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  5. China’s Blue Sky Campaign 10 Years On: Achievements and Emerging Issues
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China’s Blue Sky Campaign 10 Years On: Achievements and Emerging Issues

Paper Session

Saturday, Jan. 4, 2025 2:30 PM - 4:30 PM (PST)

San Francisco Marriott Marquis, Foothill G1
Hosted By: Chinese Economists Society
  • Chair: Shanjun Li, Cornell University

Interactions Between Emissions Trading Systems and Other Policies: Insights from Theory and an Application to China

Carolyn Fischer
,
World Bank, CESifo and Resources for the Future
Lawrence H. Goulder
,
Stanford University, NBER and Resources for the Future
Chenfei Qu
,
Tsinghua University

Abstract

Jurisdictions using emissions trading often combine this with other policies like renewable energy support and energy efficiency improvements. This overlap creates economic interactions, leading to outcomes that differ from those predicted by examining policies separately. Traditionally, research has focused on cap-and-trade (CAT) systems, where emissions are capped but prices vary. Recently, attention has shifted to rate-based emissions trading systems (ETS), where both emissions and prices are flexible, and the effects of policy interactions are less understood. This paper broadens the discussion to include various ETS types, such as tradable performance standards (TPS), alongside overlapping policies like renewable subsidies and electricity taxes. We provide analytical insights into how different ETS types respond to these overlaps. Using a numerical general equilibrium model, we analyze these dynamics in the context of China. Our findings show that while renewable subsidies have no impact on emissions under a CAT system, they increase emissions under a uniform TPS and decrease them under a TPS targeting high-emission sources.

For CAT systems, additional renewable subsidies or electricity taxes introduce efficiency costs. However, under some TPS configurations, these policies can reduce market distortions and increase cost-effectiveness. Our model quantitatively evaluates how overlapping policies affect emissions, production, prices, and costs under China's planned ETS and alternative designs. China's existing policy overlaps significantly reduce the cost differential between its specific TPS and CAT, making CAT the most cost-effective in isolation. Rate-based systems benefit from indirect emissions pricing, improving price pass-through. Utilizing the TPS to achieve renewable targets can counteract distortions from differentiated benchmarks and effectively tax electricity without excessive correction, providing adequate incentives for clean producers. These results underscore the importance of jointly considering ETS type and overlapping policies in policy reforms to ensure effective and efficient environmental regulation.

The Impact of Co-Exposure to PM2.5 and O3 on Mortality in China

Fan Xia
,
Nanjing University
Heqing Huang
,
Peking University
Jintao Xu
,
Peking University

Abstract

China has made strides in reducing PM2.5 pollution, but O3 pollution continues to rise annually. Most research has focused on the health impacts of PM2.5 alone, with less understanding of the effects of simultaneous exposure to both PM2.5 and O3. This study investigates the causal link between exposure to these pollutants and mortality, using daily, county-level mortality data from Disease Surveillance Points (DSPs) spanning 2013-2018. We analyzed the impact of short-term co-exposure to PM2.5 and O3 on deaths related to cardiovascular, cerebrovascular, and respiratory diseases. To mitigate the potential endogeneity in pollution exposure, we employed instrument variables including inversion intensity, wind direction, and sunshine duration. Our findings indicate that a 1% increase in the three-day average concentration of PM2.5 correlates with a 0.062% rise in non-accidental deaths. Similarly, a 1% increase in O3 levels corresponds to a 0.098% increase in non-accidental deaths.

Despite the reduction in PM2.5 levels from 2013 to 2018 leading to an average 2.75% decrease in non-accidental deaths, the concurrent increase in O3 levels resulted in a 0.96% rise in non-accidental deaths, significantly offsetting the benefits from PM2.5 reductions. Additionally, the study highlights significant regional differences in pollution impacts: the health hazard from O3 is up to 163% greater in northern China compared to southern China, while the adverse effects of PM2.5 are up to 145% more severe in southern China than in the north. This research underscores the need for simultaneous control of PM2.5 and O3 and suggests tailored pollution control strategies that consider regional differences in pollutant impact. This dual focus is crucial for enhancing overall air quality and public health outcomes across different regions of China.

