中国工业企业的环境业绩：监察的作用

u Ps - aR 2 A POLICY RESEARCH WORKING PAPER 2285 Industrial Environmental Inspections have astatistical\ signiflcant impact on firms' Performance in China environmental performance in the Chinese city of The Impact of Inspections Zhenjiang, and citizens' complaints have a significant impact on inspections. So Susmita Dasgupta stronger information and Benoi't Laplante education campaigns may Nlandu Mamingi improve social welfare in the Hua Wang city. The World Bank Development Research Group Infrastructure and Environment February 2000  POLICY RESEARCH WORKING PAPER 2285 Summary findings Little empirical research has been done on monitoring Pollution charges do Ilot have a statistically and enforcement issues in environmental economics, significant effect oll firms' performance - although the especially to analyze the impact of monitoring and lack of variation in pollution charges in Zlhenjiang enforcement on polluters' environmental performance. precludes effectively capturing their impact. No studies have been done in developing economics. Complaints have a significant impact on inspections Dasgupta, Laplante, Mamingi, and Wang explore the and therefore on pAllutinn control. impact of inspections, and the potential impact of Currently available data do not allow analysis of pollution charges and citizens' complaints, on the whether the cost oi- addirional inspections is justified, but environmental performance of polluters in China. it is reasonable to speculate that additional inspections Their analysis of plant-level data from the city of would improve social welfare in Zhenjiang and that Zhenjiang shows that: information and ecucation campaigns are probably a Inspections have a statistically significant impact on good way to encourage citizen complaints. firms' environmental performance. This paper -a product of Infrastructure and Environment, Development Research Group - is part of a larger effort in the group to study environmental regulation in developing countries. The study was funded by the Bank's Research Support Budget under the research project "Pollution Control in China: The Role and Impact of inspection and Complaints" (RPO 682-44). Copies of this paper are available free from the World Bank, 1818 H Street, NW, Washington, DC 20433. Please contact Yasmin D'Souza, room MC2-622, telephone 202-473-1449, fax 202-522-3230, email address ydsouza@vxworldbank.org. Policy Research Working Papers are also posted on the Web at wwv.worldbank.org/researchI workingpapers. The authors may be contacted at sdasguptaCkworldbank.org, blaplantec@?worldbank.org, or hwangl(cworldbank.org. February 2000. (25 pages) The Policy Research WI'orking Paper Series disseminates the findiings of work in progress to encoziiigc the exchanzge of ideas ahozot development issues. An objective of the series is toget the findings out quickly, even if the presentatiois are less than folly polished. The papers carry the names of the aothors anzd should he cited accordinzgly. The findings, inmerpretations, aind conclusions expressed in this paper are entirely those of the authors. They do nlot necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Produced by the Policy Research Dissemination Center  Industrial environmental performance in China: The impact of inspections By Susmita Dasgupta* Benoit Laplante* Nlandu Mamingi** and Hua Wang* Development Research Group The World Bank * Development Research Group, The World Bank, 1818 H Street, N.W. Washington, D.C. United States, DC20433. ** The University of the West Indies, Bridgetown, Barbados.  ACKNOWLEDGEMENTS We thank sincerely Zhenjiang Environmental Protection Bureaw for allowing us access to the data necessary to perform the analysis presented in this paper. We also wish to thank Professor Genfa Lu (Department of Environmental Science and Engineering, Nanjing University) for his generous collaboration. We also thank participants of the workshop held in the Department of Environmental Science and Engineering of Nanjing University for their comments and suggestions. Our thanks to Mr. Craig Meisner and Mrs Ping Yun for their research assistance. All remaining errors remain our own. 2  Executive summary In environmental economics, monitoring and enforcement issues have attracted relatively little research effort. Moreover, the bulk of the literature on these issues has been of a theoretical nature. Few have empirically analysed the impact of monitoring and enforcement activities on the environmental performance of polluters. Moreover, all existing studies have been performed in the context of developed countries. A purpose of the current paper is to partially fill this important gap by exploring the impact of inspections on the environmental performance of polluters in China. Our analysis also simultaneously examines the potential impact of pollution charges and citizens' complaints. Our analysis of plant-level data from the city of Zhenjiang shows that inspections do have a statistically significant impact on the firms' environmental performance. In the current paper, our results suggest that pollution charges do not have a statistically significant impact on firms' performance. However, this result may simply be explained by the lack of variation in pollution charges within the city of Zhenjiang which therefore prevents us from effectively capturing the impact of pollution charges. Our results also demonstrate that complaints do impact inspections significantly. Given the impact of inspections on pollution, citizens' complaints therefore do have a significant impact on pollution control. These results may provide a key to China's future quality of environment. Whether or not these results support that additional resources be devoted to monitoring activities cannot strictly be addressed with the data currently available. Indeed, in order to do so, there would be a need to compare the costs of performing additional inspections with the net benefits of reduced pollution emissions. However, given the high level of air and water pollution currently observed in Zhenjiang, given the impact that these may have solely on health and productivity losses, it is reasonable to speculate that inspections do increase social welfare in Zhenjiang. The results however suggest that citizens can also have an important impact on pollution (via inspections). Hence, this would suggest a greater role for the regulator to embark on information and education policies. 