Pollution emissions impose serious social negative externalities, especially in terms of public health. To reduce pollution emissions cost-effectively, the marginal abatement costs (MACs) of pollution emissions must be determined. Since the industrial sectors are the essential pillars of China’s economic growth, as well as leading energy consumers and sulfur dioxide (SO2) emitters, estimating MACs of SO2 emissions at the industrial level can provide valuable information for all abatement efforts. This paper tries to address the critical and essential issue in pollution abatement: How do we determine the MACs of pollution emissions in China? This paper first quantifies the SO2 emission contribution of different industrial sectors in the Chinese economy by an Input-Output method and then estimates MACs of SO2 for industrial sectors at the national level, provincial level, and sectoral level by the shadow price theory. Our results show that six sectors (e.g., the Mining and Washing of Coal sector) should be covered in the Chinese pollution emission trading system. We have also found that the lowest SO2 shadow price is 2000 Yuan/ton at the national level, and that shadow prices should be set differently at the provincial level. Our empirical study has several important policy implications, e.g., the estimated MACs may be used as a pricing benchmark through emission allowance allocation. In this paper, the MACs of industrial sectors are calculated from the national, provincial and sectoral levels; therefore, we provide an efficient framework to track the complex relationship between sectors and provinces.
With the rapid development of the Chinese economy, air pollution has increased in severity. Especially, sulphur dioxide (SO2) has become of major concern because it can cause serious health problems like cardiovascular diseases and acidification of some soils and water bodies. To abate SO2, tax policies may be adopted. However, to make such policies feasible, it is important for policy-makers to know the contributions of SO2 emissions by individual industries. This paper first attempts to quantify the contributions to the total amount of SO2 emitted. Secondly, we estimate, from the public health perspective, the socio-economic costs of SO2 emissions related to these industries, and then compare the impacts of different tax policies from the public health perspective on reducing SO2 emissions. Finally, multiple policy implications are outlined for the Chinese government. The results show that indirect emission tax outperform direct tax for improvements in public health, and ultimately of people's welfare. Our findings are essential for relevant policy-making in China, as well as other emerging economies.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.