Regulation On Transboundary Water Pollution

Interjurisdictionary river-basin pollution is one of the most serious problems of the water crisis in China. Long-term efforts on pollution control have not brought about the improvement of water quality on the whole and the interjurisdictionary water disputes are getting more and more intensified. Interjurisdictionary river-basin pollution, as a kind of transboundary externality, cannot be simply solved by the end-of-pipe technical treatment. Instead it should be settled down under the sustainable institutional system of environmental regulation, which calls for a insightful and deep study on the social and economic factors behind this kind of externality so as to find the efficient regulation schemes. One new branch of environmental economics which concentrates on the space-dimension has noticed the transboundary character of river-basin pollution and also mentioned the problem of governmental hierarchy in environmental regulation, but the theme of environmental regulation institutions need to be explored more profoundly. China, a society experiencing profound institutional transition and market reform, offers a specific research case for us to examine the regulation of transboundary river-basin pollution under the background of fiscal decentralization. The study on the interjurisdictionary river-basin pollution in China not only offsets the existing literature but also can be used for the reform of China's environmental regulation institutions as reference. The thesis aims to investigate the determinant factors and to explore the efficiency of transboundary water pollution regulation in China so as to identify the reform trend of the regulation system. First of all, the thesis makes an empirical study on the status quo of river-basin pollution regulation system in China and identifies the factors that influence the transboundary water pollution. Then based on a constructed "equilibrium pollution" model and a sample of a 1994-2002 panel data on provincial regulation, the thesis analyzes the characters and performance of the provincial water pollution regulation which is presented mainly by the indicator of pollution pricing. This empirical study indicates that the provincial regulation does play a significant role of controlling the pollution and there exists great regional regulation differencebetween jurisdictions. The difference reflects the self-interests of those provinces and transboundary externality is an important determinant factor for this difference. The upstream provinces tend to ease environmental regulation, adopting the free-rider behavior to transfer water pollution to the downstream ones.Based on the research results above and the worldwide river-basin management practices, the thesis examines the regulation institutions, regulation structure and regulation instruments of transboundary water pollution from the perspective of property rights theory in the new institutional economics. The analysis shows that water priority and the public good character of water quality are the economic factors that explain the state ownership of the river-basin water resource. The water pollution regulation embodies the state ownership and the multiple governmental levels of environmental regulation reflect the substantial management regime of the state ownership.Combined with the characteristic unidirectional externality of transboundary water pollution, the theoretical part of the thesis first of all modifies the approach of model construction on transboundary pollution, making it more explicit to compare the regulation efficiency under centralized and decentralized regimes. It finds that the decentralized regulation regime can be socially efficient in the presence of worker/consumer mobility. Secondly the regional regulation cooperation and river-basin transfer mechanism are examined, such as the principles and approaches of regional transfer and cost sharing, the stability of the cooperation. It is followed by the discussion on the choices of regulation instruments on transboundary pollution, which focuses on the efficiency and limitation of water rights, water pricing, water trading and environmental liability under interjurisdictionary context, breaking through the traditional analytical assumption that there is only one government holds the regulation authority.Last but not least, the thesis probes into the social regulation of transboundary pollution, examining the incentives, approaches and efficiency of volunteer regulation. The results support a regulation framework of multi-centered governance on transboundary water pollution. The current literature on environmental regulation generally ignores the non-government regulation agents, failing to explain the regulation behavior of water users, consumer groups and NGOs. The thesis attempts to make up the theoretical deficiency. It shows that non-governmental regulation is economically rational to some extend and contributes to the abatement oftransboundary pollution. Regulation on the interjurisdictionary river-basin pollution needs a transformation from control to cooperation so as to achieve the object of widely participated regulation.The thesis consists of eight chapters. The introduction briefly discusses the research background and motivation for subsequent chapters, along with the structure arrangement of the thesis. Chapter 2 provides a comprehensive review of the economic literature on transboundary pollution, identifying some dark and gray spots in the literature so as to justify our study. Chapter 3 presents an empirical study on the interjurisdictionary river-basin pollution in China with case study and theoretical analysis, which examines the externality properties of transboundary water pollution, the behavior of environmental regulators and the performance of environmental regulation. Chapter 4 develops the research on the regulation institutions on transboundary water pollution. It explains the choices of regulation regimes from the perspective of environmental property rights. This chapter analytically depicts and mathematically models the centralized and decentralized regulation regimes of the unidirectional river-basin transboundary pollution, discussing the provision of local public goods with a spillover effect. With the research results above, Chapter 5 explores the theme of regional cooperation on environmental regulation and river-basin transfer. Chapter 6 concentrates on the question of how to design the regulation instruments on transboundary pollution. The results from Chapter 4 to Chapter 6 show the efficiency and limitation of governmental regulation. Chapter 7, combining the trend of public management in transitional economies, evaluates social volunteer regulation on transboundary pollution. It mainly examines the possibilities of regulation participation for water users, interest groups and NGOs, and discusses the efficiency of "providing the public goods with voluntarism". Chapter 8 concludes by identifying the major implications of this study for environmental regulation theories and river-basin management policy.