ACADEMIC

project on environmental scarcities, state capacity, & civil violence

An Estimate of the Economic Consequences of Environmental Pollution

by Xia Guang
Policy Research Center of the National Environmental Protection Agency, 100035, Beijing

I. INTRODUCTION

The immense impact of environmental pollution on people’s daily lives has increased the importance of conducting research that will enable scientists to assess environmental damage in economic terms. Such an assessment will improve the ability of the public to quantitatively grasp the impact of environmental pollution and the effectiveness of existing environmental policies. A quantitative assessment of the impact of environmental pollution will also provide data to enhance the effectiveness of government decision making. In recognition of these facts, environmental economists have begun searching for viable methods to estimate economic losses resulting from environmental pollution. These efforts have resulted in steadily improving evaluation methods. This paper contributes to these efforts by calculating the economic costs of environmental pollution to China, based on data from the early 1990s.

The paper is divided into four sections. The first reviews the progress that has been made in the field of environmental pollution cost evaluation; the second presents the methodology adopted and the data used in this study; the third calculates the economic losses resulting from water, air and solid waste pollution; and the final section assesses the calculations and presents conclusions.

 

A Review of Current Research in the Field of Environmental Pollution Cost Evaluation

Chinese environmental economists began to estimate the cost of environmental pollution losses in the early 1980s. These calculations of economic losses due to pollution were first presented in 1981 at the National Seminar On Environmental Economics held in Zhenjiang, Jiangsu Province. These theses mainly dealt with the theory and method of estimating economic loss due to pollution, including case studies from Japan and sample studies in specific Chinese cities and enterprises. 1

In one case, Zhu Jicheng and his colleagues calculated economic losses resulting from water pollution between 1972 and 1976 in an unnamed northern city. Their conclusion was that water pollution cost the city 301 million yuan, approximately 2 percent of the city’s Gross Economic Product (GEP of 15.5 billion yuan).2 In another case, Zhao Guichen and others put the economic cost of pollution from an asphalt factory at 42.58 million yuan between 1970 and 1979.3

Since the publication of these studies, a number of major research projects have been conducted with the aim of improving the tools used to conduct quantitative estimates of economic loss resulting from environmental pollution. For instance, the study entitled Forecast and Research on the Environment in the Chang Jiang River Valley that ran from 1982 to 1984, estimated total economic losses due to pollution in the Yangzi River valley at approximately 277 million yuan, or 1.56 percent of total industrial output value.4

These research projects were all limited regional studies. By contrast, a research project, begun in 1984, entitled Forecast and Countermeasures on China’s Environment in 2000, was the first national study of environmental costs ever undertaken. This study involved over 1,000 researchers and it ran for four years. According to this study, annual average economic losses from 1981 to 1985 were approximately 38.0 billion yuan (6.75 percent of the 1983 GNP).5

Since the publication of these studies, further advances have occurred in methods to calculate economic losses resulting from environmental pollution. For example, at the regional level, research institutes in Liaoning province and Yantai city estimated the cost of environmental damage in their regions for 1987 and 1989. These institutes concluded that economic losses due to environmental damage in Liaoning province accounted for 2.9 percent of local GEP, while in Yantai city losses accounted for 2.2 percent.6,7 During the 1990s, calculations of national economic losses resulting from pollution gained wider attention. At the Conference of International Cooperation Committee for China Environment and Development held in 1992, a report noted that:
According to expert estimates, economic losses resulting from pollution reached approximately 95 billion yuan per annum, including 40 billion yuan resulting from water pollution, 30 billion yuan resulting from air pollution, and 25 billion yuan resulting from solid waste and chemical fertilizers. These losses accounted for approximately 6.75 percent of national GNP. The economic losses can be further divided into: Impact on human health, 32 percent; losses in agriculture, forestry, animal husbandry and fisheries, 32 percent; losses in industrial materials and buildings, 30 percent; and others, 6 percent.8
Unfortunately, this report fails to note the dates covered by these results. Since much of the data in the report is found in the Forecast and Countermeasures on China’s Environment in 2000,9 I believe the results are derived from 1988 data. In 1994, a senior government official affirmed that “Chinese experts have done research on economic losses resulting from environmental pollution for many years and they have concluded that annual economic losses reach 100 billion yuan, and that pollution does harm to human health.”10

Research on economic losses to China resulting from environmental pollution has also been conducted by foreign scholars. In his study entitled Environmental Change as a Source of Conflict and Economic Losses in China (1992), Smil presented preliminary estimates, and four years later published a more detailed study, concluding that environmental pollution and degradation cost China approximately 10 percent of its GDP in 1990.11

 

II. Methodology and Data

That environmental pollution damages society is an objective fact. That damages caused by environmental pollution can be expressed in economic terms is also an objective fact. Therefore, it should be possible to quantify economic losses arising from environmental pollution by using cumulative statistics and induction from the smallest unit (e.g., an enterprise). If this approach could be used, the total cost of pollution would become quantifiable. Unfortunately, this task is not yet feasible. Instead we rely on studies that quantify a limited number of environmental pollution sources.

Because there is no detailed statistical basis for calculating economic losses sustained by individual enterprises or localities, we have to resort to larger-scale estimates of regional and national values. For instance, when calculating the national economic loss according to total pollution discharge in the country, no matter how precise the calculations, the results expressed cannot be the “real” values, rather they are only the “calculated” values. This is mainly due to the fact that there is no simple correlation between physical quantities and economic losses. In reality, the relations between the two variables are affected by many specific factors, ranging from climate and self-purification capacity of rivers to complex effects on human health.

 

The Impact of Various Factors on the Economic Cost of Environmental Pollution

While national level studies such as The Economic Measurement and Research on China’s Environmental Pollution Loss should continue to be conducted, in-depth research must also take place at the grassroots level. This ideal approach is constrained by objective limitations, forcing us to develop a method that uses studies at the macro level, while concurrently increasing the accuracy of predictions at the micro level.

In the report entitled, Estimation of Environmental Pollution Loss and Countermeasures of Environmental Protection in Yantai City: A Cost-Effectiveness Analysis, the Yantai Environmental Protection Research Institute adopted a structural analysis formula to calculate the cost of water pollution. These researchers divided their study into sub-sections that addressed surface water, sub-surface water, industry, marine cultivation, and coastal scenery. This approach took into account local geography and degrees of industrialization, as well as pollutant discharge levels. Appropriate values for economic loss due to pollution were selected for their calculations.

