IDEAS home Printed from https://ideas.repec.org/a/eee/finana/v74y2021ics1057521921000442.html
   My bibliography  Save this article

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

Author

Listed:
  • Cui, Lianbiao
  • Duan, Hongbo
  • Mo, Jianlei
  • Song, Malin

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.

Suggested Citation

  • Cui, Lianbiao & Duan, Hongbo & Mo, Jianlei & Song, Malin, 2021. "Ecological compensation in air pollution governance: China's efforts, challenges, and potential solutions," International Review of Financial Analysis, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:finana:v:74:y:2021:i:c:s1057521921000442
    DOI: 10.1016/j.irfa.2021.101701
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1057521921000442
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.irfa.2021.101701?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Dale Whittington & Stefano Pagiola, 2012. "Using Contingent Valuation in the Design of Payments for Environmental Services Mechanisms: A Review and Assessment," The World Bank Research Observer, World Bank, vol. 27(2), pages 261-287, August.
    2. Monge, Juan J. & Daigneault, Adam J. & Dowling, Leslie J. & Harrison, Duncan R. & Awatere, Shaun & Ausseil, Anne-Gaelle, 2018. "Implications of future climatic uncertainty on payments for forest ecosystem services: The case of the East Coast of New Zealand," Ecosystem Services, Elsevier, vol. 33(PB), pages 199-212.
    3. Gómez-Baggethun, Erik & de Groot, Rudolf & Lomas, Pedro L. & Montes, Carlos, 2010. "The history of ecosystem services in economic theory and practice: From early notions to markets and payment schemes," Ecological Economics, Elsevier, vol. 69(6), pages 1209-1218, April.
    4. Leimona, Beria & van Noordwijk, Meine & de Groot, Rudolf & Leemans, Rik, 2015. "Fairly efficient, efficiently fair: Lessons from designing and testing payment schemes for ecosystem services in Asia," Ecosystem Services, Elsevier, vol. 12(C), pages 16-28.
    5. Sun, Jian & Dang, Zhiliang & Zheng, Shaokui, 2017. "Development of payment standards for ecosystem services in the largest interbasin water transfer projects in the world," Agricultural Water Management, Elsevier, vol. 182(C), pages 158-164.
    6. Xin Gao & Juqin Shen & Weijun He & Fuhua Sun & Zhaofang Zhang & Xin Zhang & Liang Yuan & Min An, 2019. "Multilevel Governments’ Decision-Making Process and Its Influencing Factors in Watershed Ecological Compensation," Sustainability, MDPI, vol. 11(7), pages 1-28, April.
    7. Zhang, Dayong & Zhang, Zhiwei & Managi, Shunsuke, 2019. "A bibliometric analysis on green finance: Current status, development, and future directions," Finance Research Letters, Elsevier, vol. 29(C), pages 425-430.
    8. Kroeger, Timm & Casey, Frank, 2007. "An assessment of market-based approaches to providing ecosystem services on agricultural lands," Ecological Economics, Elsevier, vol. 64(2), pages 321-332, December.
    9. Grima, Nelson & Singh, Simron J. & Smetschka, Barbara & Ringhofer, Lisa, 2016. "Payment for Ecosystem Services (PES) in Latin America: Analysing the performance of 40 case studies," Ecosystem Services, Elsevier, vol. 17(C), pages 24-32.
