How the Chinese System of Charges and Subsidies Affects Pollution Control Efforts by China's Top Industrial Polluters

36 Pages Posted: 20 Apr 2016

See all articles by George Allayannis

George Allayannis

University of Virginia - Darden School of Business

Leora F. Klapper

World Bank; World Bank - Development Research Group (DECRG)

Multiple version iconThere are 2 versions of this paper

Date Written: October 31, 1999

Abstract

There have been extensive theoretical studies of firms' responses to environmental regulations ad enforcement but few empirical analyses of firms' expenditures on pollution abatement in response to different regulations and enforcement strategies. The authors empirically analyze the pollution abatement efforts of Chinese industrial firms under a system combining pollution charges and abatement subsidies. Using data on China's top industrial polluters and on regional development in China, they find that the combination of charges and subsidies used in china has provided effective incentives for the most heavily polluting industrial firms to abate pollution. Chinese industries operate under a unique pollution control system, a market-based instrument combining emissions charges and abatement subsidies. This combination of charges and subsidies has given firms incentive to invest in wastewater treatment facilities. The pollution levy, although low, has significantly improved investments in abatement. The authors found that the more pollution a firm generates, the more likely it is to invest in pollution abatement. This study was only of top polluters, which are closely monitored by environmental agencies, so the results may not be valid for other sources of industrial pollution.

Keywords: Sanitation and Sewerage, Water and Industry, Public Health Promotion, Pollution Management & Control, TF030632-DANISH CTF - FY05 (DAC PART COUNTRIES GNP PER CAPITA BELOW USD 2,500/AL, Environmental Economics & Policies

Suggested Citation

Allayannis, George and Klapper, Leora F., How the Chinese System of Charges and Subsidies Affects Pollution Control Efforts by China's Top Industrial Polluters (October 31, 1999). World Bank Policy Research Working Paper No. 2198. Available at SSRN: https://ssrn.com/abstract=632675

George Allayannis (Contact Author)

University of Virginia - Darden School of Business ( email )

Box 6550
Charlottesville, VA 22906-6550
United States
434-924-3434 (Phone)

HOME PAGE: http://faculty.darden.edu/allayannisy

Leora F. Klapper

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
202-473-8738 (Phone)

HOME PAGE: http://econ.worldbank.org/staff/lklapper

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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