Will Domestic Health and Tourism Concerns Lead China to Curb Pollution?

Take these two facts and consider them together: (1) China’s air quality has been notoriously poor for the past three decades or so; and (2) according to the BP statistical Review of World Energy, China’s energy use and coal use relative to other countries indicates that any greenhouse-gas-reducing policies by other countries are likely to be ineffective if China’s trajectory remains the same.

Looking at those facts, and looking at all of the political distortions of economic signals in China (from state-owned industry to activist monetary policy), it’s hard not to despair if you, like me, would like to see the alignment of economic and environmental incentives to contribute to real, substantive, long-term economic-environmental sustainability.

Walter Russell Mead points to two dimensions of China’s poor environmental quality that may lead to some policy changes: domestic health care costs are high, in part due to the health effects of the poor air quality, and it’s also reducing tourism.

Air pollution contributed to the deaths of an estimated 1.2 million people in China in 2010, and it costs the country nearly six percentof its annual GDP in health care costs, material damages, and premature deaths. Beijing’s air quality is “crazy bad“, and the country’s toxic smog is driving China’s urbanites out of its megacities. Small wonder, then, that air pollution is having a devastating effect on China’s tourism industry.

These factors have led China to start looking a policies to improve their environmental quality, as described in the Economist last week. Among other things, the increasing “NIMBY”ism reported in the Economist shows the extent to which environmental quality is a normal good — when average incomes rise and living standards rise, people consume more quantity of normal goods, and these increasingly better-off residents of China want more environmental quality. That is a positive harbinger.

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