Pollutant emission reduction effect through effluent tax, concentration-based effluent standard, or both

ABSTRACT

There are numerous studies comparing different kinds of environmental taxes and standards. However, forms of environmental standards focused by former researchers are usually quantity-based limits/standards (e.g. pounds per day or pounds per unit of output). Concentration-based emission standard (e.g. milligrams per liter of wastewater) as one important form of environmental standard has not been given much attention. In this article, comparable estimates of their probable effect on enterprise pollution reduction will be developed for concentration-based effluent standards, effluent taxes, and a combination of both. A linear simulation model is used to clearly and obviously compare the effects of effluent taxes and concentration-based standards within the same figure. With one detailed application to the paper industry, some enlightenment and conclusions – as well as the general applicability of these principles – are then provided: Under the same effluent tax rate, enterprises, groups, and industries that are cleaner will reduce more pollutants than those that have higher pollutant abatement costs. It is recommended that effluent taxes are set by avoiding cutting it even at one stroke and considering the feasibility of pollution-reducing technology in various industries. It is necessary to reduce MAC of enterprises to better stimulate enterprises’ or industries’ emission reduction by preferential measures, such as high tax rate coordinated by speeding up the depreciation of environmental protection equipment.

KEYWORDS:

• Concentration-based effluent standard
• effluent tax
• emission reduction effect (ERE)
• marginal abatement cost (MAC)

Acknowledgment

We would like to thank Beijing Natural Science Foundation (9154036), “Water Pollution Control Strategy and Decision Support Platform” (Grant No. 2009ZX07631-02-03), “Water Pollution Accident Damage Assessment Technology Research (Grant No. 201309060)” for fund support. I thank Professor Zhang W. for helpful comments.

Disclosure statements

No potential conflict of interest was reported by the authors.

Notes

¹ Helfand (1991) highlighted that these standards’ forms not only included the amount of total pollution permissible in a certain period of time (quotas or permits), but also included emission intensity standards, such as tons per unit output or tons per unit input. Aside from quotas or permits, many papers compared the effects of emission standard and emission taxes/fees. Whenever these papers refer to emission standards or emission performance standards, they almost universally refer to emission intensity standards, such as emissions per unit of output (tons per unit of output) or emissions per unit of specified input.

² C denotes pollutant abatement cost, whereas a denotes the abatement amount.

³ Final pollutant concentration is pollutant concentration after a certain treatment.

⁴ Eastern areas include: Beijing, Tianjing, Shanghai, Hebei Province, Liaoning Province, Shanghai, Jiangsu Province, Zhejiang Province, Fujian Province, Shandong Province, Guangdong Province, Hainan Province; middle areas include: Shanxi Province, Jilin Province, Heilongjiang Province; Anhui Province, Jiangxi Province, Hunan Province, Hubei Province, Henan Province; western areas include: Guangxi Province, Xizang Province, Neimeng Province, Ningxia Province, Guizhou Province, Chongqing.

⁵ There are three dummy variables for regional factor: the eastern region of China; the middle of China; the western region of China.

⁶ For the paper industry, there are five treatment methods physical treatment method, physical chemistry method, biological treatment method, and combined treatment method.

⁷ There are three dummy variables for enterprise character factor: private nature enterprise; foreign enterprise and the others.

Additional information

Funding

This work was supported by Beijing Natural Science Foundation (9154036), “ Water Pollution Control Strategy and Decision Support Platform” [grant No. 2009ZX07631-02-03], “ Water Pollution Accident Damage Assessment Technology Research [grant No. 201309060]”.