Chapter 11 Environmental economics 11.1 The development history and status environmental economics 11.2 Green accounting 11.3 The evaluation of environmental economic value 11.4 Environmental economic means 11.5 Case study

11.1 The development history and status environmental economics Relationship between environment and economy Two opposite viewpoints ： Pessimistic point: it proposes the argument of zero growth. Eyeless optimistic point: economic development itself can solve environmental problem, it denies the positive effect of economic development on environment.

Externality theory and market failure Externality: certain economy subject activity will produce influence on the welfare of another economy subject; this kind of influence neither reflected through market price mechanism. Externality including external economical efficiency and external non-economical efficiency, environmental problems are most external non-economical efficiency. Exteriorization of external non-economical efficiency: it enables the outer fees produced by producers and consumers to bear by themselves, which means the principle of polluter bearing the fees.

price P P1P1 0 MPC MSC MB Quantity QQ1Q1 Figure 11-1 The market failure caused by external diseconomics

External diseconomics inner method Control Loss compensation pollution discharge right exchange Economic measure of non-market

Environmental quality and public things Environmental quality is becoming deteriorate, the key point is that the regulation of deteriorate and right of use of environmental resource is not strict and comprehensive. Atmosphere, river, lake and underground water are the public property resources or the public things. Public things: its indivisible interest distributed to all the social members, whether this person wants to purchase this public things or not.

11.2 Green accounting National economy accounting The concerned content of national economy accounting system （ SNEA ） Two general national economy accounting system in international  The material product balanced schedule system of former Soviet Union.  The national economy accounting system in the Western countries.

The existed defects of MPS system and SNA system:  It has not actually reflected the environmental prevention fees.  It has not considered the consumption and depreciation of natural resource inventory  It has not indicated the fees of environmental degradation.

Figure 11–2 The relationship between current SNA main indexes notes ： the figure is quoted from Wang Jinnan ， 1994

The accounting method of environment and resources  Physical accounting method Including: classification of natural resource and environment; current state and utilization condition of natural resource and environment; inventory and flow rate accounting of natural resource and environment.  Value accounting method  By using currency as the unit to do measurement.  Three kinds of evaluation methods, that is market price method, citizen desire method, cost maintenance method.

11.3 Economic value assessment of environment Environmental fees---effect analysis  Welfare function establishment accord with certain economy and social target.  Calculating and measuring the value of input and output  Uses the net value and internal profit efficiency as the main evaluation index.  Carry out analysis and comparison of certain project economy, society, ecological value and profit, concludes that whether it is feasible or not.

O X0X0 Removal rate of pollutant （ t.a -1 ） cost of marginal removal utility of marginal removal Figure 11–3 optimal level of pollutant removal （b）（b） O C D X0X0 Removal rate of pollutant （ t.a -1 ） Total cost curve Total benefits curve （a）（a） cost effectiveness \ ten thousand

Fees function and damage function  Damage function: Establishing damage relation between activity, environment quality and acceptance object.  Fees function: it is the quantification form of describing the relations of input and fess of pollution control or environment quality improvement

cost OX0X0 Removal rate of pollutant （ t.a -1 ） Cost of gross contamination Cost of gross failure Cost of total control （a）（a） cost OX0X0 Removal rate of pollutant （ t.a -1 ） （b）（b） cost of marginal damage cost of marginal control Figure 11–4 optimal level of pollutant removal

Benefit evaluation techniques of environmental quality Table 11–1 Technical classification of environmental quality benefit evaluation notes ： quoted from Wang Jinnan ， 1994

11.4 Environmental economic means Economic means of environmental management environmental economic means pigou means Coase means Tax (fees ) subsidy deposit/refund automated negotiation trade of pollution discharge license Figure 11-5 classification of environmental economic means Notes:quoted from Li Keguo, Wei Guoying, Zhang Baoan,2003

The application of environmental economic means Now there are more than 150 different economy incentive methods are using in 14 nations, the main forms are as follows  Deposit  Pollution discharge license plan  Extra subsidy  Charge (tax)

11.5 Case study Urban water pollution emissions model of huhhot 1. Water pollution model （ 1 ） Water pollution discharge model Pollution behavior index of factory level Pollutant discharge intensity ：  Pollution behavior index of regional index

（ 2 ） Water environmental quality model Choosing the QUAL2E to simulate river water quality Adopting finite difference to do resolution. The basic form of comprehensive one-dimensional is one- dimensional convection—diffusion equation

（ 3 ） Water pollution loss model  Agriculture loss (figure 11-6 （ a ）11-6 （ a ）  Loss of pollution management fees （ figure 11-6 （ b ）11-6  Water shortage loss  Total loss caused by water pollution （ figure11-7 ）11-7

crop loss Water quality （ COD content ） （a）（a） treatme nt loss Water quality （ COD content ） （b）（b） Figure 11-6 The relationship between water pollution loss and water quality

usable water consumption Water quality （ COD content ） alternative water resources fees usable water consumption alternative water resources fees Water quality （ COD content ） Figure 11-7 The water shortage loss caused by pollution

2. Result  Emission simulation COD regression analysis BOD regression analysis

Loss simulation of water pollution Year Water pollution loss/ten thousand Yuan Annual quantity of pollutant discharged /Ten thousand tons ， ， ， ，