A compromise method was adopted in a 1986 study entitled Forecast and Countermeasures on China’s Environment in 2000. This study took a comprehensive macro-analysis approach, dividing losses resulting from environmental pollution into several major categories. The study estimated the total amount of various types of pollution discharged, as well as the population and areas affected by the discharge. It used data collected in other studies and implemented a market-value and opportunity-cost approach to estimate economic losses. The results represented economic losses at the national level. This method is theoretically explicit and implementable, and thus fairly reliable.

The author of this latter study divides environmental pollution into three categories: water; air; and solid waste. He measures the economic cost of water pollution by calculating its impact on human health, industrial production, crops, livestock and fisheries, and that of atmospheric pollution by calculating its impact on human health, crops, household hygiene, and construction materials. The economic cost of solid waste is measured by calculating the amount of land occupied by such waste. Overlapping variables in the study are omitted from the final estimate.

For the purposes of my own study, I have supplemented the formulas found in the Forecast and Countermeasures with additional sources. Resources used in my study include official information found in statistical yearbooks and bulletins on environmental conditions, as well as academic papers and research reports. Due to the difficulty of obtaining data for 1993 and 1994, my study relies on data for 1992.

Relying on economic tools to measure environmental factors, such as the economic costs of environmental pollution, is a difficult task for four reasons. First, the environment is a public resource that is not easily assigned a market value. Second, the result of calculations may vary widely depending on the particular approach selected by researchers. Third environmental economic measurement relies heavily on extensive research in the natural sciences. For instance, the dose-response relationship between pollution and human health will remain unclear until extensive observation and experimentation have been completed. Furthermore, numerous variables influence this relationship. As a result, data on certain variables cannot be obtained. Fourth, it is not clear whether and how to calculate costs to future generations. Researchers who wish to include estimates of the indirect effects of environmental pollution face similar issues.

Economic Losses Resulting from Water Pollution

In 1992, excluding discharge by rural enterprises, a total of 36.65 billion tonnes of waste water were released into rivers in 1992, 64 percent of which was from industrial sources.12 In general, river pollution in China follows a clear pattern: water quality tends to be better in the rivers of major water systems, while rivers in smaller water systems are often seriously polluted. Economic losses arising from water pollution can be assessed in various ways. This study concentrates on an estimate of economic losses resulting from the impact of water pollution on human health, industry, crop yields, livestock, and fisheries.

Economic Losses Resulting from the Impact of Water Pollution on Human Health

Water pollution may affect people indirectly through the aquatic food chain and through the use of waste water for crop irrigation. Water pollution can also have a direct affect on human health as a result of polluting drinking water, often causing infections and chronic or acute poisoning. In many parts of China, especially in suburban areas, waste water is used to irrigate crops. The advantages of using waste water in this way include its greater availability, its fertilizing properties, and the limited purification required. However, the long term costs of waste water irrigation outweigh the benefits. Waste water irrigation pollutes and damages both the agricultural environment and human health. According to the 1993 Bulletin of China’s Environmental Status, waste water irrigation polluted 3.3 million ha (Mha) of farmland13 and affected a population of 40 million.14

A 1980s study on irrigation conducted in Shenyang and Fushun in Liaoning province discovered the incidence of cancer in regions that irrigate with waste water was twice that of regions that relied on fresh water. In regions that irrigated with waters contaminated by petroleum, the incidence of certain major diseases was 1.5 to 20 times higher than in areas that relied on fresh water irrigation. Furthermore, the incidence of stomach cancer in areas irrigated with waste water was found to be 18 per 100,000, far higher than the 12 per 100,000 found in areas that irrigated with fresh water. In addition, the incidence of enteric disease was 5 percent higher in regions that rely on waste water irrigation, and the incidence of hepatitis was 3.6 percent higher.15

The human capital formula is best suited to calculating economic losses resulting from the impact of water pollution on human health. According to data produced by public health departments, the average medical expenses per patient per year were: 5,595 yuan for cancer patients, 280 yuan for hepatitis patients, and 93 yuan for patients with enteric disease.16China’s health system is unique in that the family of a sick person is responsible for his or her care, even while the sick person is residing in hospital. As a result, economic losses resulting from sickness and hospitalization must also account for time lost by family members. The average number of days a family spends accompanying and caring for a family member is 36 days for cancer patients, 25 days for patients with hepatitis, and 10 days for patients with enteric disease.

According to the China Statistical Yearbook, the per capita net value of farm yields in 1992 was 1,031 yuan.17 For the purposes of our study, this figure is regarded as human capital. We also assume that the various diseases require, on average, one year to be cured. Based on the above data and assumptions, we calculate the economic impact of indirect water pollution on human health using the following formula:

S1 = {PdT!FTi(Li-Loi) + !FYi(Li-Loi) + PdH!FHi(Li-Loi)}M

In the formula:

S1 Value of lost human health resulting from environmental pollution (hundred million yuan/year).
P Human capital (per capita value), yuan/year/person.
M Population in the polluted area (hundred million persons).
Ti Average annual loss of labor by patients suffering from one of the three diseases.
Yi Average medical and nursing expenses for patients sick with one of the three diseases (yuan/person).
Hi Average annual work time lost by relatives accompanying family members sick with one of the three diseases.
Li, Loi Respectively, the incidences of the three diseases in polluted and clean areas (person/100,000 persons/year).18

Thus the economic loss arising from the impact of water pollution on human health is:

S1 = [1031(12 x 0.0018% + 1 x 3.6% + 15/360 x 5% + (5,595 x 0.0018% + 280 x 3.6% + 93 x 5%) + 1,031(36/360 x 0.0018% + 25/360 x 3.6% + 10/360 x 5%)] x 0.4 = (41.49 + 14.74 + 4.03) x 0.4 = 2.41 billion yuan/year

In order to assess the economic loss resulting from the impact of polluted drinking water on human health, we first calculate the size of the exposed population. Forecast and Countermeasures on China’s Environment in 2000 estimates that 150 million people were exposed to tainted drinking water in 1985.19 By using this estimate as a baseline, and factoring in an annual 5 percent growth in rural population from 1985 to 1992,20 we arrive at an estimate of 280 million people affected by polluted drinking water in 1992. Forecast and Countermeasures also estimates that the incidence of cancer (specifically, liver and stomach cancer) in areas reliant on polluted drinking water is 6.15 percent higher than the incidence among people in areas with fresh drinking water.21

My personal experience leads me to believe that this estimate is far too high. The incidence of cancer is usually around one in ten thousand, therefore, I do not adopt their estimate. Instead, I have adopted a different method to calculate the impact of tainted drinking water. People living in areas relying on tainted drinking water will surely suffer no less than the people living in areas using waste water for irrigation, and the minimum level of damage will be in direct proportion to population totals (280 million/40 million = 7). Therefore, the economic loss caused as a result of tainted drinking water should be 2.41 x 7 = 16.87 billion yuan.