    10. Kim-Bakkegaard, Riyong & Jacobsen, Jette Bredahl & Wunder, Sven & Thorsen, Bo Jellesmark, 2017. "Comparing tools to predict REDD+ conservation costs to Amazon smallholders," Resource and Energy Economics, Elsevier, vol. 49(C), pages 48-61.
    11. Ståle Navrud & Jon Strand, 2018. "Valuing Global Ecosystem Services: What Do European Experts Say? Applying the Delphi Method to Contingent Valuation of the Amazon Rainforest," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(1), pages 249-269, May.
    12. Tsurumi, Tetsuya & Managi, Shunsuke, 2020. "Health-related and non-health-related effects of PM2.5 on life satisfaction: Evidence from India, China and Japan," Economic Analysis and Policy, Elsevier, vol. 67(C), pages 114-123.
    13. Taghizadeh-Hesary, Farhad & Yoshino, Naoyuki, 2019. "The way to induce private participation in green finance and investment," Finance Research Letters, Elsevier, vol. 31(C), pages 98-103.
    14. Hein, Walter & Wilson, Clevo & Lee, Boon & Rajapaksa, Darshana & de Moel, Hans & Athukorala, Wasantha & Managi, Shunsuke, 2019. "Climate change and natural disasters: Government mitigation activities and public property demand response," Land Use Policy, Elsevier, vol. 82(C), pages 436-443.
    15. Blundo-Canto, Genowefa & Bax, Vincent & Quintero, Marcela & Cruz-Garcia, Gisella S. & Groeneveld, Rolf A. & Perez-Marulanda, Lisset, 2018. "The Different Dimensions of Livelihood Impacts of Payments for Environmental Services (PES) Schemes: A Systematic Review," Ecological Economics, Elsevier, vol. 149(C), pages 160-183.
    16. Kosoy, Nicolas & Martinez-Tuna, Miguel & Muradian, Roldan & Martinez-Alier, Joan, 2007. "Payments for environmental services in watersheds: Insights from a comparative study of three cases in Central America," Ecological Economics, Elsevier, vol. 61(2-3), pages 446-455, March.
    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. Zhenxiang Cao & Liqing Peng, 2023. "The Impact of Digital Economics on Environmental Quality: A System Dynamics Approach," SAGE Open, , vol. 13(4), pages 21582440231, December.
    2. Tao, Hu & Zhuang, Shan & Xue, Rui & Cao, Wei & Tian, Jinfang & Shan, Yuli, 2022. "Environmental Finance: An Interdisciplinary Review," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    3. Ma, Jie & Xu, Mengmeng & Jiang, Jiehui, 2023. "Mapping high-resolution urban road carbon and pollutant emissions using travel demand data," Energy, Elsevier, vol. 263(PE).
    4. Du, Huibin & Liu, Huiwen & Zhang, Zengkai, 2022. "The unequal exchange of air pollution and economic benefits embodied in Beijing-Tianjin-Hebei's consumption," Ecological Economics, Elsevier, vol. 195(C).
    5. Bai, Rui & Lin, Boqiang, 2023. "Nexus between green finance development and green technological innovation: A potential way to achieve the renewable energy transition," Renewable Energy, Elsevier, vol. 218(C).
    6. Shahzad, Umer & Ferraz, Diogo & Nguyen, Huu-Huan & Cui, Lianbiao, 2022. "Investigating the spill overs and connectedness between financial globalization, high-tech industries and environmental footprints: Fresh evidence in context of China," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    7. Malin Song & Weiliang Tao, 2022. "Coupling and coordination analysis of China's regional urban‐rural integration and land‐use efficiency," Growth and Change, Wiley Blackwell, vol. 53(3), pages 1384-1413, September.

