Ecological compensation in air pollution governance: China's efforts, challenges, and potential solutions

Lianbiao Cui, Hongbo Duan, Jianlei Mo and Malin Song

International Review of Financial Analysis, 2021, vol. 74, issue C

Abstract: The Chinese government has proposed to establish an ecological compensation (EC) mechanism for air quality to deal with the country's serious air pollution problem; however, the process has not progressed smoothly due to a lack of specific technical guidance. This study draws lessons from the preliminary pilot projects that some provinces and cities have conducted, aiming to provide insights that will inform policy and decision makers in effectively designing future EC initiatives. By reviewing 45 case studies, we find that EC has typical regional characteristics with high provincial heterogeneity regarding the compensation factor, compensation formula, and compensation standard. Although great efforts have been made in the pilots, China's municipal EC programs still have much room for improvement. Currently, nearly 93% of regions have adopted the territorial model to define environmental responsibility for monitoring sites, and 68% have not implemented the urban and county classification assessment. We argue that both actions will weaken the effectiveness of the EC policy because they cannot clearly define regional environmental responsibilities. To ensure fairness, this study suggests the simultaneous adoption of shared responsibility by adjacent administrative regions and the territorial model, when calculating the environmental responsibility of each assessed object. This study not only reveals the progress and challenges of China's EC practices in air quality but also provides important references for the construction of EC mechanisms in other regions.

Keywords: Ecosystem service payment; Air pollution; Case study; Territorial model; China (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:74:y:2021:i:c:s1057521921000442

DOI: 10.1016/j.irfa.2021.101701

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