IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v65y2008i2p356-366.html
   My bibliography  Save this article

A cost-benefit analysis for the economic growth in China

Author

Listed:
  • Wen, Zongguo
  • Chen, Jining

Abstract

Currently, traditional development issues such as income inequality, depletion of natural resources, environmental pollution as well as retardation of infrastructure have occurred in China. In the future, more pressures would be imposed on China by the continuous fast development of industrialization, and with transfer of the world manufacture center to China. Sustainable development, including its economic, environmental and social elements, is a key goal of decisionmakers. This paper develops a methodology on cost benefit analysis of economic growth at macroscopic level to identify issues of China's sustainability. In order to address some important issues on how to make policies to improve the quality of economic growth, the CBA framework developed in this study analyses economic-ecological-social interaction, building three accounts that reflect three dimensions of sustainable development that includes 26 sub-models in all, and finally is integrated into an index as Net Progress Proceeds (NPP). The estimation methods of these submodels, such as cost of environmental pollution, depletion of natural resources and defensive expenditures are described in detail. Based on the framework and methods, this paper examines the costs and benefits of economic growth in three aspects of economy, ecology and society. The results illustrate that NPR of China's economic growth had been negative for a long time and has just became positive since year 2000 but was quite low. Even the best was only 1.6% in 2002 (the worst was -Â 24.2% in 1982). Based on the comparison between three accounts, we can draw a conclusion that ecological cost is the dominant factor that affects China's NPR. The empirical results show that if no other innovative measures or policies are taken in the future the costs of growth would outweigh its benefits, resulting in un-sustainability. Basically, the long-term economic growth would be unsustainable due to increasing environmental damage and depletion of natural resources. There are a few limitations that we consider need to be improved in our CBA framework and method, nevertheless they have many options that can be explored by policy makers, to make the development path more sustainable.

