Pollution Abatement Costs Research Articles

Assessing the effectiveness of PM2.5 pollution control from the perspective of interprovincial transport and PM2.5 mitigation costs across China

Due to the transboundary nature of air pollutants, a province's efforts to improve air quality can reduce PM2.5 concentration in the surrounding area. The inter-provincial PM2.5 pollution transport could bring great challenges to related environmental management work, such as financial fund allocation and subsidy policy formulation. Herein, we examined the transport characteristics of PM2.5 pollution across provinces in 2013 and 2020 via chemical transport modeling and then monetized inter-provincial contributions of PM2.5 improvement based on pollutant emission control costs. We found that approximately 60% of the PM2.5 pollution was from local sources, while the remaining 40% originated from outside provinces. Furthermore, about 1011 billion RMB of provincial air pollutant abatement costs contributed to the PM2.5 concentration decline in other provinces during 2013–2020, accounting for 41.2% of the total abatement costs. Provinces with lower unit improvement costs for PM2.5, such as Jiangsu, Hebei, and Shandong, were major contributors, while Guangdong, Guangxi, and Fujian, bearing higher unit costs, were among the main beneficiaries. Our study identifies provinces that contribute to air quality improvement in other provinces, have high economic efficiency, and provide a quantitative framework for determining inter-provincial compensations. This study also reveals the uneven distribution of pollution abatement costs (PM2.5 improvement/abatement costs) due to transboundary PM2.5 transport, calling for adopting inter-provincial economic compensation policies. Such mechanisms ensure equitable cost-sharing and effective regional air quality management.

Who will Spend more Pollution Abatement Costs: does Size Matter?

This paper looks at the relationship between enterprise size and pollution abatement costs using firm-level datasets in China, where size-dependent distortions may exist in the distribution of enterprises of different sizes. We find that the pollution abatement costs decrease with enterprise size. Compared to the smallest size, the magnitudes of marginal decreases in pollution abatement costs per 1000 CNY of industrial output in the largest size are 3.29 CNY, 0.54 CNY and 2.60 CNY for gas, SO2 and dust, respectively. Moreover, we further explore the potential mechanisms for the decrease of pollution abatement costs from three perspectives: environmental protection-related investment, regulation intensity, and technological capability. Our findings suggest that the decrease in the intensity of environmental protection-related investment for large enterprises may be directly reduce the intensity of pollution abatement costs. Although large enterprises have low intensity of pollution abatement costs, this does not mean that they are subject to weaker environmental regulation. More importantly, we find that large enterprises may have more adoption of abatement technologies. For SO2 and dust, the pollutant removal efficiency of the largest enterprises is 4.92% and 1.82% higher than that of the smallest enterprises, respectively. Our results are robust to different specifications. These findings help us enact appropriate policies for enterprises based on their size, thereby improving the efficacy of pollution abatement and achieving the optimal level of pollution abatement for the entire society.

Do investment tax incentives promote firm pollution abatement investment? Evidence from China’s value-added tax reform

Using the 2009 consumption-based value-added tax (VAT) reform in China as a quasi-natural experiment for investment tax incentives, we investigate the impact of investment tax incentives on firm pollution abatement investment via a difference-in-differences (DID) approach. We find that the investment tax incentives have significantly raised firm pollution abatement investment of the eligible firms over the ineligible firms by 21.7%. Moreover, the effect is more pronounced for firms with political connection and firms located in regions with stricter environment regulation and lower pollution abatement costs. Our mechanism shows that the motivations for tax deduction play an important role in increasing pollution abatement investment. We also find that VAT reform has a negative indirect impact on firm environmental fine and firm employments and has a positive impact on firm’s capital-labor ratio and labor productivity.

