China Environmental Law

Good lord it must get tiresome being lectured to by Americans.  US Treasury Secretary Henry Paulson in prepared remarks for delivery today to the Chinese Academy of Sciences informs the assembled academicians that:

• Although China’s economy is only one-sixth the size of America’s, it is about to be come the No. 1 source of greenhouse gas emissions.
• China is the world’s largest coal producer and consumer, a significant cause of the smog that regularly blankets Beijing and other cities.
• China’s pollution problems are “daunting” and 16 of world’s 20 most polluted cities are located in China.

Can someone tell me how trotting out these chestnuts is calculated to advance the ball on the substantive issues Secretary Paulson came to address?  Perhaps this is just part of an elaborate diplomatic dance, and I don’t know the tune. Or, it could be that these were simply the most “controversial” bits of the (otherwise benign) speech that made for the best copy in the initial reports . Thus, my “first take” designation; I will wait until I see the whole speech to react to its tone.

I do have a particular problem with the third point, this is No. 23 in the “China: world’s polluter” Psalter, many people know it by heart.  When anyone ever bothers to cite a source for the “16 of 20″ conclusion they usually reference the “World Bank.” The closest I could come, after half an hour of searching, to finding support for anything approaching this “fact” is the World Bank’s “China Quick Facts” page which reports that “China has 20 of the world’s 30 most polluted cities, largely due to high coal use and motorization.” There is no indication whether this fact comes from the World Bank’s own research or whether they are relying on someone else’s data or reporting. One year’s free subscription to this blog to anyone who can cite the original source for “16 of 20!”   Citations to CNN don’t count. I want hard numbers and an explanation of how the numbers were derived.

No one ever indicates what type of pollution these cities have the most of. The World Bank’s allusions to “coal use” and “motorization” would indicate that it at least is referring to “air pollution.” There are other forms of pollution, of course, and one would think that they should be considered when bestowing “most polluted” honors. The Blacksmith Institute has put together a “world’s worst polluted places” list which is heavy on hazardous waste contamination, and only two Chinese cities rank among its top 10 for 2007. 

But I digress. So, having catalogued for the appreciative patient all of its environmental ills, the prescription is as follows:

1. Eliminate tariffs and non-tariff barriers on products, goods and services that can improve the health and welfare of the Chinese people.  Good, Full speed ahead.

2. Eliminate price controls on electricity and fuel. Good idea, but chances of this happening soon are slim. I know there are studies out there that say that allowing electricity and fuel prices to go to market in China will have only a de minimis impact on inflation, but I don’t think you will convince the Chinese leadership of that fact now when inflation ranks as one of its top concerns. Prices will trend to market rates but very, very slowly.

3. Employ a U.S. system of using tradable credits so that polluters who reduce emissions most cheaply can sell them to others who find it more expensive. Good idea, but it’s like telling the consumptive Russian serf to take the waters at Baden Baden. China does not have the means to implement an effective trading scheme. Such schemes require accurate baselines, rational cap setting, continuous monitoring, an effective oversight and enforcement system, and national laws and regulations which set the parameters for trading, to name a few preconditions. China doesn’t have any of these yet. It should continue with its  experimental, pilot programs and work toward the day when “cap and trade” will become a viable national pollution control option. This isn’t going to work now, however.