Lin Boqiang

For China, making genuine strides in cleaning up the environment clearly involves raising society’s awareness. The smog hovering over the skylines of China’s major cities has already been alarming. A commonly expressed view is that China, as a developing country, will inevitably have environmental pollution, and that with economic growth and higher income levels, its citizens will also have higher demands toward the quality of the environment and therefore invest more in improving the environment and taking environmental-friendly measures—in short, dealing with pollution after it happens.

 

This view is based on the Environmental Kuznets Curve (EKC) proposed by American economists Gene Grossman and Alan B. Krueger. A graphical portrayal of environmental quality relative to a country’s level of development, it is shaped like an inverted U, indicating that as a country’s economy grows, its environmental quality will deteriorate before improving. Implicit in this representation is the traditional “treatment after pollution” pattern developed nations have already undergone.

 

The success stories of Western countries all seem to demonstrate that environmental pollution is an inescapable externality during any period of rapid urbanization and industrialization, and that the way to overcome environmental pollution is simply to develop the economy more rapidly in order to get out of the period when growth is hurting the environment—the ascending part of the EKC—and reach the period when growth is helping the environment. Now the problem is, is this “success story” always applicable, in any era and on any continent?

 

Today, the ways that polluters harm the environment, the condition and availability of natural resources, and the international economic situation are all significantly different from what they used to be. Developed nations’ experience a certain degree of environmental pollution during industrialization is inevitable. Will the rapid economic growth of populous nations like China and India, and the massive scale on which these countries consume resources, push environmental pollution to or even beyond a tipping point? If we indeed have gone beyond the tipping point, would we even be able to recognize it? Currently, some of China’s ecological and environmental problems may already be beyond repair.

 

The treatment of our environmental problems is in itself a process that will require tremendous energy and resources. Being able to consume energy at this level will only work if China has access to abundant amounts of cheap resources, and, of course, only if it uses them to initiate treatment before environmental deterioration reaches the “beyond repair” condition. As opposed to when the Western world industrialized, China is facing a shortage of resources and thus ever increasing prices for resources. The traditional pattern of treatment after pollution, even if it may work, will be more difficult and costly given these conditions. What is certain is that environmental deterioration and resource exhaustion will require a lot of time and capital to address.

 

Historically, developed nations have often shifted their pollution to underdeveloped nations by moving their manufacturing sectors. China, however, is not yet able to employ this solution.

 

While government policies cannot change the existence of the inverted U curve, they can ameliorate it. Better policies can make the curve flatter; they can make its apex come earlier. Even if we acknowledge the EKC’s existence, we still need better policy-making and international aid and investment to control environmental deterioration. Developed nations’ experience has also shown that adopting measures and enacting policies to develop sustainably earlier will make the curve flatter or make its apex appear earlier.

 

Naturally, the curve will look different depending on a country’s pattern of economic growth and the particular regime of environmental policies it employs. More passive environmental policies that simply assess environmental cost can make the curve smoother and reduce its peak through providing subsidies for meeting environmental goals. More active environmental policies can further reduce the peak by facilitating internalization of costs, minimizing the environmental damage caused by economic growth and preventing the damage from becoming irreversible.

 

Whether China can improve environment is dependent on whether it can achieve higher income levels, adjust the structure of its economy, utilize resources more efficiently, change the composition of inputs and further advance technology. All these factors except for achieving higher income levels will be driven by the price of resources. As such, policies should be made to set environmental standards and energy prices should be reformed to reflect environmental costs and the cost of resources consumed. We need to adjust the structure of the economy so as to encourage the use of clean energy. This is also an area where technological innovation will be key in exploring alternatives to conventional forms of energy. We can also get more per unit of energy by decreasing energy intensity and increasing waste recycling.

 

As environmental pollution is cumulative, prevention and treatment today will cost less than dealing with it in the future.

 

Lin Boqiang is director of the China Center for Energy Economics Research at Xiamen University and distinguished professor in Changjiang Scholar.

 

The Chinese version appeared in Chinese Social Sciences Today, No. 547, Jan.10, 2014

                                                                  Translated by Jiang Hong

                                          Revised by Charles Horne

The Chinese link:

http://www.csstoday.net/xueshuzixun/guoneixinwen/87176.html