Environmental Resources and Economic Growth

1
Environmental Resources and Economic Growth

• James Roumasset
• University of Hawaii
• Hua Wang
• World Bank
• Kimberly Burnett
• University of Hawaii

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Environmental Kuznets Curve
Kg SO2 for 55 developed and developing countries,
1987-88, turning point 3137
3
Ambient concentrations in 11 Chinese cities,
1981-2001
NOx
SO2
TSP
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Major City EKCs
Taiyuan, TSP
Beijing, NOx
Shanghai, SO2
Tianjin, SO2
Anshan, TSP
Guangzhou, NOx
Chengdu, TSP
Changchun, NOx
Anshan, SO2
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Why is there no clear pattern?

• Regulation comes in waves
• Growth uneven
• Decentralization
• Relative prices, e.g., coal
• Short time horizon

7
Statistical reporting

• Falling levels of NOx, SO2, TSP in 11 major
  cities
• Contrasts starkly with bleak qualitative reports
• What information is needed to complete story?

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Towards improved statistical reporting

• TSP measurement PM 40 vs PM 10
• NOx measurement NO vs NO2
• Decentralization of industry?
• All emissions are not equal need
  source-receptor modeling

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Towards improved statistical reporting cont

• Sampling protocols location, seasonal, weather
  factors (Beijing TSP falling, but May 2000,
  then Premier Zhu Rongji warned that the rapidly
  advancing desert would necessitate moving the
  capital from Beijing
• Season matters In Beijing, winter SO2 2.7 times
  worse for health than average SO2, and 14.2 times
  worse than summer SO2 (Brajer and Mead 2004)

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But with more careful analysis

• Auffhammer et al. (2004) CO2 in 30 provinces
  from 1985-2000
• Correct approach is effect of income with
  controls on composition of industry, population,
  and proximity to the coast
• China on the flat part of EKC
• Income not as important for CO2 concentrations as
  population growth

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Water pollution
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Concentrations

• Proportion in poor water classes decreasing, but
  concentrations increasing

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Natural Resources Water

• Water resources not increasing supply (raw
  provision of water to consumers, including
  transportation loss, from the water resource)
  decreasing
• 246.826 million people without running water
• Problem especially severe in populous northern
  cities, water scarce, pollution severe, low
  income households with no running water

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• people are found boiling black water and
  scraping off the scum that accumulates on the top
  for drinking and cooking New York Times, Sept.
  12, 2004

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Soil

• Desertification 900 square miles, 5 billion tons
  lost/yr. (Brown, 1994)
• Since the 1990s, desertification has been major
  land resource concern
• But, productivity quantity farmland increasing,
  140 million hectares in 1993 (Lindert, 1996)
• Soil movement not soil loss
• Increased food imports reflect changing
  comparative advantage.
• Off-site problems, health effects may be of
  greater concern

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Forests
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Forests cont

• Total area increasing, total volume rebounding
  (Rozelle et al. 2003) but quality, biodiversity
  decreasing
• Afforestation campaigns fast growing species,
  overly dense spacing problems with species
  viability, commercial value, biodiversity.

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Fisheries
Source Chinese Academy of Fishery Sciences
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Fisheries

• Largest producer in the world, largest number of
  fishing boats
• Over-fishing, water pollution
• gt decline in stocks
• Regulations in place to limit number of boats but
  not quotas
• Quotas considered (not ITQs)

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Energy
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Coal
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Energy cont.

• Oil cleaner, less construction time
• Coal consumption still growing especially after
  2000 (relative energy cost, import prices)
• 2nd largest exporter of coal beginning 2001

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Depreciation of Natural Capital

• Air pollution growth less than GDP
• Water pollution not greater than GDP
• Renewables decrease in stock reduction
• Non-renewablesextraction growing less than GDP

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GNNP

• Constant or decreasing wedge
• Opportunities for further convergence, i.e.higher
  growth

25
Policy Reform

• Inconsistent regulations across industries and
  firm sizes
• Weak incentives small fines, no incentives for
  inspectors
• Lack of enforcement comply only during
  inspections, not enough inspectors
• Underpricing of natural resources

26
Improvements?

• Water prices going up in some areas
• Experimentation with tradable sulfur permits

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Remaining Challenges

• More attention to air than water pollution
• Need for water demand management
• Water, forestry resources remain underpriced,
  overused
• Use of oil has increased, but not as fast as
  energy consumption
• Major roadblock appears to be public
  administration

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Conclusions

• Substantial progress in energy efficiency and
  emissions/BTU
• Offset by rapid growth and low per capita income,
  i.e. EKC max remains in future
• Growth statistics not compromised by failure to
  deduct environmental depreciation