    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. Lliso, Bosco & Pascual, Unai & Engel, Stefanie, 2021. "On the role of social equity in payments for ecosystem services in Latin America: A practitioner perspective," Ecological Economics, Elsevier, vol. 182(C).
    2. Lima, Letícia Santos de & Krueger, Tobias & García-Marquez, Jaime, 2017. "Uncertainties in demonstrating environmental benefits of payments for ecosystem services," Ecosystem Services, Elsevier, vol. 27(PA), pages 139-149.
    3. Hausknost, Daniel & Grima, Nelson & Singh, Simron Jit, 2017. "The political dimensions of Payments for Ecosystem Services (PES): Cascade or stairway?," Ecological Economics, Elsevier, vol. 131(C), pages 109-118.
    4. Dextre, Rosa María & Eschenhagen, María Luisa & Camacho Hernández, Mirtha & Rangecroft, Sally & Clason, Caroline & Couldrick, Laurence & Morera, Sergio, 2022. "Payment for ecosystem services in Peru: Assessing the socio-ecological dimension of water services in the upper Santa River basin," Ecosystem Services, Elsevier, vol. 56(C).
    5. Ola, Oreoluwa & Menapace, Luisa & Benjamin, Emmanuel & Lang, Hannes, 2019. "Determinants of the environmental conservation and poverty alleviation objectives of Payments for Ecosystem Services (PES) programs," Ecosystem Services, Elsevier, vol. 35(C), pages 52-66.
    6. Brownson, Katherine & Guinessey, Elizabeth & Carranza, Marcia & Esquivel, Manrique & Hesselbach, Hilda & Madrid Ramirez, Lucia & Villa, Luis, 2019. "Community-Based Payments for Ecosystem Services (CB-PES): Implications of community involvement for program outcomes," Ecosystem Services, Elsevier, vol. 39(C).
    7. Yubing Wang & Kai Zhu & Xiao Xiong & Jianuo Yin & Haoran Yan & Yuan Zhang & Hai Liu, 2022. "Assessment of the Ecological Compensation Standards for Cross-Basin Water Diversion Projects from the Perspective of Main Headwater and Receiver Areas," IJERPH, MDPI, vol. 20(1), pages 1-31, December.
    8. Jie Guo & Tianqi Zhu & Minghao Ou & Fengsong Pei & Xiaoyu Gan & Weixin Ou & Yu Tao, 2018. "A Framework of Payment for Ecosystem Services to Protect Cropland: A Case Study of the Yangtze River Delta in China," Sustainability, MDPI, vol. 10(1), pages 1-18, January.
    9. Grilli, Gianluca & Fratini, Roberto & Marone, Enrico & Sacchelli, Sandro, 2020. "A spatial-based tool for the analysis of payments for forest ecosystem services related to hydrogeological protection," Forest Policy and Economics, Elsevier, vol. 111(C).
    10. Taghizadeh-Hesary, Farhad & Yoshino, Naoyuki & Inagaki, Yugo & Morgan, Peter J., 2021. "Analyzing the factors influencing the demand and supply of solar modules in Japan – Does financing matter," International Review of Economics & Finance, Elsevier, vol. 74(C), pages 1-12.
    11. Chapman, Mollie & Satterfield, Terre & Wittman, Hannah & Chan, Kai M.A., 2020. "A payment by any other name: Is Costa Rica’s PES a payment for services or a support for stewards?," World Development, Elsevier, vol. 129(C).
    12. Mohsin, Muhammad & Taghizadeh-Hesary, Farhad & Panthamit, Nisit & Anwar, Saba & Abbas, Qaiser & Vo, Xuan Vinh, 2021. "Developing Low Carbon Finance Index: Evidence From Developed and Developing Economies," Finance Research Letters, Elsevier, vol. 43(C).
    13. Fan, Shengyue & He, Miao & Zhang, Tianyu & Huo, Yajing & Fan, Di, 2022. "Credibility measurement as a tool for conserving nature: Chinese herders’ livelihood capitals and payment for grassland ecosystem services," Land Use Policy, Elsevier, vol. 115(C).
    14. Hong-Zhen Zhang & Ling-Yun He & ZhongXiang Zhang, 2023. "Can Transverse Eco-compensation Mechanism Correct Resource Misallocation in Watershed Environmental Governance? A Cost-benefit Analysis of the Pilot Project of Xin’an River in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(4), pages 947-973, April.
    15. Bhavesh Kumar & Love Kumar & Avinash Kumar & Ramna Kumari & Uroosa Tagar & Claudio Sassanelli, 2024. "Green finance in circular economy: a literature review," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(7), pages 16419-16459, July.
    16. Jones, Kelly W. & Avila Foucat, Sophie & Pischke, Erin C. & Salcone, Jacob & Torrez, David & Selfa, Theresa & Halvorsen, Kathleen E., 2019. "Exploring the connections between participation in and benefits from payments for hydrological services programs in Veracruz State, Mexico," Ecosystem Services, Elsevier, vol. 35(C), pages 32-42.
    17. Singh, Neera M., 2015. "Payments for ecosystem services and the gift paradigm: Sharing the burden and joy of environmental care," Ecological Economics, Elsevier, vol. 117(C), pages 53-61.
    18. Bell, Andrew & Parkhurst, Gregory & Droppelmann, Klaus & Benton, Tim G., 2016. "Scaling up pro-environmental agricultural practice using agglomeration payments: Proof of concept from an agent-based model," Ecological Economics, Elsevier, vol. 126(C), pages 32-41.
    19. Abdul Gafoor, C.P. & Perumbalath, Shamshadali & Daimari, Phungkha & Naheem, K.T., 2024. "Trends and patterns in green finance research: A bibliometric study," Innovation and Green Development, Elsevier, vol. 3(2).
    20. Hao Wang & Sander Meijerink & Erwin van der Krabben, 2020. "Institutional Design and Performance of Markets for Watershed Ecosystem Services: A Systematic Literature Review," Sustainability, MDPI, vol. 12(16), pages 1-26, August.

    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:finana:v:74:y:2021:i:c:s1057521921000442. 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/inca/620166 .

    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.