Suggested Citation

  • Wen, Zongguo & Chen, Jining, 2008. "A cost-benefit analysis for the economic growth in China," Ecological Economics, Elsevier, vol. 65(2), pages 356-366, April.
    • Handle: RePEc:eee:ecolec:v:65:y:2008:i:2:p:356-366
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921-8009(07)00393-X
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Philibert, Cedric, 2000. "How could emissions trading benefit developing countries," Energy Policy, Elsevier, vol. 28(13), pages 947-956, November.
    2. Hanley, Nick & Moffatt, Ian & Faichney, Robin & Wilson, Mike, 1999. "Measuring sustainability: A time series of alternative indicators for Scotland," Ecological Economics, Elsevier, vol. 28(1), pages 55-73, January.
    3. Johannesson, Magnus & Johansson, Per-Olov & Kristrom, Bengt & Gerdtham, Ulf-G., 1993. "Willingness to pay for antihypertensive therapy -- further results," Journal of Health Economics, Elsevier, vol. 12(1), pages 95-108, April.
    4. Aldy, Joseph E. & Hrubovcak, James & Vasavada, Utpal, 1998. "The role of technology in sustaining agriculture and the environment," Ecological Economics, Elsevier, vol. 26(1), pages 81-96, July.
    5. Hamilton, Clive, 1999. "The genuine progress indicator methodological developments and results from Australia," Ecological Economics, Elsevier, vol. 30(1), pages 13-28, July.
    6. Van Houtven, George & Cropper, Maureen L., 1996. "When is a Life Too Costly to Save? The Evidence from U.S. Environmental Regulations," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 348-368, May.
    7. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
    8. Wen, Zongguo & Zhang, Kunmin & Du, Bin & Li, Yadong & Li, Wei, 2007. "Case study on the use of genuine progress indicator to measure urban economic welfare in China," Ecological Economics, Elsevier, vol. 63(2-3), pages 463-475, August.
    9. Mendelsohn, Robert & Nordhaus, William D & Shaw, Daigee, 1994. "The Impact of Global Warming on Agriculture: A Ricardian Analysis," American Economic Review, American Economic Association, vol. 84(4), pages 753-771, September.
    10. Shreekant Gupta & George Van Houtven & Maureen Cropper, 1996. "Paying for Permanence: An Economic Analysis of EPA's Cleanup Decisions at Superfund Sites," RAND Journal of Economics, The RAND Corporation, vol. 27(3), pages 563-582, Autumn.
    11. England, Richard W., 1998. "Measurement of social well-being: alternatives to gross domestic product," Ecological Economics, Elsevier, vol. 25(1), pages 89-103, April.
    12. Patterson, K D, 1992. "The Service Flow from Consumption Goods with an Application to Friedman's Permanent Income Hypothesis," Oxford Economic Papers, Oxford University Press, vol. 44(2), pages 289-305, April.
    13. James T. Hamilton & W. Kip Viscusi, 1999. "How costly is “clean”? An analysis of the benefits and costs of Superfund site remediations," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 18(1), pages 2-27.
    14. Islam, Sardar M. N. & Munasinghe, Mohan & Clarke, Matthew, 2003. "Making long-term economic growth more sustainable: evaluating the costs and benefits," Ecological Economics, Elsevier, vol. 47(2-3), pages 149-166, December.
    15. Pezzey, J., 1992. "Sustainable Development Concepts; An Economic Analysis," Papers 2, World Bank - The World Bank Environment Paper.
    16. Bolund, Per & Hunhammar, Sven, 1999. "Ecosystem services in urban areas," Ecological Economics, Elsevier, vol. 29(2), pages 293-301, May.
    17. Won Kim, Chong & Phipps, Tim T. & Anselin, Luc, 2003. "Measuring the benefits of air quality improvement: a spatial hedonic approach," Journal of Environmental Economics and Management, Elsevier, vol. 45(1), pages 24-39, January.
    18. Stern, David I. & Common, Michael S. & Barbier, Edward B., 1996. "Economic growth and environmental degradation: The environmental Kuznets curve and sustainable development," World Development, Elsevier, vol. 24(7), pages 1151-1160, July.
    19. Shafik, Nemat & Bandyopadhyay, Sushenjit, 1992. "Economic growth and environmental quality : time series and cross-country evidence," Policy Research Working Paper Series 904, The World Bank.
    20. Subramanian, Uma & Cropper, Maureen, 2000. "Public Choices between Life Saving Programs: The Tradeoff between Qualitative Factors and Lives Saved," Journal of Risk and Uncertainty, Springer, vol. 21(1), pages 117-149, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Qingling Shi & Xiangzheng Deng & Chenchen Shi & Shiyi Chen, 2015. "Exploration of the Intersectoral Relations Based on Input-Output Tables in the Inland River Basin of China," Sustainability, MDPI, vol. 7(4), pages 1-18, April.
    2. Luca D’Acci, 2014. "Monetary, Subjective and Quantitative Approaches to Assess Urban Quality of Life and Pleasantness in Cities (Hedonic Price, Willingness-to-Pay, Positional Value, Life Satisfaction, Isobenefit Lines)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 115(2), pages 531-559, January.