To summarize, the economic losses resulting from the impact of water pollution on human health is approximately 20 billion yuan.

Economic Losses Resulting from the Impact of Water Pollution on Industry

With potential water resources of 2,790 billion m3 a year, China ranks sixth in the world. While an impressive figure, China’s actually exploitable water resources are limited to approximately 1,200 billion m3 per year. China presently consumes 553.2 billion m3 of water per year, equivalent to 20 percent of potential water resources and 46 percent of actually exploitable water resources.22 These figures seem to suggest that China does not face a serious water shortage. However, water resources in China are unevenly distributed, with 82 percent of all surface water and 70 percent of all underground water located in the Yangzi River valley and to its south. China’s north, approximately 50 percent of the nation’s land area, is forced to depend on the remaining 18 percent of surface water, and 30 percent of underground water. Over half of China’s cities face water shortages,23 with northern China and northern Chinese cities facing an annual 36 billion tonne water deficit.24

In this study, we calculate the economic impact of water pollution on industry by measuring the economic losses that arise due to restrictions on industrial production as a result of polluted water. No data are available on the impact of polluted water sources on industry. As a result, this study has had to make the following calculation: 1) waste water discharges increased by 12 percent, from 32.7 billion tonnes25 in 1985 to 36.7 billion tonnes26 in 1992; and 2) water shortages resulting from polluted water equaled 1 billion tonnes in 1985.27Based on these figures we calculated that polluted water caused a water shortfall of approximately 1.12 billion tonnes, 3.1 percent of the water shortage in 1992. This figure seems a bit low, however we have been unable to produce a more persuasive estimate. As noted, in 1985 pollution was responsible for a 1 billion tonne shortfall of water. However, this accounts for only 2 percent of the total water shortage of 50 billion tonnes.

These calculations raise a number of questions. How is the impact of the 36 billion tonne water shortage divided between urban residents and industry? Also, how great is the economic impact of general water shortages on industry, and what part is specifically related to polluted water? For lack of statistical data, we assume that water pollution causes the loss to industry of any additional net income, and that lost net income can be regarded as economic losses resulting from water pollution. We also assume that all other factors of production (equipment, raw materials and labor) are statistically accounted for. In 1985, a one tonne shortage of water caused a 6.5 yuan loss of net income to industry.28 Since the price index in 1992 was 188.9 percent greater that of 1985,29 we adjust the loss to 12.3 yuan/tonne. We then calculate the economic impact of water pollution on industry as follows: 12.3 x 1.12 billion = 13.78 billion yuan.

Economic Losses Resulting from the Impact of Water Pollution on Farm Yields

In this study, we calculate the impact of water pollution on general crop yields by measuring decreases in yields of grain and vegetables. In the mid-1980s the Agricultural Environmental Protection Institute conducted a study of 380,000 hectares (ha) of farmland in 37 regions that depended on sewage water for irrigation. According to the study, farmland irrigated with sewage water yielded 80 million kg of grain less than farmland irrigated with clean water, a difference of 210 kg/ha in yields.30 Since 3.3 Mha of farmland were irrigated with sewage water in 1992, we estimate the resultant loss of grain yields was 690,000 tonnes.

The average market price for grain was 0.32 yuan/kg in 1985, or 0.54 yuan/kg.31 According to the price index published by the State Statistical Bureau, the average price for grain in 1992 was 169.49 percent greater that in 1985.32 Therefore, we can conclude that the average price of grain for 1992 was 0.54 yuan/kg. However, this price reflects the official state-set price, and not the true market price for grain, which is twice the state-set price. Therefore, in order to calculate the actual economic impact of water pollution on grain yields, we set the price of grain at 1.1 yuan/kg. Using the market value formula to calculate cost we arrive at the following results:

S2 = P x Q
In this formula:

S2 The value of grain lost to water pollution.
P The market price of grain (yuan/kg).
Q The lost grain output (kg).

Inserting the above figures in the formula, we arrive at a value for grain loss of 760 million yuan.

Applying the same method, we now calculate the economic impact of water pollution on vegetable yields. According to the China Statistical Yearbook, average per capita vegetable consumption for urban residents in 1992 was 124.91 kg. Rural residents consumed an average of 129.12 kg per capita. In 1992 the urban population of China was 324 million people and the rural population was 848 million people.33 Based on these figures we estimate that total vegetable consumption in 1992 was 150 million tonnes, of which urban consumption constituted about 27 percent. We assume that vegetable consumption is approximately equal to vegetable production. Since we know that in 1992, 7.03 Mha of land were planted with vegetables,34 we are able to estimate that vegetables yields per ha in 1992 equaled 21,300 kg.

While farmers grow their own vegetables, vegetables consumed by urban residents are mostly grown in suburban fields that are generally irrigated by sewage water. As previously noted, sewage water irrigation decreases vegetable yields. Therefore, we assume that losses in vegetable yields are mainly reflected in a decrease of vegetables consumed by urban residents. We have already estimated that vegetable fields in the suburban areas cover approximately 27 percent of the urban areas, or 1.893 Mha of land. According to the conclusions found in relevant research materials, the area of vegetable fields in polluted areas and the average loss to yields are both 15 percent.35 As a result, we can estimate the total loss of vegetable output resulting from water pollution as approximately 910,000 tonnes. Since we know that the 1992 price for vegetables averaged 0.68 yuan per kg,36 using the market value formula, we can ascertain the economic losses resulting from decreased vegetable yields. The result of our calculations suggests that the economic cost of lost vegetable yields is approximately 620 million yuan. If we add the economic losses resulting from decreased crop yields to this sum, we obtain a grand total of approximately 1.38 billion yuan.

Economic Losses Resulting from the Impact of Water Pollution on Livestock and Fisheries

The calculation of losses to livestock and fisheries is seriously restricted by a paucity of data. The most recent large scale survey of this issue was conducted in the mid-1980s in the Forecast and Countermeasures on China’s Environment in 2000. As a result, in this section I am forced to rely on data from 1985 and on the limited information supplied in the China Statistical Yearbook.

