Pollution Abatement Expenditures Research Articles

Evolution of technical efficiency in Chinese coal mining firms: the roles of competition and technology

ABSTRACT This study examines the evolution of technical efficiency (TE) and its determinants in China’s high-pollution coal mining industry. The effects of market competition, technology, and pollution abatement expenditure (PAE) on inefficiency are investigated. Using a firm-level panel dataset for the 2001–2013 period, estimation using a panel stochastic frontier model shows that the average TE was stable with a small fluctuation in the 2000s and then deteriorated in the 2010s. The majority of private entrants have lower TE than the main group of incumbents, state-owned enterprises, whereas foreign firms exhibit the highest TE among firms. We find that capital imports, research and development, and government subsidies are important factors in reducing technical inefficiency, highlighting the importance of technological activity on production efficiency. Further analysis of the relationship between PAE and TE reveals that PAE positively contributes to the efficiency of coal mining firms. Robustness checks ensure the aforementioned findings.

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.

Environmental economic modeling of sustainable growth and consumption in a zero-emission society

Successfully managing both economic growth and environmental preservation is an important issue facing international society. In this paper, we analyze whether it is possible to simultaneously achieve continued economic growth and a zero net emission of pollution (in the sense of a zero residual amount of pollution created minus pollution abated) within the context of a growth model with endogenous fluctuations. We assume that societies implement the kindergarten rule of pollution abatement such that pollution is cleaned up as it is created, and refer to the proportion of pollution abatement expenditure in gross domestic product (GDP) for achieving zero net emission of pollution flow as the kindergarten rule level of abatement. The model leads to the appearance of a no-innovation growth phase (called the Solow regime) and innovation-led growth phase (called the Romer regime) in the presence of pollution abatement. When period-2 cycles alternating between Solow and Romer regimes emerge, the model implies that the zero net emission of pollution flow is compatible with continued growth of consumption. As preconditions in this regard, however, the economy requires GDP above a certain level together with variability of the kindergarten rule level of abatement. Furthermore, in the Solow regime, the economy experiences higher growth in consumption and a faster decrease in the kindergarten rule level of abatement, while the economy experiences lower growth in consumption and a slower decrease in the kindergarten rule level of abatement in the Romer regime. The present study is also related to goal 8 (target 8.4) of the United Nations Sustainable Development Goals, and provides a theoretical rationale that the sustained growth of GDP and consumption is an achievable goal in a zero-emission society.

The Short-Run Effect of a Local Fiscal Squeeze on Pollution Abatement Expenditures: Evidence from China’s VAT Pilot Program

Introduced in 2012, China’s value-added tax (VAT) pilot program gradually replaced business tax (BT) with VAT. It has created a large fiscal squeeze for the local government since 75% of VAT revenue goes to the central government. Employing a difference-in-differences estimator with continuous treatment intensity, we find that this fiscal squeeze has a negative effect on pollution abatement expenditures. Moreover, private firms in eastern regions are less responsive to this shock than those in the rest of China due to having better regulated local governments. We also find that this effect is smaller in magnitude if the firm owner is younger, more educated or has industrial and political connections compared to her respective counterparts. This fiscal squeeze reduces pollution abatement expenditures more in regions with higher fiscal stress, looser environmental regulation, and lower pollution abatement costs. Further exploration shows that, in response to this fiscal squeeze, local governments have adopted several tools to compensate for revenue loss, including increasing tax enforcement and loosening environmental regulation.

Exporting and pollution abatement expenditure: Evidence from firm-level data

The relevance of analyzing whether exporting firms engage in greater pollution abatement cannot be overemphasized. For instance, the question relates to the possibility of export promotion policies being environmentally beneficial. Thus, the issue is especially relevant for developing countries typically characterized by weak enforcement of environmental regulation. However, despite the extensive literature assessing the environmental consequences of aggregate trade, the evidence from firm-level trade is relatively scarce and skewed toward developed countries. Accordingly, we employ cross-sectional data across Indonesian firms to assess the causal effect of exporting on abatement behavior. Due to concerns over non-random selection into exporting, we also resort to a number of novel identification strategies. Two of the approaches are proposed by Millimet and Tchernis (2013) and entail either minimizing or correcting for selection bias. The remaining methods, attributable to Lewbel (2012) and Klein and Vella (2009), rely on higher moments of the data to obtain exclusion restrictions. While we largely find exporting to encourage pollution abatement, the estimated impacts are more pronounced after accounting for the endogeneity of exporting status.