3   1. Introduction Since the beginning of the 1970s, governments of developed and developing countries have enacted or amended a large number of environmental laws and regulations often directed at controlling the industrial emissions of air and water pollution. However, imposing a ceiling on a plant's emissions does not necessarily imply that emissions will fall and environmental quality improve. For the objectives of the regulation to be attained, the behaviour of the regulated community has to be monitored, and compliance with environmental standards has to be enforced.' While a large amount of resources is typically devoted to designing environmental regulations, and negotiating environmental standards with the regulated industries, it is generally acknowledged that resources devoted to monitoring and enforcement are insufficient relative to the complexity and extent of the task.2 While the monitoring of industrial polluters and the enforcement of compliance are both crucial components of a credible regulatory program, monitoring and enforcement issues have attracted little research effort. In a recent survey of the environmental economics literature, Cropper and Oates (1992) write: "The great bulk of the literature on the economics of environmental regulation simply assumes that polluters comply with existing directives." Moreover, most of the literature on these issues has been of a theoretical nature.3 On the empirical front, two broad questions have partially been addressed. A first question pertains to the impact of the regulator's behavior on the environmental performance of polluters. In particular, Magat and Viscusi (1990; henceforth MV), and X We define monitoring as the process of verifying the firm's status of environmental performance (e.g. compliance), and enforcement as the undertaking of actions (e.g. fines) to bring the firm to improve its environmental performance (e.g comply with environmental standards). 2 Among others, see Russell (1990) and O'Connor (1994) for more details. 3 See Downing and Watson (1974), Harford (1978), Linder and McBride (1984), Russell et al. (1986), Beavis and Dobbs (1987), Harrington (1988), Malik (1990), and Russell (1990). For a recent survey of the literature on monitoring and enforcement, see Cohen (1998). 4  Laplante Rnd, Rilstone (1996; henceforth LR) have examined whether or not inspections have an impact on the emissions of pulp and paper plants in the United States and Canada, respectively. MV (1990) have shown that inspections reduce permanently the level of emissions of plants by approximately 20%. LR (1996) have shown that not only inspections but also the threat of inspections reduce emissions by approximately 28%.4 These two analyses also find that inspections induce more frequent self-reporting of emissions by the regulated plants. Hence, not only do inspections have an impact on the actual level of emissions of the plants, but they also provide regulators with a more accurate pollution profile of the plants. More recently, Nadeau (1997) has shown that inspections significantly reduce the duration of firms' violation of air pollution standards in the pulp and paper industry in the United States. These results have clear policy implications as to the importance of a credible monitoring strategy to create incentives for pollution control. If inspections have an impact on the behavior of polluters and partly explain improvements in their environmental performance, a second question of interest thus pertains to the determinants of the regulator's monitoring strategy. Deily and Gray (1991, 1996), and Dion, Lanoie and Laplante (1998) have shown that regulators are sensitive to local environmental damages in their decision to inspect specific plants and, other things being equal, that greater inspection effort is allocated towards those plants whose emissions are likely to generate a higher level of damages. While this may be a desirable behaviour,' these authors also show that the monitoring and enforcement activities of regulators are also a function of variables pertaining to local labour market conditions (such as unemployment 4 These two analyses examine the impact of inspections on water pollut on emissions as measured by biological oxygen demand (BOD) and total suspended solids (TSS). 5 Economists have greatly criticized environmental regulations that impose on polluters uniform environmental standards since such standards ignore that plants impose non-uniform environmental damages per unit of pollution. However, Dion et al. (1998) argue that the presence of uniform standards does not necessarily imply uniform compliance with the standards. 5  rate, and the importance of the plant in the local labour market). Regulators thus appear to show a reluctance to enforce standards in a way that may have an impact on employment.' . Empirical studies on monitoring and enforcement issues have thus been of only recent interest and remain limited in numbers.7 Moreover, they have been performed only in the context of developed countries: We are not aware of any empirical study on the impact and determinants of monitoring and enforcement activities of an environmental agency of a developing country at the plant level.8 The current paper is a first step toward filling this important gap. Building upon MV (1990) and LR (1996), in this paper we analyse the role of inspections, pollution charges, and citizens' complaints as determinants of the environmental performance of industrial polluters in Zhenjiang, China.9 Our analysis of plant-level data shows that inspections do have a statistically significant impact on the firms' environmental performance. In the current paper, our results suggest that pollution charges do not have a statistically significant impact on firms' performance. However, this result may simply be explained by the lack of variation in pollution charges within the city of Zhenjiang which therefore prevents us from effectively capturing the impact of pollution charges. Our results also demonstrate that complaints do impact inspections significantly. Given the impact of inspections on pollution, citizens' complaints therefore do have a significant impact on pollution control. These results may provide a key to China's future quality of environment. These results may provide a key to China's future quality of environment. 6 Dion et al. (1998) thus argues that both the public interest theory of regulation and the economic theory of regulation contribute to explaining the decision of regulators to monitor the environmental performance of regulated plants. 7 In their paper, Deily and Gray (1991) writes that this is "thefirst empirical study of the EPA's enforcement activity at the plant level" (p. 260). 8 Pargal and Wheeler (1996) have examined the impact of non-regulatory activities on environmental quality in Indonesia. 9 Dasguta and Wheeler (1997) have analysed the determinants of citizens' complaints in China and found that they were an increasing function of the levels of income and education. 6  In the next section, we briefly describe the institutional and regulatory context currently in place in China. In section 3, we present the model we purport to test. In Section 4, the dataset and results are presented. We briefly conclude in Section 5. 2. Context (a) Growth and the environment in Zhenjiang, China China's industrial growth has been extremely rapid. In the 1990s, industrial output increased by more than 15% annually. Industry now accounts for approximately 45% of China's gross domestic product, and has provided a source of rapidly expanding income. However, serious environmental damage has accompanied this rapid growth. A large number of China's waterways are near biological death from excessive discharge of organic pollutants. In many urban areas, atmospheric concentrations of pollutants such as suspended particulates and sulfur dioxide routinely exceed World Health Organization safety standards by very large margins.'