An investigation on public environmental investment in the P.R.C. for sustainable development

Abstract

Environmental problems, arising from overloaded fast-paced economic development, are faced throughout the world. These problems are especially pronounced in the Peoples Republic of China (P.R.C.), where environmental resource deterioration is beginning to hamper the sustainability of socio-economic development. The costs of environmental protection and restoration are increasing, and may, one day, offset the economic growth if bold and appropriate measures are not implemented in time. It has been the prime concern of the national environmental authorities to establish a reasonable annual environmental spending as a ratio of the GDP, in the coming five-year plan. This work aims at establishing an appropriate public environmental spending as a ratio of the GDP, and a reasonable spending schedule in order to ensure sustainable development in socio-economy in the P.R.C.. The investigation was carried out based on an in-depth analysis of data and materials, from both the Government and academic sources, on the (1) current status of hydrospheric, atmospheric and lithospheric environmental quality, (2) economic structure and population density, and (3) shortfalls in current environment expenditure in the P.R.C.. These studies were carried out by comparing and contracting with the situations in such countries as India, U.S., Japan and Germany to further fine tune and optimize the public environmental spending schedule and policies. India was selected for comparison due to its population size and density which are comparable to that of the P.R.C.. U.S. was compared and contrasted with for the size of its GDP that is of comparable order as that of the P.R.C.. Japan and Germany were chosen for comparison because both these countries are major industrial manufacturing hubs in the Asia Pacific and European Union, respectively, which are of similar roles and economic structure as that of the P.R.C.. In-depth analysis has revealed that the present annual public environmental investment (EnvI) in P.R.C., after necessary adjustments, is less than 1.0 % of GDP. This is far from being sufficient, considering the annual rate of economic growth in excess of 10 % for the past one and a half decade, and the severe polluting nature of the manufacturing economy. Furthermore, 1 % of GDP for environmental spending is also substantially lower compared to developed countries. This underinvestment and the somewhat inappropriate spending schedule have resulted in ineffective pollution management and control, which have expressed as relatively severe hydrospheric, atmospheric and lithospheric pollutions. Taking the experience of developed and developing countries into consideration, to ensure sustainable development, the public environmental investment should be set at 2.1 % of GDP to start with. Furthermore, this figure should build up annually at a rate not lower than that of annual GDP growth. Public environmental spending should include capital investments on the construction of various waste processing facilities and the running costs of these facilities. Assuming the GDP growth of the P.R.C. will maintain at an average level of 8%, it is recommended if the EnvI should grow at a tri-annual rate of 12%, thus reaching 2.15 % by the year 2024. This percentage will then maintain from then on, and closely tag onto the annual GDP growth rate. This recommended public spending should suffice, considering the currently fine tuning of economic structure to enter into more value-added high-technology productions with presumably lower level of pollution, and the substitution of no less than 35 % of conventional coal- and oil-fired power plants by green and renewable energy sources, such as solar-, hydro-, wind-, and biological sources. In conclusion, concerted efforts in increased public EnvIs, economic structure transformation, research and development of novel and appropriate environmental technologies, enactment and implementation of environmental legislations and education in environmental consciousness are necessary. Additionally, the government should strategically invite commercial investments on a BOT (build-operate-transfer) basis, as in the U.S. experience, in order to improve the effectiveness and efficiencies of communal municipal waste treatment facilities.