Environmental problems in China : estimates of economic costs

Abstract

Today's China experiences every imaginable environmental problem, yet its capacity to deal with these challenges is limited. China's poor oil and gas resources mean that its industries and services still overwhelmingly rely on coal, an inefficient fuel and a major polluter. Moreover, it has extensive areas of badly damaged ecosystems. And, like other countries in the early stages of rapid industrial development, China has been slow to allocate capital for environmental management. These facts, together with China's huge population and ambitious development aspirations, make it the world's most worrisome case of environmental degradation, with global repercussions.

The annual cost of China's environmental pollution and degradation is probably at least 10 percent of its gross domestic product (GDP) and may well be as high as 15 percent. But China has been spending far less on environmental protection and management than even the 1.5 percent of GDP recommended by the country's leading environmental experts.

The effects of pollution and environmental degradation are everywhere. Chronic lung diseases aggravated by air pollution accounted for approximately 25 percent of all deaths in the late 1980s. In only 6 of China's 27 largest cities is drinking water quality within state standards. Contamination of crops by polluted water endangers health and reduces opportunities for export of products. And the loss of arable land to urban encroachment and soil erosion means that, by the year 2000, Bangladesh and Egypt will be the only two populous nations with less arable land per capita than China.

If China were to consume resources at the level of South Korea or Taiwan and import crude oil and grain at rates comparable to those of other rapidly growing East Asian economies, it would need more energy and more cereals than are currently available on the world market. Securing the largest possible share of its energy and food needs from domestic sources will be important not only for China's economic progress but also for global stability. Such a strategy can succeed, however, only when China uses its resources efficiently and makes protection of the environment, and a gradual shift to more sustainable ways of running its economy, a matter of high priority.