the economic growth and the air quality deterioration
TRANSCRIPT
The Economic Growth and the Air Quality Deterioration in China
Hao Cheng
Second Cycle Degree Programme in Economics and Market Policy
Final Dissertation in Industrial Organization
Introduction With the acceleration of the industrialization in China, environmental
problems, especially air quality deterioration has drawn wide attention in recent years.
Investigating the relationship between economic growth and environmental pressure by testing Environmental Kuznets Curve (EKC) hypothesis is an important subject in economic researches.
In this thesis, I will use a panel data of the concentrations of main air pollutants (PM10, SO2 and NO2) in 31 provincial capital cities in China (2003-2013) to test EKC hypothesis and to analyze the relationship between economic development and air quality deterioration.
The Common Types of EKC Estimation Results in Previous Literatures
Inverted U-shaped relationship (EKC)
•Scale effect structural effect and technological effect (Grossman and Krueger, 1991);•Demand for better environmental quality;•International trade and FDI;•Policy effect•Market mechanism
U-shaped relationship
•Environmental pressure indicators with certain particularity (afforestation and deforestation);•The increase in energy consumption overweighs the effects of the shift to lower sulfur content fuels (Kaufmann, 1998)
N-shaped relationship
•Policy factors (Moomaw and Unruh, 1997; Martinez-Zarzoso and Bengochea-Morancho, 2004; Friedl and Getzner 2003);•Economic factors (De Bruyn and Opschoor 1997);
Monotonic Relationship•Ever growing global economy will continue increasing environmental pressure in a global scale;•EKC hypothesis only applies to individual countries rather than global environmental indicators;•The level of economic development has not reached the “delinking” level yet.
The regional economic growth and air quality damage in China
Empirical Analysis Environmental indicators: the annual average daily concentration of PM10, SO2
and NO2 of 31 provincial capital cities (2003-2013); Economic indicator: GDP per capita; The Model
Possible estimation resultsβ1 > 0, β2 < 0, β3 > 0 N-shapedβ1 < 0, β2 > 0, β3 < 0 inverted N-shapedβ1 < 0, β2 > 0, β3 = 0 U-shaped β1 > 0, β2 < 0, β3 = 0 EKC, turning point: for logarithmic model, for cubic
model ;
β1 > 0, β2 = β3 = 0 monotonically increasingβ1 < 0, β2 = β3 = 0 monotonically decreasingβ1 = β2 = β3 = 0 a flat pattern
Methodology Considering the possibility of the existence of multiple types of relationships,
six different regression models are used to investigate the relationship between every air pollutant and GDP per capita: Linear : Quadratic: Cubic: Logarithmic Linear: Logarithmic Quadratic: Logarithmic Cubic: +
Then, chose the most fitted model as the final regression model by comparing the adjusted coefficient of determination (adjusted R2), F-statistics and t statistics for each type of regression model.
Empirical Analysis Results
0
50
100
150
200
250
300
350
0 20,000 60,000 100,000 140,000
GDP PER CAPITA(YUAN)
PM
10(μ
g/m
3)
EASTERN
1.6
2.0
2.4
2.8
3.2
3.6
4.0
4.4
4.8
5.2
9.2 9.6 10.0 10.4 10.8 11.2 11.6 12.0
LNGDP
LNS
O2
1.6
2.0
2.4
2.8
3.2
3.6
4.0
4.4
4.8
5.2
9.2 9.6 10.0 10.4 10.8 11.2 11.6 12.0
LNGDP
LNS
O2
10
20
30
40
50
60
70
80
0 20,000 60,000 100,000 140,000
GDP PER CAPITA(YUAN)
NO
2(μ
g/m
3)
The concentrations of main air pollutants were mostly in a declining trend, the air quality has got improved to some extent, but the decline was only temporary, without effective environmental protection measures the air quality will deteriorate again with the economic growth.