Because they account for about 80 percent of the nation’s total sewage irrigation, my study of the impact of water pollution on livestock focuses on Beijing and Tianjin cities, and the province of Liaoning.37 According to the China Statistical Yearbook, by the end of 1992, there were 4.291 million head of cattle in these three areas.38 The yearbook also provides statistics on the mortality rate for livestock in regions that rely on waste water irrigation. We know that in these regions the mortality rate among large animals was 7 percent, and, among domesticated fowl was around 10 percent.39 Based on these figures, we estimate that 320,000 large animals were lost as a result of water pollution. The market value per head of cattle in 1985 was 1,000 yuan.40 Since we know that the 1992 purchase price was 179.3 percent above the 1985 figure,41 we calculate that the average market price of livestock in 1992 was 1,793 yuan per head. Implementing the Market value formula, we estimate the loss of livestock to water pollution in the cities of Beijing and Tianjin, and the province of Liaoning at 580 million yuan. By adding 20 percent to this figure, we arrive at 700 million yuan, reflecting the economic loss for the entire country.

In assessing the economic impact of water pollution on fisheries, we concentrate on direct economic losses resulting from water pollution accidents and on the incremental decrease in yields caused by water pollution. According to the Communiqué on China’s Environmental Condition, nearly 1,000 pollution accidents occurred in China’s fisheries during the course of 1992, costing approximately 400 million yuan.42 Water pollution also caused the loss of 45,500 tonnes of fish in the country’s 327,000 ha fresh water aquatic industry.43 According to the China Statistical Yearbook, the retail price of aquatic products increased by 284.3 percent between 1985 and 1992,44 from about 0.5 yuan per kg in 1985, to about 1.42 yuan per kg in 1992.45 Implementing the market value formula, we estimate the economic loss arising from an incremental decrease in aquatic yields at 64.61 million yuan.46 We then add the 400 million yuan lost to fisheries as a result of pollution accidents to this figure, arriving at the approximate total economic loss to fisheries of 460 million yuan. By combining the total economic loss resulting from the impact of water pollution on both the livestock and fisheries industries, we arrive at a total of 1.16 billion yuan.

We now combine the economic costs of the impact of water pollution on the various factors reviewed in this section, and arrive at 35.6 billion yuan as the approximate total economic impact of water pollution in 1992.

Economic Losses Resulting from Air Pollution

Air pollution in China is most heavily concentrated in the cities of northern China. The main pollution source is burning coal. In this paper, economic losses caused by air pollution are assessed in several different categories, specifically damage to human health, to crops, to animals, and to materials.

Economic Losses Resulting from the Impact of Air Pollution on Human Health

The main economic impact of air pollution on human health is the rising incidence of respiratory disease among people, resulting in a loss of human capital. We therefore estimate the economic losses resulting from air pollution by implementing the Human Capital Formula we used to assess economic losses resulting from water pollution. This study focuses on three major respiratory illnesses; chronic bronchitis, pulmonary heart disease, and lung cancer. Human capital, P, represents the national average cash wages for employees in 1992, estimated at 2,711 yuan.47

No statistical data record the number of people, M, residing in polluted areas. Therefore, we are forced to assume that all people affected by air pollution are urban residents. The urban population in 1992 was 320 million,48 however, not all of these people live in polluted regions. We assume that 50 percent of urban residents, 162 million people, are affected by air pollution. One basis for this estimate is the Communiqué on China’s Environmental Condition for 1992, which asserts that both the yearly and daily average values of total suspended particles (TSP) in 51 percent of China’s cities contravenes government standards.49 In fact, this estimate is rather conservative, since virtually every city in China faces air pollution problems.

Our estimates of labor lost to respiratory illness are based on sample surveys conducted in the mid-1980s. According to these surveys, one year of labor is lost to chronic bronchitis; two years are lost to pulmonary heart disease; and 11 years are lost to lung cancer.50 The average medical cost of care per sufferer is 2,110 yuan for chronic bronchitis, 4,220 yuan for pulmonary heart disease, and 12,700 yuan for lung cancer.51 The differences between the incidence of these three diseases in regions with polluted and clean air are; 0.9 percent for chronic bronchitis, 1.1 percent for pulmonary heart disease; and 0.00833 percent for lung cancer.52 By applying these figures to the Human Capital Formula, we calculate that the economic loss resulting from the impact of air pollution on human health, in 1992, is approximately 20.16 billion yuan.

Economic Losses Resulting from the Impact of Air Pollution on Crop Yields

The economic losses to crops resulting from atmospheric pollution manifest themselves mostly through decreased yields of grain, vegetables, fruit, silkworm cocoons, and livestock. The Market value formula is applied to assess these losses based on the following equation:

S3 = !FPi x Qi
In this equation:

S3 The lost value of crops resulting from air pollution.
P The market price of crops (yuan/kg).
Q The lost output (kg).

In our assessment of economic losses resulting from water pollution we estimated the market price of grains and vegetables at 1.1 yuan/kg and 0.68 yuan/kg respectively. We now estimate the market value of fruit and silkworm cocoons. The 1985 market price for fruit was 0.8 yuan/kg and for silkworm cocoons was 2.31 yuan/kg.53 Based on prices published by the state we estimate that the 1992 market price for these two products was approximately 1.5 yuan/kg and 7.0 yuan/kg respectively.54 The next step is to estimate the affect of air pollution on the yields of these crops.

First, it is necessary to determine the unit-output of the specific crops, as well as the amount of farmland actually influenced by pollution. According to the China Statistical Yearbook the unit-output of grain was 4,342 kg/ha; the unit-output of fruit was 4,194 kg/ha (total fruit output was 24.4 million tonnes and total orchard area was 5.818 Mha).55 To assess the impact of air pollution on vegetable yields, we rely on the previously estimated vegetable yield of 21,300 kg/ha. Total output of silkworm cocoons is known to be 660 million kg.56 In 1992, 111 Mha were planted with grains, 7.03 Mha were planted with vegetables, and 5.818 Mha were planted with orchards.57

By relying on the Pollution Impact Coefficient we are able to estimate that air pollution has affected approximately 10 percent of the total area of crop land, vegetable plots, and orchards.58 Thus, we can assume that 11.1 Mha of cropland, 703,000 ha of vegetables and 581,800 ha of orchards were affected by air pollution. We also know that incremental losses resulting from air pollution were, on average, 10 percent for grains, 15 percent for vegetables, and 15 percent for fruit.59 Relying on the above data, we estimate grain yield losses of 5.3 billion yuan, vegetable yield losses of 1.02 billion yuan, and fruit yield losses of 560 million yuan. Based on a loss coefficient of 7 percent, we estimate a 46.42 million yuan economic loss resulting from the impact of air pollution on silkworm cocoons.60 The total economic loss resulting from the impact of air pollution on these three items in 1992, was 7.2 billion yuan.