Assessing air pollution emissions vs. abatement costs in agricultural practices

Assessing air pollution emissions vs. abatement costs in agricultural practices

Evaluating the employment effects of environmental regulation without abatement cost data: A nonparametric cost function approach

Environmental policymakers are concerned that environmental regulations reduce employment. A microeconomic analysis illustrates that environmental regulations have an uncertain effect on employment, making this an empirical question. A standard cost function model, used in the literature, requires a lot of data such as pollution abatement cost data to examine effects of environmental regulations on employment, but such survey data is not always available. In this paper, we develop a nonparametric cost function which alleviates the need for pollution abatement cost data. Our cost function, therefore, allows researchers and policy analysts to estimate employment changes associated with pollution abatement as well as measure the relative importance of other factors related to changes in employment with no pollution abatement cost data. Moreover, this is the first model using a cost function that incorporates the effect of structural change among industries within the economy on employment, which allows researchers to the examine how environmental regulations change the structure of the economy via a structural decomposition component. We illustrate how to operationalize our model using a balanced panel of industry-level data for 26 industries from 17 OECD countries (1995–2006). Our findings suggest that the change in employment due to regulatory induced increases in input costs exhibits both substantial variation among countries and substantial intra-country heterogeneity among industries.

Incentive or constraint? Comprehensive impacts of green credit policy on industrial energy intensity.

Green credit policy (GCP) has dual attributes of being both an "environmental regulation" and a "financial instrument". Understanding its role in facilitating industrial green transformation is crucial. However, there is limited theoretical and empirical evidence on the impact of GCP on industrial green transformation. This research fills this gap by comprehensively investigating the impacts and mechanisms of GCP on industrial energy intensity (EI) in China, considering both incentive and constraint effects. Theoretically, the environmental and financial impacts of GCP are merged into a unified analytical framework based on a heterogeneous enterprise model. Empirically, diverse empirical methods, including difference-in-differences (DID), difference-in-differences-in-differences (DDD), and mediating effects models, are adopted to examine whether GCP can promote green innovation or accelerate financial constraints. Results show that (1) GCP significantly decreases EI, especially among high-polluting enterprises (HPEs). The impact of incentives is far greater than that of constraints. (2) Regarding the incentive effect, energy substitution and innovation offsets exert a primary influence on reducing EI. (3) The constraint effect is caused primarily by rising financing and pollution abatement costs. (4) Heterogeneity analysis shows that the inhibiting effect of GCP is more significant in non-state-owned enterprises, underdeveloped financial markets, and abundant energy endowments. This paper provides a theoretical framework and new empirical evidence for policymakers to design effective policies for promoting industrial green transformation.

Spatial optimization of nutrient reduction measures on agricultural land to improve water quality: A coupled modeling approach

AbstractThe objective of this study is to identify the optimal spatial distribution of Best Management Practices (BMPs) to reduce total phosphorus (TP) runoff from agricultural land in the largest Canadian watershed draining into Lake Erie, the Great Lake most vulnerable to eutrophication. BMP measures include reduced fertilizer application, cover crops, buffer strips, and the restoration of wetlands. Environmental SWAT model results feed into a spatial optimization procedure using two separate objective functions to distinguish between public BMP program implementation costs (PIC) on the one hand and farmers’ private pollution abatement costs (PAC) on the other hand. The latter account for the opportunity costs of land retirement and changing land productivity. PAC are initially lower than PIC but exceed the latter after 30% of the annual TP baseline load is eliminated. This suggests that under optimal conditions existing grant and incentive payments cover the economic costs farmers face up to a maximum of 30% of the baseline load reduction. Imposing further reductions of up to 40% results in a cost to farmers of almost $52 million per year. This is 45% higher than the optimal solution based on PIC and therefore not deemed incentive‐compatible under the watershed's existing cost‐sharing scheme.

Revealed pollution abatement costs revisited

Revealed pollution abatement costs revisited

Water Pollution Abatement in Olive Oil Industry in Morocco: Cost Estimates and Policy Implications

