Pollution regulation and abatement efforts: evidence from China

This paper empirically tests pollution abatement efforts of Chinese industries in response to pollution regulations, especially the pollution charge instrument practiced in China for about 20 years. The impacts of pollution regulation on abatement expenditures are examined for one thousand large and medium Chinese industrial polluters. The results show that plant-level expenditures on end-of-pipe wastewater treatment are strongly responsive to the pollution charges. The estimated elasticities of operation cost and new investment with respect to pollution price are 65 and 27%, respectively. Other command-and-control regulatory approaches, however, are not found to have systematic and significant impacts on abatement expenditures. (C) 2002 Elsevier Science B.V. All rights reserved.