ACADEMIC
project on environmental scarcities, state capacity, & civil violence
The Economic Cost of Environmental Degradation in China
According to studies produced by Professors Wang Hongchang and Ning Datong, and by Mr. Xia Guang, the annual economic cost of environmental degradation in China can be illustrated in terms of income lost as a result of deforestation, environmental pollution, and degradation of natural resources.
For the purposes of these studies, “loss” was defined as the deviation between potential and actual economic income resulting from environmental damage.
The following tables summarize the sources of economic loss in 1992 Renminbi (billion yuan).
Effects of Deforestation | 1992 yuan (billions) |
Reduced Precipitation | 81.00 |
Reduced Lumber Output | 19.40 |
Desertification | 18.81 |
Lost Water Run-off | 66.70 |
Loss of Plant Nutirents to Erosion | 41.00 |
Reservoir and Lake Sedimentation | 0.80 |
Siltation of Previously Navigable Rivers | 4.10 |
Property Loss Resulting from Flooding | 13.40 |
Total | 245.20 |
Water Pollution | 1992 yuan (billions) |
Impact on Human Health | |
as a Result of Contaminated Food | 2.41 |
as a Result of Contaminated Drinking Water | 16.87 |
Impact on Industrial Output | 13.78 |
Impact on Crop Yields | 1.38 |
Impact on Livestock and Fisheries | 1.16 |
Air Pollution | |
Impact on Human Health | 20.16 |
Impact on Agricultural Production | 7.20 |
Impact on Materials | 16.53 |
Acid Rain | 14.00 |
Solid Waste Pollution | |
Solid Waste | 5.12 |
Total | 98.61 |
Arable Land | 1992 yuan (billions) |
Impact of Farmland Conversion | 0.35 |
Impact of Soil Erosion | 16.20 |
Impact on Reservoir Capacity and Waterways | 3.8 |
Impact of Increased Soil Salinity | 0.54 |
Desertification | |
Impact on Availability of Arable Land | 1.80 |
Impact on Agricultural Land Quality | 12.00 |
Impact on Infrastructure | 1.00 |
Rangeland | |
Impact on Animal Husbandry | 3.00 |
Impact on Quality of Forage | 0.20 |
Total | 38.80 |
Note that while some of the calculations in Prof. Ning’s paper represent long-term losses, in the above table the figures represent annual losses only.
Income Lost as a Result of Deforestation | 245.20 |
Income Lost as a Result of Pollution | 98.61 |
Income Lost as a Result of Natural Resource Degradation | 38.80 |
Total in 1992 yuan (billions) | 382.61 |
It should be noted that some duplication occurs among the studies. For example, both Professors Wang and Ning calculate the impact of reservoir siltation and loss of soil nutrients. However, the causes for these losses differ. Whereas Prof. Wang attributes the losses to deforestation, Prof. Ning attributes the losses to excessive grazing, and cultivation, and to wind erosion. Due to the difficulty of distinguishing among the many causes of specific cases of environmental degradation, such duplication is unavoidable. Nonetheless, we have decided to retain the calculations as they appear.
An examination of these tables reveals deforestation as the greatest source of economic losses – almost double the total losses arising from environmental pollution and degradation of natural resources combined.
The approach adopted by the authors to study economic losses resulting from the above factors raises one obvious question: How do we calculate the income that would have potentially been accrued were there no environmental damage? In addressing this question, the authors relied heavily on assumptions as a basis for their calculations.
Professor Wang’s study exemplifies this point. His calculations rely on a comparison of existing conditions with an ideal situation in which no deforestation has occurred whatsoever. Due to the difficulty of finding a more accurate substitute for comparison, this idealized base-line, though not necessarily precise, is adopted.
The final outcome is quite stunning. On an annual basis, economic losses to China as a result of environmental degradation equal 382.61 billion yuan. This figure represents 18.9 of China’s total national income (2022.3 billion yuan in 1992). This loss is attributable to; natural resource degradation — 1.9%; environmental pollution — 4.9%, and; deforestation — 12.1%.
At first glance the significant losses attributed to deforestation seem exaggerated. However, a close study of Professor Wang’s research demonstrates the accuracy of his calculations. The disturbing results of this study should serve to awaken all Chinese to the extraordinary importance of afforestation.