Chapter 11 Environmental economics

Chapter 11 Environmental economics

11.1 The development history and status environmental economics

11.2 Green accounting

11.3 The evaluation of environmental economic value

11.4 Environmental economic means

11.5 Case study

11.1 The development history and status environmental economics

11.1.1 Relationship between environment and economy

Two opposite viewpoints ：• Pessimistic point: it proposes the argument of z

ero growth. • Eyeless optimistic point: economic developmen

t itself can solve environmental problem, it denies the positive effect of economic development on environment.

11.1.2 Externality theory and market failure • Externality: certain economy subject activity will produce

influence on the welfare of another economy subject; this kind of influence neither reflected through market price mechanism.

• Externality including external economical efficiency and external non-economical efficiency, environmental problems are most external non-economical efficiency.

• Exteriorization of external non-economical efficiency: it enables the outer fees produced by producers and consumers to bear by themselves, which means the principle of polluter bearing the fees.

price

P

P1

0

MPC

MSC

MB

QuantityQ Q1

Figure 11-1 The market failure caused by external diseconomics

External diseconomics inner method

Control

Loss compensation

pollution discharge right exchange

Economic measure of non-market

11.1.3 Environmental quality and public things • Environmental quality is becoming deteriorate, the key po

int is that the regulation of deteriorate and right of use of environmental resource is not strict and comprehensive.

• Atmosphere, river, lake and underground water are the public property resources or the public things.

• Public things: its indivisible interest distributed to all the social members, whether this person wants to purchase this public things or not.

11.2 Green accounting

11.2.1 National economy accounting • The concerned content of national economy accounting system

（ SNEA ）• Two general national economy accounting system in internatio

nal

The material product balanced schedule system of former Sovi

et Union.

The national economy accounting system in the Western count

ries.

The existed defects of MPS system and SNA

system: It has not actually reflected the environmental

prevention fees.

It has not considered the consumption and dep

reciation of natural resource inventory

It has not indicated the fees of environmental d

egradation.

Figure 11–2 The relationship between current SNA main indexes

notes ： the figure is quoted from Wang Jinnan ， 1994

11.2.2 The accounting method of en

vironment and resources Physical accounting method

Including: classification of natural resource and environment; current st

ate and utilization condition of natural resource and environment; invent

ory and flow rate accounting of natural resource and environment. Value accounting method

By using currency as the unit to do measurement.

Three kinds of evaluation methods, that is market price method, citizen d

esire method, cost maintenance method.

11.3 Economic value assessment of environment

11.3.1 Environmental fees---effect analysis

Welfare function establishment accord with certain economy and social t

arget.

Calculating and measuring the value of input and output

Uses the net value and internal profit efficiency as the main evaluation in

dex.

Carry out analysis and comparison of certain project economy, society, e

cological value and profit, concludes that whether it is feasible or not.

O X0 Removal rate of pollutant （t.a-1 ）

cost of marginal removal

utility of marginal removal

Figure 11–3 optimal level of pollutant removal （ b ）

O

C

D

X0 Removal rate of pollutant （t.a-1 ）

Total cost curve

Total benefits curve

（ a ）

cost effectiveness \ten thousand

cost effectiveness \ten thousand

11.3.2 Fees function and damage function

Damage function: Establishing damage relation bet

ween activity, environment quality and acceptance o

bject.

Fees function: it is the quantification form of describ

ing the relations of input and fess of pollution contro

l or environment quality improvement

cost

O X0 Removal rate of pollutant （t.a-1 ）

Cost of gross contamination

Cost of gross failure

Cost of total control

（ a ）

cost

O X0 Removal rate of pollutant （t.a-1 ）（ b ）

cost of marginal damage

cost of marginal control

Figure 11–4 optimal level of pollutant removal

11.3.3 Benefit evaluation techniques of environmental quality

Table 11–1 Technical classification of environmental quality benefit evaluation

notes ： quoted from Wang Jinnan ， 1994

11.4 Environmental economic means 11.4.1 Economic means of environmental management

environmental economic means

pigou means

Coase means

Tax (fees )

subsidy

deposit/refund

automated negotiation trade of pollution discharge license

Figure 11-5 classification of environmental economic means

Notes:quoted from Li Keguo, Wei Guoying, Zhang Baoan,2003

11.4.2 The application of environmental economic means

Now there are more than 150 different economy incentive methods

are using in 14 nations, the main forms are as follows

Deposit

Pollution discharge license plan

Extra subsidy

Charge (tax)

11.5 Case study

Urban water pollution emissions model of huhhot 1. Water pollution model（ 1 ） Water pollution discharge model

Pollution behavior index of factory level Pollutant discharge intensity ：

Pollution behavior index of regional index

),,,,,,,,,( MBLTGQRONSf

（ 2 ） Water environmental quality model • Choosing the QUAL2E to simulate river water quality

• Adopting finite difference to do resolution.

• The basic form of comprehensive one-dimensional is one-dimensi

onal convection—diffusion equation

Sdx

x

uAdx

x

DDA

dxt

A xxxx

x

（ 3 ） Water pollution loss model

Agriculture loss (figure 11-6（a）

Loss of pollution management fees （ figure 11-6（ b ） Water shortage loss

Total loss caused by water pollution （ figure11-7）

KKKWRD 0121 10

crop

loss

Water quality （ COD content ）（ a ）

trea

tme

nt lo

ssWater quality （ COD content ）（ b

）

Figure 11-6 The relationship between water pollution loss and water quality

usable water consumption

Water quality （ COD content ）

alternative water resources fees

usable water consumption

alternative water resources fees

Water quality （ COD content ）

Figure 11-7 The water shortage loss caused by pollution

2. Result

Emission simulation COD regression analysis

BOD regression analysis

0479.06233.07433.01526.0 MBLQeCODI a

7625.03550..0 LQeBODI a

Loss simulation of water pollution

Year Water pollution loss/ten thousand Yuan

Annual quantity of pollutant discharged /Ten thousand tons

2010 27 ， 759.58688 23 ， 697.28337

1998 22 ， 779.90524 14 ， 062.78753