    3. Chen, Yvonne Jie & Li, Pei & Lu, Yi, 2018. "Career concerns and multitasking local bureaucrats: Evidence of a target-based performance evaluation system in China," Journal of Development Economics, Elsevier, vol. 133(C), pages 84-101.
    4. Li Fang & Pan He & Chuanhao Tian & Yao Yao & Hongjie Chen, 2022. "Beyond the ceremony: Mega-event, air quality and political career," PLOS ONE, Public Library of Science, vol. 17(2), pages 1-19, February.
    5. Yuanquan Chen, 2008. "Chinese Economy and Excess Liquidity," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(5), pages 63-82, September.
    6. Halkos, George & Tzeremes, Nickolaos, 2011. "Economic growth and carbon dioxide emissions: Empirical evidence from China," MPRA Paper 32840, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Posner, Stephen M. & Costanza, Robert, 2011. "A summary of ISEW and GPI studies at multiple scales and new estimates for Baltimore City, Baltimore County, and the State of Maryland," Ecological Economics, Elsevier, vol. 70(11), pages 1972-1980, September.
    2. Roger Fouquet, 2012. "Economics of Energy and Climate Change: Origins, Developments and Growth," Working Papers 2012-08, BC3.
    3. Aniqa Ahmad & Sofia Anwar, 2023. "A Composite Index for Sustainable Development: Measurement and Development Status of Selected Countries," Journal of Economic Impact, Science Impact Publishers, vol. 5(1), pages 1-14.
    4. Wen, Zongguo & Zhang, Kunmin & Du, Bin & Li, Yadong & Li, Wei, 2007. "Case study on the use of genuine progress indicator to measure urban economic welfare in China," Ecological Economics, Elsevier, vol. 63(2-3), pages 463-475, August.
    5. Shahbaz, Muhammad & Mahalik, Mantu Kumar & Shah, Syed Hasanat & Sato, João Ricardo, 2016. "Time-varying analysis of CO2 emissions, energy consumption, and economic growth nexus: Statistical experience in next 11 countries," Energy Policy, Elsevier, vol. 98(C), pages 33-48.
    6. Jeffrey Wilson & Peter Tyedmers, 2013. "Rethinking What Counts. Perspectives on Wellbeing and Genuine Progress Indicator Metrics from a Canadian Viewpoint," Sustainability, MDPI, vol. 5(1), pages 1-16, January.
    7. Kijima, Masaaki & Nishide, Katsumasa & Ohyama, Atsuyuki, 2010. "Economic models for the environmental Kuznets curve: A survey," Journal of Economic Dynamics and Control, Elsevier, vol. 34(7), pages 1187-1201, July.
    8. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.
    9. Bradford David F. & Fender Rebecca A & Shore Stephen H. & Wagner Martin, 2005. "The Environmental Kuznets Curve: Exploring a Fresh Specification," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-28, June.
    10. Ghimire, Narishwar & Woodward, Richard T., 2013. "Under- and over-use of pesticides: An international analysis," Ecological Economics, Elsevier, vol. 89(C), pages 73-81.
    11. Jha, Raghbendra & Murthy, K. V. Bhanu, 2003. "An inverse global environmental Kuznets curve," Journal of Comparative Economics, Elsevier, vol. 31(2), pages 352-368, June.
    12. George Halkos & Iacovos Psarianos, 2016. "Exploring the effect of including the environment in the neoclassical growth model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(3), pages 339-358, July.
    13. C. Seri & A. de Juan Fernandez, 2021. "The relationship between economic growth and environment. Testing the EKC hypothesis for Latin American countries," Papers 2105.11405, arXiv.org.
    14. Rothman, Dale S., 1998. "Environmental Kuznets curves--real progress or passing the buck?: A case for consumption-based approaches," Ecological Economics, Elsevier, vol. 25(2), pages 177-194, May.
    15. Andreoni, James & Levinson, Arik, 2001. "The simple analytics of the environmental Kuznets curve," Journal of Public Economics, Elsevier, vol. 80(2), pages 269-286, May.
    16. Richard T. Carson, 2010. "The Environmental Kuznets Curve: Seeking Empirical Regularity and Theoretical Structure," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(1), pages 3-23, Winter.
    17. Jaeger, William K. & Kolpin, Van, 2008. "The Environmental Kuznets Curve from Multiple Perspectives," Climate Change Modelling and Policy Working Papers 36760, Fondazione Eni Enrico Mattei (FEEM).
    18. Roca, Jordi & Serrano, Monica, 2007. "Income growth and atmospheric pollution in Spain: An input-output approach," Ecological Economics, Elsevier, vol. 63(1), pages 230-242, June.
    19. Shahrouz Abolhosseini & Almas Heshmati & Jorn Altmann, 2014. "The Effect of Renewable Energy Development on Carbon Emission Reduction: An Empirical Analysis for the EU-15 Countries," TEMEP Discussion Papers 2014109, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Mar 2014.
    20. Blair Fix, 2019. "Dematerialization Through Services: Evaluating the Evidence," Biophysical Economics and Resource Quality, Springer, vol. 4(2), pages 1-17, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:65:y:2008:i:2:p:356-366. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.