental harm. Such objective analyses can reset policy priorities. Clearing the Air uses this information to show how appropriate "green" taxes might not only reduce emissions and health damages but even enhance China's economic growth. It also shows to what extent these same policies could limit greenhouse gases, suggesting that wealthier nations have a responsibility to help China build environmental protection into its growth. Clearing the Air is written for diverse readers, providing a bridge from underlying research to policy implications, with easily accessible overviews of issues and summaries of the findings for nonspecialists and policymakers followed by more specialized, interlinked studies of primary interest to scholars. Taken together, these analyses offer a uniquely integrated assessment that supports the book's economic and policy recommendations. Jing Cao. 2007. “Essays on Environmental Tax Policy Analyses: Dynamic Computable General Equilibrium Approaches Applied to China.” Kennedy School of Government, Harvard University. Publisher's Version Thesis Type: Ph.D. dissertation. Yi-Ming Wei, Lan-Cui Liu, Ying Fan, and Gang Wu. 2007. “The impact of lifestyle on energy use and CO2 emission: An empirical analysis of China’s residents.” Energy Policy, 35, 1, Pp. 247-257. Publisher's VersionAbstract Based on the application of a Consumer Lifestyle Approach (CLA), this paper quantifies the direct and indirect impact of lifestyle of urban and rural residents on China's energy use and the related CO2 emissions during the period 1999–2002. The results show that approximately 26 per cent of total energy consumption and 30 per cent of CO2 emission every year are a consequence of residents’ lifestyles, and the economic activities to support these demands. For urban residents the indirect impact on energy consumption is 2.44 times greater than the direct impact. Residence; home energy use; food; and education, cultural and recreation services are the most energy-intensive and carbon-emission-intensive activities. For rural residents, the direct impact on energy consumption is 1.86 times that of the indirect, and home energy use; food; education, and cultural recreation services; and personal travel are the most energy-intensive and carbon-emission-intensive activities. This paper provides quantitative evidence for energy conservation and environmental protection focused policies. China's security for energy supply is singled out as a serious issue for government policy-makers, and we suggest that government should harmonize the relationships between stakeholders to determine rational strategies. Jing Cao. 2007. “Measuring green productivity growth for China's manufacturing sectors: 1991-2000.” Asian Economic Journal, 21, 4, Pp. 425-251. Publisher's VersionAbstract Over the past two decades, China has sustained rapid economic growth of 8–10 percent, part of which is attributed to the positive total factor productivity (TFP) growth. However, this extraordinary economic performance has been accompanied by severe environmental pollution and associated health damage. The conventional TFP method is biased in interpreting the progress of technology change because it does not consider non‐marketable residues, such as environmental pollution, and, hence, efficiency improvements in terms of pollution abatement technology and environmentally friendly management are ignored. This bias might direct our attention to less efficient use of environmental friendly abatement technologies or send wrong signals to policy‐makers. To address this issue, the present paper applies a modified welfare‐based green TFP approach, treating environmental damage as non‐desirable (negative) residual output. Therefore, environmental efficiency is taken into account to accurately interpret technological progress from a social welfare point of view. Based on a national time‐series input–output table, historical capital and labor input data for China and sectoral level air pollution emission data from 1991 to 2000, the empirical results suggest that with increasingly stringent environmental regulations, many pollution intensive sectors, such as electricity, primary metal and chemical industries, improved their environmental efficiency in the late 1990s. However, because of the weak environmental regulations in construction and transportation, and in sectors primarily composed of small private or township and village industrial enterprises, firms within these industries contributed to increasing environmental degradation. Mun S Ho and Dale W Jorgenson. 2007. “Policies to control air pollution damages.” In Clearing the air: The health and economic damages of air pollution in China, edited by Mun S Ho and Chris P Nielsen. Cambridge, MA: MIT Press. Publisher's VersionAbstract An interdisciplinary, quantitative assessment of the health and economic costs of air pollution in China, and of market-based policies to build environmental protection into economic development. China's historic economic expansion is driven by fossil fuels, which increase its emissions of both local air pollutants and greenhouse gases dramatically. Clearing the Air is an innovative, quantitative examination of the national damage caused by China's degraded air quality, conducted in a pathbreaking, interdisciplinary U.S.-China collaboration. Its damage estimates are allocated by sector, making it possible for the first time to judge whether, for instance, power generation, transportation, or an unexpected source such as cement production causes the greatest environmental harm. Such objective analyses can reset policy priorities. Clearing the Air uses this information to show how appropriate "green" taxes might not only reduce emissions and health damages but even enhance China's economic growth. It also shows to what extent these same policies could limit greenhouse gases, suggesting that wealthier nations have a responsibility to help China build environmental protection into its growth. Clearing the Air is written for diverse readers, providing a bridge from underlying research to policy implications, with easily accessible overviews of issues and summaries of the findings for nonspecialists and policymakers followed by more specialized, interlinked studies of primary interest to scholars. Taken together, these analyses offer a uniquely integrated assessment that supports the book's economic and policy recommendations. Mun S Ho and Dale W Jorgenson. 