Sulfur Emissions Control in China: Domestic or Regional Cooperative Strategies?

What is it about?

This paper investigates the economic costs of pollution due to sulphur dioxide emissions in China and their impacts on human health and ecosystems in Northeast Asia, specifically China and Japan. We compare actual emission charging as practiced in China with the estimated domestic and regional "optimal" charges. The analysis demonstrates that, while the actual SO₂ emission charge in China has been increased, it may be still less than the estimated domestic "optimal" charge incorporating damage costs only on human health by dry deposition in a gaseous form, excluding damage costs caused by acid rain in China. Nevertheless, it would be still beneficial for Japan to financially assist China with its SO₂ reduction because the percent contribution by northeast China to deposition in Japan is increasing.

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Why is it important?

although the rate of China’s emission charge increased in 1998, that rate is still less than the estimated domestic optimum (incorporating damage costs on human health, but excluding damage caused by acid rain in China). Thus, although China is in the process of internalizing damage costs on human health, it is still sub-optimal. If the damage costs attributed to acid rain in China are considered, the rate of the emission charge is increased. Willingness to pay of Japan for reducing sulfur deposition emitted in China has also risen. An efficient strategy to reduce SO2 emissions in this region may first be to disseminate information in China. A regionally optimal policy framework will also mitigate the damage caused by SO2 emissions in Northeast Asia.

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