This article discusses the challenges of water scarcity and industrial water pollution in developing countries, specifically in Morocco, where the olive oil industry is a significant contributor to organic water pollution. The Moroccan government has implemented regulations and economic incentives to address this issue, but enforcement has been hindered by a lack of information on environmental damage and pollution abatement costs. This study aims to improve the knowledge of public decision makers on the costs of the depollution of oil mills and to use this information to develop tools for the reinforcement of the current regulation mechanism. To meet our research objective, the Translog hyperbolic distance function is used to represent the environmental technology generating three undesirable outputs (SS, BOD, and COD) and to estimate the olive oil mills’ specific pollution abatement cost (shadow price). Finally, pollutant-specific taxes are computed using the tax-standard method. The results showed that oil mills must renounce the production of olive oil totaling MAD 13,314, MAD 4706, and MAD 5786 for the reduction of one ton of SS, BOD, and COD, respectively, and that there are economies of scale in the treatment of olive mill wastewater. After calculating the rate of the environmental tax, we conclude that implementing the tax according to current emission standards can be very restrictive for oil mills, as it would represent 22% of the total annual turnover of the olive oil industry. These findings suggest a redesign of the regulation mechanism, including the implementation of environmental monitoring systems, the consideration of economies of scale in pollution control, and the use of better-targeted green subsidies and effective environmental tax. However, further research is needed to understand the impact of these measures on the economic performance of the olive oil industry.

Effects of shared governance and cost redistribution on air pollution control: a study of game theory-based cooperation.

This study seeks cost-effective strategies for PM2.5 reduction to generate insights into minimizing pollution abatement costs subject to different scenarios. This study theorizes that the cooperation of PM2.5 abatement has potential gains for participants and develop an empirical way to compare the costs and efficiency of PM2.5 abatement involving the variation of environmental conditions. This study revises the cooperative game model in the context of threshold effects using data obtained from the Beijing-Tianjin-Hebei metropolitan cluster in China. In general, the results support the key assertion that cooperation in the metropolitan cluster plays a vital role in optimizing the efficiency and costs of PM2.5 abatement. In addition to extending the application of the revised model, this study provides a way to estimate the costs and the mitigation benefits of meeting the pollution targets for each coparticipant and take the scenario of multiparty cooperation into account as well as the scenarios involving other types of pollutants. The empirical findings have important policy implications for regional shared governance, decentralization, and resource reallocation. Economic incentive-based shared governance and cost reallocation work better than traditional regulations.

Putting the cart before the horse—Dal Lake's Tale of Woe

AbstractDal Lake is not only the centre of tourist attraction, but also an important livelihood source for the local population. The economic activities over the years in and around the lake have intensified, resulting in pollution, eutrophication and encroachment of the lake. The present study examined the multiple economic activities carried out on Dal Lake, estimated the net welfare generated, and subsequently developed a solution focusing on establishing an optimal trade‐off between the economic activities and pollution abatement expenditures incurred by the government. Employing optimization techniques, needed modifications in the configuration of the enterprises and the pollution abatement costs that could maximize the net welfare from Dal Lake were identified. The economic welfare of the three enterprises was maximized at the optimal level of INR 5684.85 million, with a pollution‐abating investment of INR 13.21 million.

Information and communication technologies development and the resource curse

Information and communication technologies (ICTs) influence economic growth, yet, innovation in natural resource development and energy demands is seldom considered. Will the development of ICTs aid in alleviating this natural resource curse? An analysis of time-series data from 30 Chinese provinces confirms this effect, and this finding is especially robust. In particular, some Chinese regions are affected by an abundance of natural resources. Computing, telephone, cellular connections, and incentives for technological collaboration result in greater energy demands and, thus, greater CO2 emissions. In short, ICT growth somewhat alleviates the resource curse. This effect is heterogeneous in terms of the level of regional financial development and the presence of a resource curse in the location. Policymakers seeking to develop long-term, nationwide e-sustainable strategies must then lower natural resource prices and pollution abatement costs through technologically driven natural resource expansion.