2007. “Sector allocation of emissions and damage.” In Clearing the air: The health and economic damages of air pollution in China, edited by Mun S Ho and Chris P Nielsen. Cambridge, MA: MIT Press. Publisher's VersionAbstract An interdisciplinary, quantitative assessment of the health and economic costs of air pollution in China, and of market-based policies to build environmental protection into economic development. China's historic economic expansion is driven by fossil fuels, which increase its emissions of both local air pollutants and greenhouse gases dramatically. Clearing the Air is an innovative, quantitative examination of the national damage caused by China's degraded air quality, conducted in a pathbreaking, interdisciplinary U.S.-China collaboration. Its damage estimates are allocated by sector, making it possible for the first time to judge whether, for instance, power generation, transportation, or an unexpected source such as cement production causes the greatest environmental harm. Such objective analyses can reset policy priorities. Clearing the Air uses this information to show how appropriate "green" taxes might not only reduce emissions and health damages but even enhance China's economic growth. It also shows to what extent these same policies could limit greenhouse gases, suggesting that wealthier nations have a responsibility to help China build environmental protection into its growth. Clearing the Air is written for diverse readers, providing a bridge from underlying research to policy implications, with easily accessible overviews of issues and summaries of the findings for nonspecialists and policymakers followed by more specialized, interlinked studies of primary interest to scholars. Taken together, these analyses offer a uniquely integrated assessment that supports the book's economic and policy recommendations. Chris P Nielsen and Mun S Ho. 2007. “Summary for policy.” In Clearing the air: The health and economic damages of air pollution in China, edited by Mun S Ho and Chris P Nielsen. Cambridge, MA: MIT Press. Publisher's VersionAbstract An interdisciplinary, quantitative assessment of the health and economic costs of air pollution in China, and of market-based policies to build environmental protection into economic development. China's historic economic expansion is driven by fossil fuels, which increase its emissions of both local air pollutants and greenhouse gases dramatically. Clearing the Air is an innovative, quantitative examination of the national damage caused by China's degraded air quality, conducted in a pathbreaking, interdisciplinary U.S.-China collaboration. Its damage estimates are allocated by sector, making it possible for the first time to judge whether, for instance, power generation, transportation, or an unexpected source such as cement production causes the greatest environmental harm. Such objective analyses can reset policy priorities. Clearing the Air uses this information to show how appropriate "green" taxes might not only reduce emissions and health damages but even enhance China's economic growth. It also shows to what extent these same policies could limit greenhouse gases, suggesting that wealthier nations have a responsibility to help China build environmental protection into its growth. Clearing the Air is written for diverse readers, providing a bridge from underlying research to policy implications, with easily accessible overviews of issues and summaries of the findings for nonspecialists and policymakers followed by more specialized, interlinked studies of primary interest to scholars. Taken together, these analyses offer a uniquely integrated assessment that supports the book's economic and policy recommendations. Chris P Nielsen and Mun S Ho. 2007. “Summary for research.” In Clearing the air: The health and economic damages of air pollution in China, edited by Mun S Ho and Chris P Nielsen. Cambridge, MA: MIT Press. Publisher's VersionAbstract An interdisciplinary, quantitative assessment of the health and economic costs of air pollution in China, and of market-based policies to build environmental protection into economic development. China's historic economic expansion is driven by fossil fuels, which increase its emissions of both local air pollutants and greenhouse gases dramatically. Clearing the Air is an innovative, quantitative examination of the national damage caused by China's degraded air quality, conducted in a pathbreaking, interdisciplinary U.S.-China collaboration. Its damage estimates are allocated by sector, making it possible for the first time to judge whether, for instance, power generation, transportation, or an unexpected source such as cement production causes the greatest environmental harm. Such objective analyses can reset policy priorities. Clearing the Air uses this information to show how appropriate "green" taxes might not only reduce emissions and health damages but even enhance China's economic growth. It also shows to what extent these same policies could limit greenhouse gases, suggesting that wealthier nations have a responsibility to help China build environmental protection into its growth. Clearing the Air is written for diverse readers, providing a bridge from underlying research to policy implications, with easily accessible overviews of issues and summaries of the findings for nonspecialists and policymakers followed by more specialized, interlinked studies of primary interest to scholars. Taken together, these analyses offer a uniquely integrated assessment that supports the book's economic and policy recommendations. 2006 Xiaoqi Guo. 2006. “The economic value of air-pollution-related health risks in China.” Department of Agricultural, Environmental and Development Economics, Ohio State University. James K Hammitt and Ying Zhou. 2006. “The economic value of air-pollution-related health risks in China: A contingent valuation study.” Environmental Resource Economics, 33, 3, Pp. 399-423. Publisher's VersionAbstract The economic value of preventing adverse health effects related to air pollution is estimated using contingent valuation in three diverse locations in China. Values are estimated for three health endpoints: cold, chronic bronchitis, and fatality. Alternative statistical models are tested to study their impact on estimated willingness to pay (WTP) and on the relationship between WTP and respondent characteristics. Using the official exchange rate, the sample-average median WTP to prevent an episode of cold ranges between US$3 and US$6, the WTP to prevent a statistical case of chronic bronchitis ranges between US$500 and US$1,000, and the value per statistical life ranges between US$4,000 and US\$17,000. Estimated mean values are between two and thirteen times larger. Our estimates are between about 10 and 1,000 times smaller than estimates for the US and Taiwan using official exchange rates. Indoor air quality, measured for a subset of respondents, shows no consistent relationship with WTP.