Game theoretic analysis of environmental impact assessment system in China

Environmental impact assessment (EIA) system has been established in China since 1973. In present EIA cases, there are four participants in general: governments, enterprises, EIA organizations and the public. The public has held responsible for both social costs and social duties. The public supervises social costs produced by enterprises discharging pollutant in EIA. However public participation is mostly deputized by governments, which severely weaken the independence of the public as one participant in EIA. In this paper, EIA refers to the different attitudes of the participants whose optional strategies may be described by a proper game model. According to disfigurements in EIA, three sides (governments, enterprises, and EIA organizations) dynamic iterative game theory, dynamic game theory of incomplete information, and perfect Bayesian equilibrium theory to analyze the reciprocity relation among governments, EIA organizations and enterprises. The results show that in a short period, economic benefit is preponderant over social benefit. Governments and enterprises both do not want to take EIA to reveal social costs. EIA organizations' income comes from enterprises and the collusions are built between them to vindicate economic benefit. In a long run, social benefit loss caused by environmental pollution must be recuperated sooner or later and environmental deterioration will influence the achievements of economic benefit, so both governments and enterprises are certain to pursue high social benefit and willing to take EIA, helpful to increase private benefit. EIA organizations will make fair assessment when their economic benefit are ensured. At present, the public as silent victims can not take actual part in EIA. The EIA system must be improved to break the present equilibrium of three sides, bringing the public to the equilibrium to exert public supervision. © 2007 Higher Education Press and Springer-Verlag.