The Costs and Benefits of Environmental Regulation

The Costs and Benefits of Environmental Regulation

Imad A. Moosa and Vikash Ramiah

The Costs and Benefits of Environmental Regulation presents a thorough investigation into environmental regulation, its economic and financial effects and the associated costs and benefits. A variety of issues, pertaining to regulation in general and environmental regulation in particular, are examined. These issues include the theories of regulation and how it is viewed in terms of the free market doctrine, forms of regulation, command-and-control regulation as opposed to market-based regulation and the cost–benefit analysis of environmental regulation.

Chapter 12: Environmental regulation in China: a life-saving mechanism in a pollution haven

Imad A. Moosa and Vikash Ramiah

Subjects: economics and finance, environmental economics, environment, environmental economics, environmental governance and regulation, politics and public policy, environmental governance and regulation


The objective of Chairman Mao Zedong’s second five-year plan for the period 1958–63 (the Great Leap Forward) was for the Chinese economy to grow by expanding agriculture and industry. The underlying idea was that workers had to be fed adequately (hence the need for agriculture) so that they could work in factories (industry). The increase in the production of food, coal and steel led to deforestation, pollution and the extinction of wildlife as well as other environmental problems such as adverse weather conditions. Flooding occurred in some regions of China, while drought was observed in other regions. These erratic conditions led to shrinkage of food production, which resulted in starvation and the death of around 20 million citizens. One lesson that can be drawn from the Great Leap Forward is that environmental disasters are not just a product of market systems, as they occurred in China’s command economy. The Chinese government has learned from its previous mistakes and reacted by adopting a ‘grow now and clean now’ approach, which is different from the ‘grow now and clean later’ approach (adopted by countries such as the UK, the US and Japan when their economies were growing rapidly in the process of industrialization). The recent rapid growth in China has changed the scenery of major cities, as pollution has been causing serious health problems and premature death.

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