Empirical Analysis Results
3.2
3.6
4.0
4.4
4.8
5.2
9.2 9.6 10.0 10.4 10.8 11.2 11.6
LNGDP
LNP
M10
2.4
2.8
3.2
3.6
4.0
4.4
4.8
9.2 9.6 10.0 10.4 10.8 11.2 11.6
LNGDP
LNS
O2
10
20
30
40
50
60
70
0 20,000 40,000 60,000 80,000 100,000 120,000
GDP PER CAPITA(YUAN)
NO
2(μg
/m3)
Central
Air pollution was getting worse in general, only the SO2 emission got controlled to a certain degree, but other pollutants were still increasing with the economic development.
Empirical Analysis Results
3.6
4.0
4.4
4.8
5.2
5.6
8.5 9.0 9.5 10.0 10.5 11.0 11.5
LNGDP
LNP
M10
Western
0
20
40
60
80
100
120
0 20,000 40,000 60,000 80,000 100,000
GDP PER CAPITA(YUAN)
SO
2(μ
g/m
3)
0
20
40
60
80
100
120
0 20,000 40,000 60,000 80,000 100,000
GDP PER CAPITA(YUAN)
SO
2μg/
m3)
2.4
2.8
3.2
3.6
4.0
4.4
8.5 9.0 9.5 10.0 10.5 11.0 11.5
LNGDP
LNN
O2
The air quality in Western region is not optimistic, all three pollutants have the increasing tendency in future as the economy grows , the region is less developed comparing to other parts of China, without appropriate environmental pollution precautions the air pollution will get worse as the economy grows.
Empirical Analysis Results
4.4
4.5
4.6
4.7
4.8
4.9
5.0
9.50 9.75 10.00 10.25 10.50 10.75 11.00 11.25 11.50
LNGDP
LNP
M10
80
90
100
110
120
130
140
10,000 30,000 50,000 70,000 90,000
GDP PER CAPITA(YUAN)
PM
10(μ
g/m
3)
2.4
2.8
3.2
3.6
4.0
4.4
4.8
9.50 9.75 10.00 10.25 10.50 10.75 11.00 11.25 11.50
LNGDP
LNS
O2
10
20
30
40
50
60
70
10,000 30,000 50,000 70,000 90,000
GDP PER CAPITA(YUAN)
NO
2(μg
/m3)
20
30
40
50
60
70
10,000 30,000 50,000 70,000 90,000
GDP PER CAPITA(YUAN)
NO
2(μg
/m3)
Northeastern
The main air pollutants were either increasing, or temporarily decreasing but with possible rebound in future as the economy grows.
Analysis on the Factors Affecting Air Quality
• Secondary sector (including industry and manufacturing) is the most environment-polluting sector among three major economic sectors;
• Comparing to other three regions, Eastern region is the only region where the proportion of secondary sector has been declining and in the meanwhile the proportion of tertiary sector has been increasing over the years.
Structural Changes
• Technological advancement not only can improve productivity and support faster economic growth, but also can be helpful in energy saving and emission reduction, therefore relieving the pressure on environment;
• Eastern region was the most proactive region in technological development, the application of new clean, environment-friendly technologies can improve directly or indirectly the environmental quality.
Technological Advancemen
t
• Government policies can be crucial for both economic development and environmental treatment;
• Eastern region has been given the priority of economic development since the reform, the region also has the largest amount of government investment in pollution treatment over the years.
Government Policies
Conclusions and Policy Implications
Main Conclusions
EKC does not necessarily exist, it is a summary of the industrialization experience in Western developed countries, not an inevitable developing trajectory.
The regression results indicate the existence of multiple types of relationship in different regions of China (EKC, U-shaped, N-shaped, monotonic);
The differences in the aspects of industrial structure, technological advancement and government policies can explain the different relationships between air quality deterioration and economic development in four regions of China.
Conclusions and Policy Implications
Policy Implications
Strengthen the laws and regulations in environmental protection, increase the expenditure on air pollution prevention and treatment in more polluted area;
Use clean energy (solar energy, wind and natural gas), make mandatory requirements of desulfurization and denitrification for polluting industrial enterprises;
Accelerate adjusting industrial structural composition, improve the measures of pollution control and prevention by applying new technology, increase the investment in environmental protection.
Thank you for your attention!