- New Horizons in Environmental Economics series
6. 1 Increasing returns to pollution abatement INTRODUCTION Because of China’s extremely rapid economic growth, the scale and seriousness of environmental problems is no longer in doubt. Whether pollution abatement technologies are utilized more efficiently is crucial in the analysis of environmental management in China. This study analyzes how the performance of environmental management has changed over time using province-level data and particularly estimating the size of increasing returns to pollution abatement. We first measure the environmental performance index and then measure the effect of returns to pollution abatement efforts. We are not aware of any study that has attempted to test whether efforts to abate environmental pollution involve increasing returns in developing countries. Furthermore, in any such study, it would be important to control the level of abatement technology because, in practice, the technology employed changes over time. Increases in the environmental performance index are expected to be associated with a decrease in pollution. The environmental performance index is used to control this factor. The chapter is structured as follows. Section 2 provides the background to this study. Section 3 discusses the research methods. Section 4 presents the empirical results, and Section 5 presents a summary and concluding remarks. 2 BACKGROUND Environment in China The Chinese government has undertaken a series of actions to protect environmental quality and public health and several laws, regulations and standards have been promulgated (Sinkule and Ortolano, 1995; Edmonds, 2004). The decision-making system of environmental policy consists chiefly of three organizations of the National...
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