Economic Losses Resulting from the Impact of Air Pollution on Materials

Air pollution causes damage to materials, increasing the amount of time that must be devoted to household upkeep, laundering, and car washing. Due to its corrosive effect, air pollution also shortens the life span of structures, urban facilities, and factory equipment.

Air pollution increases dust fall, adding to the time required for household upkeep. According to a study conducted in Chongqing, air pollution increases annual time spent on household upkeep by 91 hours per worker.61 As has been noted, 162 million people are influenced by air pollution in China. Since the ratio of working people in China is 60 percent,62 and the average worker’s wage is 1.52 yuan/hour,63 we can calculate the economic losses resulting from the impact of air pollution on household upkeep by applying the following formula: 162 (million people) x 0.6 x 91 (hours) x 1.52 (yuan/hour) = 13.44 (billion yuan)

The life-span of clothes is shortened by the frequent laundering necessitated by air pollution. Frequent laundering also creates increased demand for water, electricity, and detergent. A 1990 study entitled Theoretical Method and Quantitative Research on Economic Loss by Environmental Pollution, produced by the Research Institute of Environmental Protection Science of Liaoning Province, suggested that, as a result of air pollution, for every hour per day a person is exposed to the open air, he or she will be required to spend an additional 1.11 yuan on clothes laundering each year.64 We adjust the price index for water, electricity, and detergent expenses to 1.64 yuan to account for 1992 values.65 This figure is then combined with the average time spent outside (4 hours/person).66 As noted, 162 million people are influenced by air pollution. Therefore, we estimate that economic losses resulting from the impact of air pollution on materials is: 1.64 (yuan) x 162 (million people) x 4 (hours) = 1.06 (billion yuan).

Air pollution, mostly in the form of dust fall, also increases the demand for labor and materiel to clean vehicles. A survey entitled Estimation on Economic Losses Caused by Air Pollution and Analysis on Spending and Efficiency of Environmental Protection Measures in Yantai City provided a number of useful parameters on the relationship between expenses resulting from vehicle cleaning and increased cleaning time as a result of air pollution.67 Based on this study, the incremental nationwide expense of motorized vehicle cleaning due to air pollution can be estimated at about 180 million yuan per year, and the expense of non-motorized vehicle cleaning would be about 890 million yuan, for the combined total of 1.07 billion yuan.

Acid rain is a particularly damaging component of air pollution. The corrosive impact of acid rain on steel shortens its effective life span from 44.4 years under normal conditions, to only 19 years under polluted conditions.68 Steel has many uses in China. For this study we concentrate on its use in the construction of steel window frames for buildings. The corrosive affect of air pollution on steel window frames exemplifies the negative economic impact of air pollution on materials in general. The price of steel window frames in 1992 was 160 yuan/m2.69 Under normal conditions window frames last for 44.4 years, therefore, the annual economic loss resulting from degradation is: 160/44.4 = 3.6 yuan/m2. However, under polluted conditions the annual average loss is 8.4 yuan, an added loss of 4.8 yuan/m2 annually. Since no national statistics on housing construction rates exist for 1992, this study relies on figures on new housing construction in 46 big cities.70 Assuming that about 10 percent of this newly built area was in cities affected by heavy air pollution, the economic impact on steel window frames can be estimated at about 960 million yuan.

In summation, the grand total of the various economic losses resulting from the impact of air pollution on materials is 16.53 billion yuan.

Economic Losses Resulting from the Impact of Acid Rain

Acid rain pollution in China has grown steadily worse since the 1980s. The area of China affected by acid rain is expanding from the southwest in a northeasterly direction. According to the Experts’ Report on Acid Rain in China, in 1993, the area of China receiving precipitation with a pH value of less than 5.6 had increased to about 2.8 million km2 from about 1.75 million km2 in 1985.71

Some of the effects of acid rain on human health appear in the section addressing the impact of air pollution on human health, making the assessment of the economic costs to human health resulting from acid rain extremely complicated. Also, there is no data that deals specifically with the impact of acid rain. However, because acid rain affects only a relatively small area, despite some overlapping estimates between air pollution and acid rain, our general conclusions are only minimally affected. In 1994 the National Environmental Protection Agency contracted 16 experts to conduct research on acid rain issues. These experts estimated that acid rain resulted in approximately 14 billion yuan of economic losses on an annual basis.72 The National Environmental Protection Agency confirmed this estimate, and we have applied it to 1992. Therefore, we conclude that 14 billion yuan were lost as a result of acid rain in 1992.

By combining the various results obtained above, we estimate that in 1992 the economy lost 57.89 billion yuan as a result of air pollution.

Economic Losses Resulting from Solid Waste

Solid waste contributes to soil and underground water pollution, and occupies land previously earmarked for other uses. Since there are no statistics on the impact of solid waste on soil and underground water, this paper considers only those economic losses that arise from the impact of solid waste on land availability. Even after narrowing the focus of our study to this extent we still face a shortage of data. As a result, this section relies on what limited data is available and on assumptions.

According to a report issued by the National Environmental Protection Agency, 5.919 billion tonnes of industrial waste have accumulated over the past few years, occupying 54.5 thousand ha of land.73 This is equivalent to 100 million tonnes of waste for every 920 ha of occupied land. Statistics also confirm that in 1992 there were 618 million tonnes of solid waste, of which 256 million tonnes were reused, and 126 million tonnes were discharged.74 The remaining 336 million tonnes accumulated on approximately 3,100 ha of land.75

The majority of solid waste accumulates around cities on land previously earmarked for vegetables and grain cultivation. We have therefore chosen to measure economic loss by assessing lost profits resulting from lost agricultural land. While some variance exists between the agricultural yields in the south and north, we resolve it by relying on the net income of farmland in various economic regions as stipulated by the state. In Economic Assessment Formula and Parameters for Construction Projects (second edition), the State Planning Commission and the Ministry of Construction state that the net income derived from each mu of farmland planted with vegetables is: 1,018 yuan in the Yellow River-Huai River area, 482 yuan in the middle and lower reaches of the Yangzi River, 862 yuan in southwestern China, 890 yuan in southern China, 1,074 yuan in Beijing, 1,019 yuan in Tianjin, and 504 yuan in Shanghai.76

For our study we assumed three vegetable crops a year, each one with an average value of 836 yuan/mu. After converting mu into ha we arrive at a unit-loss value of 37,620 yuan/ha per year. Since we already know that solid waste occupies 3,091 ha of land, we can deduce that annual losses resulting from solid waste equal 120 million yuan. Land loss is continuous and chronic, resulting in the value of future land losses being higher than current values. Therefore, we discount future losses at a 2.4 percent rate.77 As a result, the current value of chronic accumulated losses for one yuan is 42.67 yuan, and economic loss from land used for solid waste is 5.12 billion yuan (120 million x 42.67).

