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Lecture14,ARE190IstheEnvironmentalKuznet’sCurveOperatinginChina?TheKuznetsCurveEnvironmentalKuznetsCurveEnvironmentalKuznetsCurveTheBadTimes!!!Question:Whatisthis?Answer:TheViewofBeijing’sFragrantHillsfrommy“mountainview”apartment!0200400600800100012001400gangtuoqiaoguoguoguagongshanluxianshoupayancuntantuokoushaiwangbananjinguanjinjiangkouluchenghukoujinjipowanhekousiheshanjiaoshanweixiaolixiang断面浓度（毫克/升）评价标准值：150毫克/升LevelofSiltation,YellowRiverbadDownstreamUpstreamQuestion:Whatisthis?Answer:Beijingonadayofaseveresandstorm(somesayaremadeworsebydesertification)AreThereGoodTimes?WhatWillLeadtoThem??0.000.020.040.060.080.100.1219901991199219931994199519961997199819990102030405060708090100SO2ConcentrationPercentageofPopulationwithAccesstoGas%SO2mg/m3Percentage%Year0.0300.0440.043Average0.0080.0050.004Haikou0.0170.0260.085Guilin0.0350.070.05Nanning0.0110.0320.037Zhanjiang0.0140.0150.016Shenzhen0.0300.0110.008Xiamen0.0200.0500.046Hefei0.0250.0370.061Wenzhou0.0210.0270.043Ningbo0.0320.0460.05Nantong0.0430.0710.065SuzhouSouthern0.0180.0240.049Lianyungang0.0900.0850.056Yinchuan0.0480.0930.035Huhehaote0.0400.0640.045QinhuandaoNorthern199919951991CityLocationSO2ConcentrationinMediumandSmallCities(Population1million)14.854.731.0PearlRiver18.653.131.3YangtzeRiverSouthernrivers66.725.08.3YellowRiver52.947.10SonghuaRiver62.017.021.0Haihe11.166.622.2Huaihe55.633.311.1LiaoheNorthernriversV-lowerthanVIII-IVI-IIClassComparisonofWaterQuality:South(Rich)versusNorth(Poor)POORRICHForestedArea•ThisisnottosaythatChina’sLoggingPolicywasworking…stillstrippingoldgrowthforests,butinricherSouth(rememberthemountainousSouth?),begintoplantmassivetractsoftrees0246810121416181950s198019931970s19882000Whatismechanismforimprovement?•Agreewithmovie:–NotEnvironmentalGroups!•Butitishappening:–Governmentresponse(torisingdirectandsocialcosts)•E.g.,BanLeadedGasoline(stateprovideshealthcare)•GrainforGreen(seebelow)–Citizenresponse(torisingdirectcosts)•ConfrontingChina’swatershortagesCaseStudy:ResponseoftheGovernment“GrainforGreen”:AssessingtheCost-EffectivenessandSustainabilityofChina’sConservationSet-asideProgramHugeFloods…Causedabout20billiondollarsofdamage…MechanismofGrainforGreen•FarmerssetasideallorpartofcertaintypesoflandandplantseedlingstogrowtreesUS$1=1.78yuan(PPP)$1,180$169$421$1,770$169$42105001000150020002500US$YellowRiverYangtzeRiverCompensation(US$/ha/year)Seedlings(initialyear)CashpaymentsIn-kindgrainMechanismofGrainforGreen•FifteentimestheaveragerentalpaymentunderConservationReserveProgram(CRP)inU.S.(US$/ha/year)$1348$1938$1130500100015002000$USperhaYellowRiverYangtzeRiverBasinU.S.(CRP)ComparisonofCompensation(PPP)ScaleofGrainforGreen•“Largestconservationexperimentinthedevelopingworld”•14.7millionhectaresbyendofprogram–4.4milliononslopeofatleast25degrees•20provinces,400counties,27thousandvillages,15millionfarmers(2001)•USCRP:13.6milha,$1.7billion/yr(2000)GFG:2milha,$0.8billion/yr(2002)Issues•Cost-effectiveness–Istheprogramachievingthepolicyobjectiveatthelowestpossiblecost?•Environmentalbenefit(objective):controlofsoilerosion•Opportunitycost:forgonenetrevenuefromcultivation•Sustainabilityofprogramachievements•Concernsoverwelfareimpactstoparticipants•Post-programlandusedecisionsChangesinRealIncomeperHouseholdSustainability(1):Short-termwelfareimpactChangeinRealIncomeperHousehold(Guizhou)23612300250687362973764875001512221831752061833140100020003000400050006000199519992000YuanLCPsubsidyGrainVeg/fruit/oilOtheragLivestockRemittanceOtherOff-farmChangeinRealIncomeperHousehold(Ningxia)13261563175114113020324130349434527810342437428118280100020003000400050006000199519992000YuanChangeinNumberofHouseholdswithRevenuefromOff-farmLabor/Business,Livestock,andRemittanceSustainability(2):ChangeinincomesourceNingxia,n=683432113837104040110102030405060Off-farmLivestockRemittance'95'99'00Guizhou,n=683637104849104848130102030405060Off-farmLivestockRemittance'95'99'00MuchCleanerWater…LessSiltation…BetterFloodControl…MoreElectricityGenerationWaterShortagesResponseofthePeopleMotivationsChina’swaterchallenges:Increasingwaterscarcity,inefficientwateruse,andcompetitionamongusers…Conventionalpolicymeasures:Increasingwatersupply,transferringwaterfromsouthtonorth,promotingwatersavingtechnology,reformingwaterpricingsystem….But:useofconventionalmeasuresislimitedbypolitical,financialandothersocio-economicfactorsChina’sMainWaterPolicyReformwatermanagement•Goals:–increasetheefficiencyofwateruse–freeupwaterforusedownstreamandinothersectors•Concerns:–Politicalconcernonthenegativeimpactsonproduction,incomeandpoverty–Littleornoempirical-basedworktojudgetheeffectivenessofthisstrategyObjectivesofPaper--Examinetheevolutionofwatermanagementreform--Measuretheimpactofwatermanagementreformon:wateruseproductionincomeandpovertyDataTheYellowRiverNingxiaHenanID1ID2ID4ID3LocationofstudyareasEvolutionofwatermanagementreformsMaininstitutionalreforms•Traditionaltypeofwatermanagement:“collectives,”inwhichthevillageleaderoperatesthecanalsaspartofhislargeroverallduties•Waterofficialsattemp