Exporting and Pollution Abatement Expenditure: Evidence from Firm-Level Data

The relevance of analyzing whether exporting firms engage in greater pollution abatement cannot be overemphasized. For instance, the question relates to the possibility of export promotion policies being environmentally beneficial. In fact, the issue is especially relevant for developing countries typically characterized by ineffective environmental regulation. However, despite the significance of the topic, the extant literature examining the environmental consequences of firm-level trade is skewed toward developed countries. Moreover, the existing contributions rarely attend to concerns over non-random selection into exporting. Accordingly, we employ cross-sectional data across Indonesian firms as well as a number of novel identification strategies to assess the causal effect of exporting on abatement behavior. Two of the approaches are proposed by Millimet and Tchernis (2013), and entail either minimizing or correcting for endogeneity bias. The remaining methods, attributable to Lewbel (2012) and Klein and Vella (2009), rely on higher moments of the data to obtain exclusion restrictions. While we largely find exporting to encourage pollution abatement, the estimated impacts are more pronounced after accounting for selection into exporting.

Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian States

This paper attempts to examine the role of environmental governance on foreign direct investment by testing the pollution haven hypothesis for 21 Indian states for the period 2002–2010. To test for the hypothesis, this study computes an abatement expenditure index adjusted for industrial composition at the state level using Annual Survey of Industries plant-level data. The methodology used is based on that proposed by Levinson ( 2001 ). The index compares actual pollution abatement expenditures in a particular state, unadjusted for industrial composition, to predicted abatement expenditures in the same state. (The predictions are based on nationwide abatement expenditures by industry and each state's industrial composition.) If the adjusted index is low for a state, it implies that the state has poor environmental governance, which would be expected to induce foreign firms to invest. However, the results do not find any evidence of the pollution haven hypothesis in the Indian context. Other infrastructure and market-access-related variables are more important in influencing a foreign firm's investment decisions than environmental stringency.

Offshoring Production or Offshoring Pollution?

We combine international trade data from the U.S. Census Bureau with Toxics Release Inventory data from the Environmental Protection Agency to investigate the impact of firms’ imports on toxic emissions by their U.S. plants. We find that goods imported from low-wage countries (LWCs) are more pollution-intensive than goods imported from the rest of the world. Moreover, plants release less toxic emissions and spend less on pollution abatement on American soil when their parent firms import more from LWCs. According to our estimates, a 10% increase in a plant’s parent firm’s share of imports from LWCs is associated with a 4% drop in the plant’ toxic emissions and a 3.75% reduction in pollution abatement expenditures. These effects are stronger for plants located in dirtier U.S. counties, where benefits from pollution reduction are expected to be the largest. These results provide some of the first large-sample empirical evidence that U.S. firms offshore both production and pollution to the developing world.

Declining pollution abatement R&D in the United States: theory and evidence

Industrial R&D spending in the United States for the specific purpose of abating conventional pollution declined appreciably in real terms over the period 1973–1998, both as a share of total industrial R&D spending, and as a share of pollution abatement and control expenditure. I use industry-level panel data for this period to investigate the causes of the decline. Hypotheses are derived from a conceptual model of the forces that drive the production of universally new knowledge concerned specifically with abatement. I find evidence that the decline was caused at least in part by policy design changes, and by spillovers from other-industry pollution abatement R&D substituting for R&D spending in the focal industry.

Directed Technical Change and Economic Growth Effects of Environmental Policy

A Schumpeterian growth model is developed to investigate how environmental policy affects economic growth when environmental policy also affects the direction of technical change. In contrast to previous models, production and pollution abatement technologies are embodied in separate intermediate good types. A set of stylized facts related to pollution emission, environmental policy, and pollution abatement expenditures is presented, and it is shown that the developed model is consistent with these stylized facts. It is shown analytically that a tightening of the environmental policy unambiguously directs research efforts toward pollution abatement technologies and away from production technologies. This directed technical change reduces economic growth and pollution emission growth. Simulation results indicate that even large environmental policy reforms have small economic growth effects. However, these economic growth effects have relatively large welfare effects which suggest that static models and exogenus growth models leave out an important welfare effect of environmental policy.