 

III. ANALYSIS AND COMMENTS

Economic losses resulting from environmental pollution in 1992 equaled approximately 98.61 billion yuan. This amount can be disaggregated as follows: Water pollution contributed 35.6 billion yuan, accounting for 36.1 percent of total losses; air pollution contributed 57.89 billion yuan, accounting for 58.7 percent of total losses; and solid waste contributed 5.12 billion yuan, accounting for 5.2 percent of total losses. These results are presented in table 2.

 

Table 1: Losses Resulting from Pollution in 1992
Environmental Factor Value of Economic Loss
(billion yuan)
Percent of
Total Loss
Water Pollution 35.60 36.10
Human Health 19.28
Industry 13.78
Crop Yields 1.38
Livestock 0.70
Fisheries 0.46
Air Pollution 57.89 58.70
Human Health 20.16
Agriculture 7.20
Household Upkeep 13.44
Clothing 1.06
Vehicles 1.07
Buildings 0.96
Acid Rain 14.00
Solid Waste 5.12 5.20
Total 98.61
(4.04% of GNP)
100.00

This study has not been able to account for all relevant variables. For example, since the various environmental reports on China do not include statistics on pollution by township enterprises, economic losses resulting from such enterprises cannot be assessed. In addition, some varieties of pollution, such as noise pollution, radioactive waste, and objectionable smells, are not assessed due to calculation difficulties. It should therefore be clear that actual economic losses resulting from environmental pollution are far higher than suggested by this study.

The major implication of this study is that, in 1992, environmental pollution cost the Chinese economy and society the equivalent of 98.61 billion yuan. This cost was distributed throughout Chinese society in the form of declining health and lowered living standards. We argue that the cost of eliminating environmental pollution in China would be more than compensated for by the savings that would result from an improved environment. And yet, the clean-up effort has been lagging. The question is why?

There are four basic reasons for the failure to make the necessary investments. First, when dealing with environmental issues, investments do not bear immediate and tangible fruits. Investment in environmental protection and improvement requires monetary expenditures for equipment, land, and labor. The result of such investments is reflected solely in an improved environment, a difficult commodity to quantify, and one that rarely provides tangible economic returns. Furthermore, any tangible returns that would be expected from an initial investment in the environment are usually slow to appear.

Second, the initial investors in environmental protection and improvement are rarely the ones who reap the benefits of their investment. This has a serious damping effect on the incentive to invest in environmental protection and improvement projects. Third, competition for limited government resources is intense. Developing countries, such as China, are often unwilling to direct investment to environmental protection projects because their citizens are more interested in raising their living standards through investments in economic growth. Government investment in aspects of society other than environment reap tangible, and often rapid benefits. Due to the less obvious benefits derived from investment in environmental protection, governments often prefer to direct their limited resources elsewhere. As a result, despite its relatively high marginal benefits, investment in treating and controlling pollution is generally given low priority.

Finally, minimal education on the merits of environmental protection has resulted in limited public awareness and understanding of the importance of environmental protection. This too is problem of economics, because education requires investment. In a country as large as China, the relative investment required to educate society about the importance of environmental protection is greater than in any developed country.

As noted, economic losses resulting from environmental pollution are closely related to such factors as economic activities, population, and geographic conditions. Of these various factors, we consider economic activities to be the major contributor to economic losses resulting from environmental pollution. Therefore, we have estimated the regional distribution of economic losses corresponding to the industrial income of economic regions:

 

Table 2: Regional Distribution of Economic Losses
Region Total Value of
Industrial Production
(billion yuan)
Regional Share of
Industrial Production
(%)
Total Losses
Resulting From
Pollution
(billion yuan)
Losses Resulting from
Water Pollution
(billion yuan)
Losses Resulting From
Air Pollution
(billion yuan)
Losses Resulting From
Solid Waste
(billion yuan)
Countrywide 2894.165 100 98.61 35.6 57.89 5.12
North 367.457 12.67 12.51 4.52 7.35 0.65
North-East 356.617 12.33 12.16 4.39 7.14 0.63
East 1170.233 40.44 39.87 14.39 23.41 2.06
South-Central 650.87 22.49 22.17 8.01 13.02 1.15
South-West 220.144 7.61 7.50 2.71 4.41 0.39
North-West 128.844 4.45 4.39 1.58 2.56 0.22
Source: The figures for regional industrial income are derived from A Statistical Survey of China, 1993.

China’s gross national product (GNP) in 1992 was 2,437.89 billion yuan.78 The economic loss resulting from environmental pollution was 98.61 billion yuan, equivalent to 4.04 percent of GNP. Interestingly, according to Environment Forecast and Countermeasure Research in China in 2000, average economic loss for the period between 1981 and 1985 resulting from environmental pollution was 6.75 percent of GNP, or 38 billion yuan. Although the figures for 1992 represents a lower percentage of GNP lost to environmental pollution, this does not reflect a decrease in pollution levels. Two factors contributed to the decrease of environmental pollution in terms of percent of GNP. The first factor is a change that occurred in 1987 in the statistical formula used to calculate GNP. The second factor is China’s rapid economic growth over the last 10 years, which to a great extent, has occurred in less polluting tertiary activities.

Virtually every book on environmental economics and every report on the assessment of pollution induced economic losses points to the extreme difficulty of calculating economic losses resulting from environmental pollution.79,80 While preparing this study, we too felt the great uncertainty that arises from frequent shortages of appropriate data and the recurrent need to deduce results based on assumptions, logic, and observation. Throughout this project, the judgment and knowledge of the author were relied upon. Therefore, as noted in the Methodology and Data section of this study, no matter how accurate the estimates are, they remain calculated values. Furthermore, the calculated values in this paper are calculations produced by the author, and are not necessarily more reliable than the results obtained by other experts. One obvious conclusion to be drawn from this fact is the need to standardize calculation methods across the field.