Evaluation of the costs of agricultural diffuse water pollution abatement in the context of Lithuania’s water protection goals and climate change

This study aimed at evaluating the scale and costs of an environmentally and economically optimal set of Best Management Practices (BMPs) for agricultural pollution abatement in Lithuania in order to reach water protection goals in both inland and marine waters by distributing BMPs optimally in space, while taking climate change impacts into consideration. The assessment of BMPs impact involved the use of the SWAT model by applying two climate change representative concentration pathways (RCP4.5 and RCP8.5) and two time horizons (mid-century and end-century), as well as five BMPs (arable land conversion to grasslands, reduced fertilization, no-till farming, catch-crops, and stubble fields throughout winter). The optimization of the set of BMPs employed a genetic algorithm. The results suggest that the need for BMPs application will increase from 52% of agricultural areas in the historical period up to 65% by the end of century in the RCP8.5 scenario. This means less arable land could actually be used for crop production in the future if water protection targets are met. The high costs for reaching water targets would rise even more, i.e. by 173% for RCP4.5, and by 220% for the RCP8.5 scenario, reaching approximately 200 million euros/year. In such a context, the BMP optimization approach is essential for significant reduction of the costs. Winter cover crops and reduced fertilization show the best effectiveness and cost balance, and will therefore be essential in pursuing water protection targets.

Estimating the cost of environmental regulations and technological change with limited information

In this paper we develop a modified production model to calculate changes in pollution abatement costs (PAC) when both data on bad outputs and information on the inputs assigned to pollution abatement activities are not available. To calculate the PAC of reducing bad output, we introduce a measure that captures variation in the abatement intensity of technologies used to reduce water discharges. We then decompose the change in PAC into three components to identify their relative contribution to changes in PAC: (1) changes in the level of inputs, (2) changes in pollution abatement intensity, and (3) technological change. We demonstrate how to calculate PAC and these three components using data from 1997 to 2007 on a sample of pulp mills required to comply with the effluent limits for dioxin set by the U.S. EPA's Cluster Rule. We find regulation-induced technological change is consistently associated with declining PAC, while both changes in inputs and abatement intensity are associated with increasing PAC.

Meet, beat, and pollute

We investigate two related questions about the trade-off between the short-term pressures on managers to meet earnings targets and the long-term environmental benefits of reduced pollution. Do firms release more toxins by cutting back on pollution abatement costs to boost earnings in years they meet earnings benchmarks? If so, is that relation weaker for firms with higher environmental ratings? Using Environmental Protection Agency (EPA) data on toxic emissions, we find that U.S. firms pollute more when they meet or just beat consensus earnings per share (EPS) forecasts, suggesting that meeting expectations is a more important goal than reducing pollution. We find this relation is stronger, not weaker, for firms with higher environmental ratings: they increase pollution even more when meeting earnings benchmarks than firms with lower ratings. This suggests that highly rated firms build regulatory and reputational slack over time and use it when needed to soften the negative impact of increased pollution. We contribute to the real earnings management and environmental economics literatures by documenting a negative externality of financial reporting incentives on the environment and society. We also contribute to the corporate sustainability literature by showing that an environmental, social, and governance (ESG) focus does not curb managerial short-termism.

Estimating the Total Economic Costs of Nutrient Emission Reduction Policies to Halt Eutrophication in the Great Lakes

AbstractThe Great Lakes (GL) in North America are among the largest freshwater resources on the planet facing serious eutrophication problems as a result of excessive nutrient loadings due to population and economic growth. More than a third of Canada's GDP is generated in and around the GL. Hence, the economic interests affected by pollution and pollution control are high. New policies to reduce pollution are often insufficiently informed due to the lack of integrated models and methods that provide decision‐makers insight into the direct and indirect economic impacts of their policies. This study fills this knowledge gap and estimates the impacts of different total phosphorus (TP) restriction policy scenarios across the GL. A first of its kind multi‐regional hydro‐economic model is built for the Canadian GL, extended to include TP emissions from point and non‐point sources. This optimization model is furthermore extended with a pollution abatement cost function that allows sectors to also take technical measures to meet the imposed pollution reduction targets. The latter is a promising new avenue for extending existing hydro‐economic input‐output modeling frameworks. The results show decision‐makers the least cost‐way to achieve different TP emission reduction targets. The estimated cost to reduce TP emissions by 40% in all GL amounts to a total annual cost of 3 billion Canadian dollars or 0.15% of Canada's GDP. The cost structure changes substantially as policy targets become more stringent, increasing the share of indirect costs and affecting not only the economic activities around the GL, but the economy of Canada as a whole due to the tightly interwoven economic structure.