Do pollution abatement expenditures lead to higher productivity growth? Evidence from Greek manufacturing industries

Several environmental concerns are not in favour of Greece’s sustainable future growth while the implementation of differential environmental policies to appoint the Kyoto protocol’s directives requires firms to balance their capital expenditures and operating costs to pollution abatement initiatives. This paper examines the impact of pollution abatement costs of Greek manufacturing over the period 1993–2006 using an industry-level balanced panel. Empirical results indicate that pollution abatement costs have no significant effect on the productivity of Greek manufacturing industries, on a yearly basis, providing no support on the Porter hypothesis stating that stricter environmental regulation triggers industrial productivity. However, significant changes are observed between energy intensive and energy consuming industries with pollution abatement efforts.

Do environmental regulations disproportionately affect small businesses? Evidence from the Pollution Abatement Costs and Expenditures survey

This paper examines whether the impact of environmental regulations differs by the size of the business. We consider the net effect of statutory, enforcement, and compliance asymmetries by estimating the relationship between plant size and pollution abatement expenditures, using establishment-level data on U.S. manufacturers from the Census Bureau's Pollution Abatement Costs and Expenditures (PACE) survey and from its Annual Survey of Manufactures and Census of Manufactures. We model establishments' pollution abatement operating costs (PAOC) per unit of economic activity as a function of establishment size, industry, state, and year. Our results show that PAOC intensity increases with establishment and firm size.

Optimal Pollution Abatement Under ‘Sustainable’ and Other Social Time Preferences

This paper analyses optimal pollution abatement expenditure and the pricing of pollution under alternative social time preferences, including ‘sustainable’ preferences, defined as those that are consistent with two axioms of sustainable development introduced by Chichilnisky (Land Econ 73:467–491, 1997). These axioms state essentially that neither the welfare of present nor future generations ought to be favoured over the other in determining the socially optimal path of economic development. The method is to calibrate a modified Ramsey model of optimal global growth and saving, where pollution is generated by the global output of goods and services. Pollution in turn reduces output. The simulation results illustrate how sensitive the optimal pollution price and abatement expenditure can be over time to assumptions about the social time preference rate. They also show that ‘sustainable’ preferences impose a lower burden on future generations in terms of the pollution price and abatement expenditure. Hence there is a case for governments to make explicit their value judgments about intergenerational welfare, in the context of their notion of sustainable development, when setting target pollution abatement levels and pollution prices over time.

Improving Environmental Performance: A Challenge for Romania

The transition process in Central and Eastern Europe was associated with growing environmental awareness. This paper analyses the determinants of pollution abatement and control expenditure at plant level in the case of Romania using survey data and a multilevel regression model. Our findings suggest that, although Romania has improved its environmental performance, formal and informal regulations are still only partially developed owing to the difficulties of economic transition, and heterogeneity across regions remains considerable.

Do Environmental Regulations Disproportionately Affect Small Businesses? Evidence from the Pollutionabatement Costs and Expenditures Survey

It remains an open question whether the impact of environmental regulations differs by the size of the business. Such differences might be expected because of statutory, enforcement, and/or compliance asymmetries. Here, we consider the net effect of these three asymmetries, by estimating the relationship between plant size and pollution abatement expenditures, using establishment-level data on U.S. manufacturers from the Census Bureau’s Pollution Abatement Costs and Expenditures (PACE) surveys of 1974-1982, 1984-1986, 1988-1994, 1999, and 2005, combined with data from the Annual Survey of Manufactures and Census of Manufactures. We model establishments’ PAOC intensity – that is, their pollution abatement operating costs per unit of economic activity – as a function of establishment size, industry, and year. Our results show that PAOC intensity increases with establishment size. We also find that larger firms spend more per unit of output than do smaller firms.

Spatiotemporal Autoregressive Models of Country-Level Emission of Transboundary Pollutants

Currently, there are a number of environmental issues that are of global concern, such as global warming, acid rain and ozone layer depletion. The resulting damages are not necessarily confined to only the country where the pollutants are emitted. Hence, multiregional and multilateral cooperation is necessary to take measures against them. Empirical studies on emissions of transboundary pollutants have been performed since the 1990s. For instance, Fredriksson and Millimet (2002) presented an empirical study about measures for U.S. states' environmental policies on pollution abatement and control expenditures. They concluded that, with the introduction of relatively stringent regulations, states are forced to spend higher abatement costs owing to improvements by their neighbors. Murdoch et al. (1997) also reported an empirical study looking at specifications on the demand for voluntary emission reductions with a consideration of the spatial dispersion of the pollutants; nitrogen oxides (NOx) and sulphur oxides (SOx). They discussed that the functional forms of the emissions for these two pollutants are different. In this paper, we perform an empirical study to clarify the importance of including time-series and spatial data together in their model and of the interdependency between the air pollutants. We found that current SOx and NOx emissions are related not only emissions from the proceeding year but also by neighboring countries' emissions. Additionally, we determined that a positive correlation exists the SOx and NOx emissions. From this study, we also observed that the interdependency among SOx emissions from different sources becomes smaller each year that passes. Finally, for NOx emissions, we saw that there is a stronger interdependency between the emissions from two countries that are located further apart.