To reiterate, the results of this study are as follows: In 1992, environmental pollution in China resulted in 98.6 billion yuan in economic losses. These losses can be attributed as follows: Water pollution accounted for 37.6 percent of total losses, equivalent to 36.1 billion yuan; air pollution accounted for 58.7 percent of total losses, equivalent to 57.89 billion yuan; and solid waste accounted for 5.2 percent of total losses, equivalent to 5.12 billion yuan. As a percentage of GNP, environmental pollution caused economic losses equivalent to 4.04 percent of China’s 1992 GNP.

IV. ACKNOWLEDGMENTS

Ms. Zhao Yihong produced the basic research for the section on air pollution and wrote the preliminary draft. I have used her draft as a basis for this study, making modifications, and adding the section on acid rain. The remaining parts of the study were produced by myself. Therefore, the author of this report takes full responsibility for any mistakes that might exist in this report. I would like to express my heart-felt thanks to Professor Mao Yushi who offered good advice and carefully read this repor

  1. Guo Yongwen and Yu Guozheng, “Analysis on Economic Return of Environmental Protection and Assessment on Pollution Hazard,” On Environment Economics –Colloquia of the National Symposium on Environment Economics (1981) (Nanjing: Jiangsu Science and Technology Publishing House, 1983), pp. 130-143.

  2. Zhu Jicheng and Wang Baibin, “Research on Economic Loss Caused by Water Pollution,” On Environment Economics (Nanjing: 1981 Colloquia of the National Symposium on Environment and Economics, Jiangsu Science and Technology Publishing House, 1983), pp. 230-339.

  3. Zhao Guichen, He Xiangguang, and Sun Yan, “An Initial Study on Economic Loss Caused by Environmental Pollution of a Chemical Asphalt Production,” On Environment Economics (Nanjing: 1981 Colloquia of the National Symposium on Environment and Economics, Jiangsu Science and Technology Publishing House, 1983), pp. 223-229.

  4. Zeng Beiwei, “Study on Calculation Method on Economic Losses Caused by Environmental Pollution in Xiangjiang River Domain,” Environmental Pollution, Prevention and Control (Vol. 7, 1985).

  5. National Environmental Protection Agency [NEPA], Environment Forecast and Countermeasure Research in China in 2000 (Beijing: Qinghua University Publishing House, 1990), pp. 273-290.

  6. Research Institute of Environmental Protection Science of Liaoning Province, Theoretical Method and Quantitative Research on Economic Losses Caused by Environmental Pollution (keynote report, unpublished, 1990).

  7. Research Institute of Environmental Protection Science of Yantai City, Cost-Benefit Analysis on Assessment of Economic Losses Caused by Environmental Pollution and Countermeasures on Environmental Protection in Yantai City (keynote report, unpublished, 1992).

  8. Qu Geping, “Environmental Protection in China,” Proceedings of the First & Second Meetings of the China Council for International Cooperation on Environment & Development (Beijing, 1994), p. 34.

  9. NEPA, Environment Forecast and Countermeasures Research in China in 2000, p. 283.

  10. Editorial Office of China’s Environment 2000, General Forecast on 2000 China’s Environment and Economic Analysis on Macro Environment (Research Report, Beijing, 1986, unpublished), p. 82.

  11. Vaclav Smil, “Environmental Change as a Source of Conflict and Economic Losses in China,” Occasional Papers of the Project on Environmental Change and Acute Conflict(Cambridge, MA: American Academy of Arts and Sciences, 1992); Vaclav Smil, “Environmental Problems in China: Estimates of Economic Costs” (East-west Center, Honolulu, Hawaii, 1996).

  12. NEPA, Report on China’s Environmental Condition (1992), p. 2.

  13. NEPA, “Report on China’s Environmental Condition 1993,” China Environmental News (June 5, 1994). The 1992 version of this report contained no statistics on farmland polluted with waste-water irrigation. As a result, our study relies on statistics compiled for 1993.

  14. Calculated on the basis of statistics in, NEPA, Environment Forecast and Countermeasure Research in China in 2000, p. 279.

  15. Zhang Huiqin, et. al., Systematic Analysis of Environmental Economics (Beijing: Qinghua University Publishing House, 1992), p. 267.

  16. Materials published in 1985 by the Ministry of Public Health were drawn on for the following statistics: 3,000 yuan for cancer; 150 yuan for hepatitis; and 50 yuan for enteric diseases. Ibid. p. 279. According to the 1993 Chinese Statistical Digest, The 1992 price index for medical care and pharmaceuticals was 186.5 percent greater than that of 1985. We have adjusted the 1985 data according to the 1993 estimates.

  17. State Statistical Bureau, Digest of China’s Statistics 1993 (Beijing: China Statistical Publishing House, 1993), pp. 2, 15. According to this publication, total agricultural output value in 1992 was 908.5 billion yuan, and the rural population was 8.48 billion yuan.

  18. NEPA, Environment Forecast and Countermeasure Research in China 2000, p 274.

  19. Ibid, p. 278.

  20. Digest of China’s Statistics, 1993, p 15.

  21. The parameter offered by the Environment Forecast and Countermeasure Research in China in 2000 is 61.5 percent. After careful calculation, we concluded that this parameter was too large. Consultation with the authors of the original study made clear that there had been an error in printing. NEPA, Environment Forecast and Countermeasure Research in China 2000, p. 278.

  22. Liu Changming, et. al., “Issues of Sustainable Development of China’s Water Resources,” Colloquia of the Symposium on China’s Environment and Development in 21st Century,Niu Wenyuan, et. al. (eds.) (Beijing: Chinese Academy of Sciences, May, 1994), p. 212.

  23. Zhang Qishun, et. al., “Water Issues and Sustainable Social Development,” Colloquia of the Symposium on China’s Environment and Development in 21st Century, Niu Wenyuan, et. al. (eds.) (Beijing: Chinese Academy of Sciences, May, 1994), p. 219.

  24. Ibid. On p. 217 of this article the water shortage is estimated at 36 billion meters3. However, on p. 219, the estimated water shortage is 35 billion meters3. There is a 2.8 percent disparity between these two figures. We choose to adopt the larger of the two figures. This article also fails to give the year of the estimated shortage, limiting itself to the “present.” We assume that, based on the year of publication – 1994 – the estimates represent the average for the early 1990s.