Greens-In-My-Backyard (GIMBY): Local Greenery and Citizen Support for Afforestation Elsewhere

Jiayin Hu
,
Peking University
Shang-Jin Wei
,
Columbia University
Jianwei Xing
,
Peking University
Eric Zou
,
University of Michigan

Abstract

Individuals may not fully appreciate an environmental amenity until they experience it. We study how China’s recent efforts to speed up ecological recovery – which led to substantial vegetation growth across the country – have increased citizens’ willingness to support afforestation beyond their city of residence, a mechanism we call Greens-In-My-Backyard (GIMBY). We use internal microdata from Ant Forest, a gamified carbon-tracking program of China’s largest mobile payment platform, which allows users to gather “green energies” through low-carbon transactions. These energies can be redeemed for the planting of real trees and shrubs in the country’s desert areas. Over the first three years since its start in 2017, the program attracted over 500 million users who have collectively contributed to the planting of 100 million trees and shrubs in China’s desert areas. We use transaction-level data from the program to test GIMBY, finding that cities with more rapid vegetation growth experienced higher program participation, more green activities – both in absolute terms and as a percentage of all transaction activities – and, as a consequence, more trees being planted in desert areas. This association does not stem from differences in economic growth or other tangible benefits such as proximity to planting areas or anticipated air quality improvements from afforestation. Our results suggest the existence of a positive feedback loop between top-down government environmental protection and bottom-up citizen support for and provisions of environmentally friendly actions.

Forest Growth, Air Quality Improvement and Health Risk Reduction: Evidence from China

Shilei Liu
,
Renmin University of China
Jinlei Qi
,
Chinese Center for Disease Control and Prevention
Jintao Xu Xu
,
Peking University
Yuanyuan Yi
,
Peking University
Maigeng Zhou
,
Chinese Center for Disease Control and Prevention

Abstract

In the past decade, China has seen significant improvements in air quality, coinciding with expansive afforestation and reforestation efforts aimed at combating soil erosion and sandstorms. These efforts are particularly robust in northern China and are integral to the country's Blue Sky Campaign. This study seeks to assess the extent to which recent forest growth has contributed to air quality improvements and the associated health benefits. Using satellite data to track changes in forest greenness, along with air quality measurements and individual-level mortality records, we evaluate the impact of increased forestation on air pollution and health outcomes across China. Our findings indicate that an increase in forest greenness positively affects air quality. Specifically, a 10 percentage-point increase in the seasonal average Normalized Difference Vegetation Index (NDVI) correlates with a 2.6 unit improvement in the overall Air Quality Index (AQI)—a 3.8% enhancement from the mean value of 70.8.

Moreover, this increase in NDVI corresponds to a decrease in seasonal cardiorespiratory deaths by 1.09% (approximately 9.5 people) and a reduction in non-cardiorespiratory deaths by 0.87% (about 7.3 people), all else being equal. Additionally, we observed a mitigating effect of forest greenness on the mortality risk associated with air pollution, with each 10-percentage-point increase in NDVI reducing air pollution-caused mortality by 0.5 people each season. Our analysis also highlights that the elderly, particularly elderly males, benefit more from increased forest greenness, likely due to their higher exposure levels to both air pollution and increased greenness. A preliminary cost-benefit analysis suggests that doubling the greenness of forests could yield health benefits far exceeding the costs associated with these forestation efforts, emphasizing the value of continued and expanded environmental policies focused on afforestation and reforestation as critical components of public health and environmental strategies.

Discussant(s)
Harrison Fell
,
North Carolina State University
Nicholas Sanders
,
Cornell University
Jose Scheinkman
,
Columbia University
Wen Wang
,
Hong Kong University of Science and Technology
JEL Classifications
  • Q5 - Environmental Economics