Quantifying the social-economic burden of historical air pollution in China: A provincial-level analysis

Zhang Xu, Tsinghua Univ, Phone +86 13811268799, E-mail: Xunmin, Tsinghua Univ, Phone +86 13910731708, E-mail: ng Xi, Tsinghua Univ, Phone +86 18910602467, E-mail: Zhang Xiliang, Tsinghua Univ, Phone +86 13911261226, E-mail:

Overview

With the rapid development of China's economy for nearly four decades, the slather of fossil energy use has caused serious domestic resources’ and environmental problems. As one of the major environmental problems, air pollution has received mounting attentions on the health impact and economic burden. Compared with the developed countries, China stills a high level of air pollution, so that environmental externalities’ problems can not be ignored. In this context, the two key issues of "how to scientifically quantify the overall impact of air pollution on China's socio-economic system" And "how to identify the distribution of air pollution burdens on time scales, spatial and sectoral scales" has become an important task in conducting energy, environment and climate policy assessment studies.

This study quantitatively assessed the overall impact of PM2.5-based air pollution on China's economic system on a provincial-level and identified the distribution characteristics of air pollution burdens at time scales, spatial scales and sector scales by using PM2.5 actual monitoring data based on REACH（Regional Energy Emissions Air-quality Climate Health Model, REACH Model）model. The study analyzed the comprehensive effects of air pollution from 2007 to 2015 at a national and a regional level from the aspects of public health, loss of social welfare, and output of major sectors by simulating a historical scenario, a clean scenario and two sets of policy scenarios.

The paper is organised as follows: After the introduction the second section gives a detailed description about the REACH comprehensive evaluation model and CREM-HE model which is extended from the standard version of CREM model using for health effects analysing. The third section addresses the database and assumptions, especially the provincial population-weighted PM2.5 concentration data and construction of a Health Outcome Valuation Table. In section four we explain the hypothesis of four scenarios (Historical scenario, Green scenario, Policy scenario I and policy scenario II). Results and discussion are provided in the fifth section and conclusions are given in the last section.

Methods

REACH Model is an advanced self-consistent integrated assessment model with the ability to capture the comprehensive impact of energy, environment and climate policy and to reflect the policy cost and benefit. REACH Model incorporates the energy and economy model, emission inventory model, atmospheric chemistry transport model and health effects evaluation model to implement the interdisciplinary and multi-system integration. REACH Model can be applied for policy cost-benefit analysis in the self-consistent framework by representing the provincial details of energy and economy systems and the spatial distribution information including emissions inventory and population to improve the spatial resolution.

The REACH model integrates the advanced China Regional Energy-economic model (C-REM) utilized for energy and climate policy analysis with air quality impacts modeling system and the China-specific health effect module. As the cornerstone of the REACH, the C-REM is a multi-regional, multi-sector, computable general equilibrium (CGE) model used to analyze the impacts of existing and proposed energy and climate polices of China on technology, the environment and the economy. The C-REM describes thirty Chinese provinces individually with a consistent representation of energy markets, as well as detailed accounts of regional production and bilateral trade.

The greatest merit of the REACH model is that it explicitly represents the pollution-health linkage within a larger economic system, and reduces the possibility of underestimation—the main limitation of conventional static approaches by developing the CREM-Health Effect Module (CREM-HE).

For the purpose of reflecting the direct and indirect effects of air pollution on the health of the residents, we improved the traditional social accounting matrix(SAM) by adding in a production sector and a leisure time consumption sector in CREM-HE for responding to air pollution health services. On the basis of the above, we described the exposure-response functions of four chronic exposure deaths and five acute exposures to health outcomes using the latest epidemiological study of the health effects of air pollution, establishing correspondencse from the concentration to the incidence or death cases.

Results

National level: Compared to the Green Scenario, Policy Scenario I and Policy Scenario II, the total social welfare losses caused by air pollution in 2015 is amounted to 248 Billion dollars, 197 Billion dollars and 103 Billion dollars with the Historical scenario, respectively. From a time scale point of view, the economic burden caused by air pollution increased year by year.In comparison with the Clean Scenario, the national social welfare losses increased from 121 billion dollars in 2007 to 248 billion dollars in 2015 by the Historical Scenario. From the point of view of the composition of welfare loss, chronic exposure is the main cause of direct economic loss. The direct economic losses caused by acute exposure such as medical service expenditure, labor compensation loss and leisure time loss account for nearly 10%.

Provincial level: In absolute terms, the social welfare losses caused by air pollution in the eastern and central regions of China are relatively large: social welfare losses in Shandong, Jiangsu, Zhejiang and Guangdong provinces exceed 20 billion dollars, while it is generally more than 10 billion dollars in Beijing, Shanghai and other developed cities. From the relative amount of view, the impact of air pollution on regional social welfare is more extensive. Social welfare loss rate in vast majority of provinces and cities is more than 2%, which is more than 4% in part of the provinces in eastern and central area.

Conclusions

PM2.5 has produced substantial social-economic costs in China and the welfare loss in absolute term in 2015 has reached US$248 billion.The direct economic loss from chronic exposure accounts for major loss, while the indirect economic loss from market efficiency reduction can’t be neglected with a proportion of 38% from the total loss in 2015. From the provincial perspective, the burden of air pollution on public health, social welfare and industrial output in Eastern and Central China is substantial as a consequence of severe regional air pollution, high-density population distribution and well-developed economy.

References

[1]  Zhang Xu. Development and Application of Regional Energy Emission Air-quality Climate Health Model(REACH) [D]. Tsinghua University, 2016.

[2]  Zhang D, Rausch S, Karplus V J, et al. Quantifying regional economic impacts of CO2 intensity targets in China. Energy Economics, 2013, 40: 687-701.

[3]  Nam K, Selin N E, Reilly J M, et al. Measuring welfare loss caused by air pollution in Europe: A CGE analysis. Energy Policy, 2010, 38(9): 5059-5071.

[4]  Matus K, Nam K, Selin N E, et al. Health damages from air pollution in China. Global Environmental Change—Human and Policy Dimensions, 2012,22(1): 55-66.

[5]  Zhang Da. Development and Application of China Regional Energy Model(C-REM) [D]. Tsinghua University, 2014.

[6]  Luo Xiaohu. The impact of China’s urbanization on household energy consumption [D]. Tsinghua University, 2016.

[7]  Qi Tianyu. Development of the global multi-regional dynamic energy economic model(C-GEM) and it’s application [D]. Tsinghua University, 2014.

[8]  Zhang Xu, Qi Tianyu, Ou Xunmin, Zhang Xiliang. The role of multi-region integrated emissions trading scheme: A computable general equilibrium analysis. Applied Energy, 2017, 185: 1860-1868.