  25. NEPA, Environmental Forecast and Countermeasure Research in China 2000, p. 23.

  26. NEPA, “China Environmental Condition Report 1992,” China Environment Yearbook 1993 (China Environmental Science Publishing House, 1994), p. 59.

  27. Guo Xiaomin, et. al., “Estimation on Economic Losses Caused by Environmental Pollution in China,” China Environmental Science (Vol. 10, No. 1, February, 1990), p. 57.

  28. NEPA, Environmental forecast and Countermeasure Research in China 2000, pp. 274, 281.

  29. State Statistical Bureau, Digest of China’s Statistics 1993, p. 39.

  30. Systematic Analysis of Environmental Economics, p. 268.

  31. Ibid., p. 56.

  32. Calculated according to the price index in Digest of China’s Statistics 1993, p. 39.

  33. State Statistical Bureau, China Statistics Yearbook 1994 (Beijing: China Statistical Publishing House, 1994), pp. 59, 262, 285.

  34. Research and Development Center of the State Council, China Economic Yearbook, 1993 (Beijing: Economic Management Publishing House, 1993), p. 731.

  35. NEPA, Environmental forecast and Countermeasure Research in China 2000, p. 280.

  36. Adjusted according price index of 1992 over that of 1985. China Economic Yearbook, 1993, p. 802.

  37. NEPA, Environmental forecast and Countermeasure Research in China 2000, p. 193.

  38. State Statistical Bureau, China Statistics Yearbook 1994, p. 350.

  39. NEPA, Environmental forecast and Countermeasure Research in China 2000, p. 280.

  40. Ibid., p. 281.

  41. State Statistical Bureau, China Statistics Yearbook 1994, p. 246.

  42. NEPA, “China Environmental Condition Communiqué 1992,” China Environmental News (June 5, 1993).

  43. Ibid.

  44. State Statistical Bureau, China Statistics Yearbook 1994, p. 232. Using the prices of the previous year as 100, retail prices for aquatic products are listed as follows: 134.3 in 1985, 111.7 in 1986, 117.0 in 1987, 131.1 in 1988, 116.3 in 1989, 99.3 in 1990, 101.5 in 1991 and 105.4 in 1992.

  45. NEPA, Environmental forecast and Countermeasure Research in China 2000, p. 281.

  46. Since the market price of freshwater fish in 1992 averaged about 4 yuan/kg, the author feels that this estimate is too low.

  47. NEPA, China Environment Yearbook 1993.

  48. State Statistical Bureau, China Statistics Yearbook 1994, p. 59.

  49. NEPA, China Environment Yearbook 1993, p. 1.

  50. Guo Xiaomin, et. al., China Environmental Science, p. 54.

  51. Liu Hongliang, et. al., Analysis Method on Environmental Cost-Benefit and Case Study (China Environmental Science Publishing House, 1988), p 93. According to this book, per capita care and medical fees for the three kinds of diseases in 1982 was 1,000 yuan, 2,000 yuan and 6,000 yuan respectively. According to the national classified index of retail prices found in the China Statistics Yearbook 1994, the 1992 price index for pharmaceuticals and medical equipment was 2.11 times that of 1982. The figures in this study were adjusted accordingly.

  52. Guo Xiaomin, et. al., China Environmental Science, p. 54.

  53. Liu Hongliang, et. al., Analysis Method on Environmental Expense-Efficiency and Case Study (China Environmental Science Publishing House, 1988), p. 9.

  54. State Statistical Bureau, China Statistics Yearbook 1994, p. 245.

  55. Ibid., p. 384.

  56. Ibid., p. 347.

  57. Ibid., p. 44.

  58. Guo Xiaomin, et al., China Environmental Science.

  59. Ibid.

  60. Ibid.

  61. Chang Yongguan, Estimation of Economic Losses Caused by Environmental Pollution in Chongqing (Research Report, 1995, unpublished), p. 25.

  62. State Statistical Bureau, China Statistics Yearbook 1994, Table 3-2, p. 59.

  63. Research Institute of Environmental Protection Science of Yantai City, Estimation on Economic Losses Caused by Air Pollution and Cost-benefit Analysis on Countermeasures of Environmental Protection in Yantai City (Research Report, 1992, unpublished), p. 38.

  64. Research Institute of Environmental Protection Science of Liaoning Province, Theoretical Method and Quantative Research on Economic Losses Caused by Environmental Pollution, p. 117.

  65. State Statistical Bureau, China Statistics Yearbook 1994, Table 8-4, Table 8-9.

  66. Research Institute of Environmental Protection Science of Liaoning Province, Theoretical Method and Quantative Research on Economic Losses Caused by Environmental Pollution, p. 118.

  67. Data contained in this Table are taken from, Research Institute of Environmental Protection Science of Yantai City, Estimation on Economic Losses Caused by Air Pollution and Cost-benefit Analysis on Countermeasures of Environmental Protection in Yantai City, p. 37.

  68. Ibid. pp. 91, 92.

  69. Ibid., p.92. The 1988 price for steel window frames was 80 yuan per m2. Please refer to the manufacturers’ price index of industrial products by industry, Table 8-15, in China Statistics Yearbook 1994. According to these tables, the price index of metallurgical industry was 2.002.

  70. State Statistical Bureau, China Statistics Yearbook 1994 (housing construction and living condition in major cities: Tables 8-10), p. 313.

  71. Zhong Bian, “Hazard of Acid Rain on the Rise and Emergency in Controlling It,” China Environmental News (January 14, 1995).

  72. Zhu Baoxia, “More Penalties to Curb Acid Rain,” China Daily (January 11, 1995).

  73. NEPA, China Environment Yearbook 1993, p. 64.

  74. Ibid., pp. 70-72.

  75. This assumption may not be accurate since it is not clear that all new waste occupies land. It is possible that ,in some cases, the waste is piled up. However, lacking a more accurate method to calculate the amount of land required to store newly produced waste, we have chosen to adopt this method. We believe that despite possible miscalculations, the variance will not be large.

  76. State Planning Commission, Ministry of Construction, Economic Assessment Method and Parameters of Construction Projects (2nd edition) (Beijing: China Planning Publishing House, 1994), p. 122.

  77. Ibid., p. 120.

  78. State Statistical Bureau, China Statistics Yearbook 1994, p. 32.

  79. J. Seneca, and Michael K. Taussig, (Translated by Xiong Bijun, et al.), Environment Economics (Nanning: Guangxi People’s Publishing House, 1986), p. 122.

  80. Zhu Jicheng and Wang Baibin, On Environment Economics, p. 174.