Can the aviation industry achieve carbon emission reduction and revenue growth simultaneously under the CNG2020 strategy? An empirical study with 25 benchmarking airlines

The CNG2020 strategy proposed in 2016 has directly impacted the global aviation industry, and the ensuing COVID-19 pandemic has brought the global aviation industry to a standstill. This paper calculates the Pollution Abatement Costs (PAC) index and regulated profits of the global aviation industry by establishing Data Envelopment Analysis (DEA) model. Then, considering the airlines’ different recovery times from COVID-19, we predict the data of 25 international benchmark airlines from 2021 to 2027 based on the actual data during 2012–2019. The regulated profits can help judge whether airlines can achieve a win-win situation of carbon emission reduction and revenue growth in the future recovery process. We have some findings: 1. Air France-KLM has the maximum regulated profits, while EasyJet has the minimal regulated gains. 2. The setting of route conditions impacts whether airlines can achieve a win-win situation.

The potential cost of regulation of methane and nitrous oxide emissions in U.S. agriculture

BackgroundMost studies on the environmental impacts of agriculture have attempted to measure environmental impacts but have not assessed the ability of the sector to reduce or mitigate such impacts. Only a few studies have examined greenhouse gas emissions from the sector. This paper assesses the ability of states in the U.S. to reduce agricultural emissions of methane and nitrous oxide, two major greenhouse gases (GHGs) with important global warming potential.MethodsThe analysis evaluates Färe’s PAC (pollution abatement cost) for each state and year, a measure of the potential opportunity costs of subjecting the sector to GHG emissions regulation. We use both hyperbolic and directional distance functions to specify agricultural technology with good and bad outputs.Results and conclusionsWe find that such regulations might reduce output by an average of about 2%, although the results for individual states vary quite widely.

Not at the table but stuck paying the bill: perceptions of injustice in China’s Xin’anjiang eco-compensation program

ABSTRACT A growing body of research highlights the decisive role that justice claims play in creating sustainable payment for ecosystem services (PES) programs. Employing Sikor et al.’s approach to the study of justice claims in ecosystem governance along three dimensions—distribution, procedure and recognition—we study the negotiation process behind China’s flagship interprovincial PES agreement: the Xin’anjiang River eco-compensation agreement between Huangshan (Anhui province) and Hangzhou (Zhejiang province) prefectures. We find that divergent claims between stakeholders on matters of distributive and procedural justice undercut one party’s commitment to the agreement. Local officials in the upstream locality (Huangshan) see themselves as having been disadvantaged in both procedural and distributive aspects of negotiation. They claim to have been insufficiently included in a bargaining process that involved not only the downstream locality (Hangzhou) but also the central government. Huangshan stakeholders also see themselves as largely excluded from the benefits of cleaner water and bearing too much of the pollution abatement cost. For their part, Hangzhou stakeholders have advanced a ‘polluters pay’ view of distributive justice and found partial support for this claim from Beijing. Our findings suggest that attending to environmental justice considerations should be given top priority in China’s design of PES schemes.

Investigating the Profit Pollution Abatement Costs difference before and after the “Carbon neutral growth from 2020” strategy was proposed

Based on the empirical data of 22 airlines during 2014–2019, the paper studies the impact of the introduction of Carbon neutral growth from 2020 (CNG2020) strategy on airlines' pollution abatement costs. This research considers the prices of inputs and outputs, and proposes a new Profit Pollution Abatement Costs (PPAC) index to ensure that the calculated Net Pollution Abatement Costs (NPAC) index is a cost index rather than a physical index, and a two-stage network environment production function is established to discuss the NPAC differences before and after the CNG2020 strategy was proposed. The main findings are: (a)The introduction of CNG2020 strategy has had a certain degree of impact on the airlines’ net pollution abatement costs. (b)All Nippon Airways has the largest NPAC among the 22 airlines, while Delta Air Lines and Finnair have excellent pollution abatement performance during 2014–2019. (c)Aviation carbon emissions are closely related to jet fuel consumption and route distance.