Inspections Boost Environmental Performance in China

Inspections Boost Environmental Performance in China

A new World Bank report has revealed that inspections of industrial environmental performance in China have had a significant impact on the businesses’ environmental performance, although not as big an impact as in North America.

This research ties in with the findings of previous research from the US and Canada, which found that inspections not only improve industries’ environmental performance but encourage them to report on their own emissions performance more regularly. Until now, however, there had been no empirical studies to confirm if this phenomenon existed outside developed countries.

China’s inspection regime is comparatively strict - if a polluter is found to be at fault following an inspection, penalties or warnings can be imposed including a requirement to install treatment facilities. In an extreme case, a company may be ordered to close down and relocate its operations.

The research figures showed that inspections reduced water pollution by around 1.18% and 0.40% for total suspended solids (TSS) and chemical oxygen demand (COD), respectively, and air pollution by about 0.34%. These results are lower than those seen in the pulp and paper sector in Canada and the US, where inspections reduced TSS and COD by 28% and 20% respectively.

China’s industrial growth has been rapid - in the 1990s, the country’s industrial output increased by over 15% per annum. Industry now accounts for around 45% of China’s gross domestic product, but this growth has been accompanied by serious environmental damage. Chinese industry is a major source of environmental degradation – China’s National Environmental Protection Agency estimates that industrial pollution accounts for over 70% of the nation’s total emissions. Many of China’s waterways are near biological death from discharges of organic pollutants. In many urban areas, levels of atmospheric pollutants such as particulates and SO2 regularly exceed World Health Organisation safety levels by large margins.

China has created a pollution levy as part of its environmental improvements, and the World Bank report also looked at the potential impact of pollution charges and citizens’ complaints. The research, based on plant-level data from Zhenjiang, a city in the eastern province of Jaingsu, found that pollution charges did not have a significant impact, but the World Bank researchers felt that this might be because there was little differential in the level of pollution charging in the city. Previous research, looking more broadly across the whole of China, had found that the levy reduced pollution levels.

Citizen complaints, however, were found to have a considerable positive effect on performance – a finding which supports research published in 2000 that found that community pressure is a powerful incentive for appropriate environmental management (see related story). This has led the authors to recommend that regulators should seriously consider implementing information and education policies.

Zhenjiang was chosen for the research because of its significant location. With a population of approximately three million people, it is an industrial city on the south bank of the Yangtze River. Nanjing lies to the west of the city and Shanghai to the east, so Zhenjiang has a key place in China’s economy and is an important communications hub on the lower reaches of the Yangtze. The city has also undergone rapid industrial growth in recent years - over the last decade it has grown an average of 9% annually. Private sector companies dominate.

The researchers felt that the results could be critical to China’s environmental future but were reluctant to state firmly whether additional resources should be devoted to monitoring, based on the data that is available. To be able to make a firm recommendation the researchers said they would need to be able to compare the costs of performing additional inspections with the benefits derived from reduced emissions.

Nevertheless, as both air and water pollution levels are high in Zhenjiang, and this impacts on both health and productivity, the authors felt it was “reasonable to speculate” that inspections do increase social welfare in the city.

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