Investment threshold and management reflection for industrial system cleaning: a case for China

The recognition that industrial activity plays an essential role in a sustainable society is now widespread. To understand the causal relationship between industrial pollution abatement expenditure and industrial system cleaning level in China is of considerable importance, especially under extremely rapid industrial growth and serious pressure of industrial pollutants abatement context. We use composite index assessment method and regression analysis in this paper. We establish the mathematical model between composite industrial cleaner index and investment intensity for industrial pollutants abatement, and analyze the effects of industrial pollutants treatment and discharge indicators on composite industrial cleaner index in China. Results show that: (1) There is significant nonlinear relationship between composite industrial cleaner index and investment intensity for industrial pollutants abatement. (2) From single indicator perspective, the effect of investment intensity on pollutants treatment indicators is positively, on the contrary, the effect of investment intensity on pollutants discharge indicators is negatively; (3) From decomposition cleaner index perspective, the effect of pollutants discharge level (process control) is higher than pollutants treatment capacity (end-of-pipe) on composite industrial cleaner index; (4) There is threshold between investment intensity and composite cleaner industrial index, it is a crucial reference scale for industrial environmental management in selected period.

Public Expenditure, Environment, and Economic Growth

AbstractThis paper attempts to develop a model of endogenous growth with special consideration to the role of productive public expenditure in the presence of congestion effect of private capital and environmental pollution. We analyze the properties of the optimal fiscal policy in the steady‐state equilibrium when the level of production of the final good is the source of emission. Government allocates its income tax revenue between pollution abatement expenditure and productive public expenditure. In the steady‐state equilibrium, optimum ratio of productive public expenditure to national income is less than the competitive output share of the public input; and this ratio varies inversely with the magnitude of the emission‐output coefficient. The steady‐state equilibrium appears to be a saddle point; and the market economy growth rate is not necessarily less than the socially efficient growth rate in the steady‐state equilibrium.

Health, infrastructure, environment and endogenous growth

This paper attempts to develop a model of endogenous growth with special focus on the role of health capital, public infrastructure and environmental pollution. It is an extension of the model of Agenor (2008) who does not consider environmental pollution. We analyze properties of optimal fiscal policy in the steady-state growth equilibrium when the level of production of the final good is the source of pollution. Tax revenue of the government is channelized into three expenditure heads-health expenditure, pollution abatement expenditure and public infrastructure expenditure. It is found that the optimum ratio of public infrastructural expenditure to national income in the balanced growth equilibrium is less than the competitive output share of the public input; and it varies inversely with the magnitude of the emission-output coefficient. There is no conflict between the social welfare maximizing solution and the growth rate maximizing solution in the balanced growth equilibrium. There may exist indeterminacy in the transitional growth path converging to the unique steady-state equilibrium point that never satisfies saddle-point stability. The market economy growth rate is not necessarily less than the socially efficient growth rate; and the relationship between these two depends on the magnitude of the emission-output coefficient.

Fiscal policies, environmental pollution and economic growth

This paper develops a model of endogenous economic growth with special consideration to the role of productive public expenditure and environmental pollution; and analyses the properties of optimal fiscal policy in the steady state growth equilibrium. We consider the level of consumption as the source of pollution. Government allocates its tax revenue between pollution abatement expenditure and productive public expenditure. Optimum ratio of productive public expenditure to national income is equal to the competitive output share of the public input, when productive public expenditure is depicted as tax revenue minus abatement expenditure. However, the proportional income tax rate exceeds the competitive output share of the public input. There is no conflict between the social welfare maximizing solution and the growth rate maximizing solution in the steady state growth equilibrium. The unique steady state growth equilibrium appears to be a saddle-point when the growth rate is above a critical level and the steady state equilibrium growth rate in the market economy is not necessarily lower than the socially efficient growth rate.