Equilibrium cost of water environmental protection based on watershed sustainability

Abstract

There are multiple relationship curves between watershed socioeconomic development and water environmental conservation. The goal of this paper is to present a theoretical pattern of economic activities and water environmental improvement by incorporating their bidirectional causality relationship. The Environmental Kuznets Curve (EKC) has been useful in connecting economic and environmental concepts, thus becoming an important tool for evaluating watershed sustainability. The high governance cost makes water pollution-intensive goods relatively expensive to produce. According to the EKC, there is an inverted U‐shaped relationship between water environment deterioration and the level of social and economic improvement. Based on EKC hypothesis, we studied the coordinated relationship between environmental protection of water and economic and social sustainable development in the Huntai River Watershed from 2003 to 2012 by means of a panel threshold data. The EKC is an empirical curve that describes the relationship between economic restructuring and water environmental conditions improvement. The Green Environmental Kuznets Curve (GEKC) is used to describe the relationship among watershed pollution emissions, the environmental quality and income per capita. However, according to the GEKC, U‐shaped relationship exists between the coordination of water environmental protection and the level of social economic development (SED). The GEKC is affected by water resource consumption, the regional trade situation (T), the per capita gross domestic product level (Y), and controls on the total amount of water pollution discharge. We try to adjust to the type of GEKC curve and apply dataset of water pollutant emission reduction cost control to fit main characteristic of equilibrium cost. In accordance with Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) data statistical analysis, the value of the GEKC regression equation independent variables Y, Y2, per capita water resources consumption (E), T, adding value of production (AVP) and modified socioeconomic development index (MSDI) were 1.988, −0.150, 0.720, 0.216, 0.070, and 1.890, respectively. In the long-term, the correlation formula of watershed per capita sewage discharge (C) to Y was 2.090–0.300Y. For every 1% increase in E, T, AVP, and MSDI, C increased by approximately 0.720%, 0.216%, 0.072%, and 1.890%, respectively. The E, T and MSDI are key factors in developing an effective way to control the levels of water pollution discharge. Pollution is endogenous, so water environment pollution is not necessarily caused by economic growth. According to the total amount control of water pollution discharge, the GEKC equilibrium optimization calculation results can be used to effectively control watershed pollutant emissions and improve water environmental quality. Through the adjustment of industrial structure or industrial transformation and technological progress, it is possible to change the relationship between current economic growth and water environment. With GEKC related Curve characteristic and indicator classes, it is possible to realize harmonious and sustainable development of regional economy and society in the Huntai River Watershed.