Assessing economic impacts of China’s water pollution mitigation measures through a dynamic computable general equilibrium analysis

• Published in: Environmental research letters 2011-10, Vol.6 (4), p.44026
• Main Authors: Qin, Changbo, Bressers, Hans T A, Su, Z (Bob), Jia, Yangwen, Wang, Hao
• Format: Article
• Language: English
• Subjects: Economic impact; Economic models; Economics; Emission analysis; Emissions control; Environmental policy; Equilibrium analysis; GDP; Gross Domestic Product; Macroeconomics; Pollution control; Water pollution; Water pollution measurements
• ISSN: 1748-9326; 1748-9326
• DOI: 10.1088/1748-9326/6/4/044026

In this letter, we apply an extended environmental dynamic computable general equilibrium model to assess the economic consequences of implementing a total emission control policy. On the basis of emission levels in 2007, we simulate different emission reduction scenarios, ranging from 20 to 50% emission reduction, up to the year 2020. The results indicate that a modest total emission reduction target in 2020 can be achieved at low macroeconomic cost. As the stringency of policy targets increases, the macroeconomic cost will increase at a rate faster than linear. Implementation of a tradable emission permit system can counterbalance the economic costs affecting the gross domestic product and welfare. We also find that a stringent environmental policy can lead to an important shift in production, consumption and trade patterns from dirty sectors to relatively clean sectors.