| A reasonable and strict environmental policy is the key for the scientific judgment, which is clean water and green mountains are golden and silver hills, and also the major prerequisite for Porter Hypothesis to be put into practice. This paper comprehensively evaluates Emissions Trading Scheme (ETS) and Two Control Zone (TCZ), which are the current major environmental policies to regulate the most important part of air pollution (i.e., SO2 emissions), by using province-level and city-level industrial datasets. Difference-in-difference Design (DID) and Data Envelopment Analysis (DEA) are employed by making full use of the natural experimental characteristics of two environmental policies. To be specific, first, this paper confirms a paradox between China’s practice and theory of environmental policies through examining three effects on reducing air pollution, improving public health and boosting industrial gross output (i.e. Porter effect in this paper). Second, this paper fully reveals real challenges of the current environmental policies and answers the paradox from inside and outside "Double Engines" of market (e.g., market construction) and government (e.g., environmental regulations). Third, this paper deeply dissects dynamic mechanism of the current environmental policies from three aspects of government’s law enforcement, individuals’ participation and media’s reports, and then concludes a feasible path to adopt environmental policies in China’s "new normal" phase. Our findings are as follows.(1) Coordinating relationship between environment, health and economy has become a new inspection standard of environmental policies’ practice, and also a criterion to judge whether a paradox between China’s practice and theory of environmental policies. Based on the theoretical foundation and China’s practice, this paper finds environmental policies’ economic evaluation have changed from traditional standard, which is to coordinate relationship between economy and environment, to new standard, which is to coordinate interactive relationship between environment, health and economy. As China’s environmental policies, TCZ started in 1998 is the largest command-and-control regulation, and SO2 emissions trading pilot scheme (SETPS) initiated in 2002 is the pioneer of market-oriented policy instruments. In theory, compared with TCZ, ETS is regarded as the best choice to solve China’s environmental problems because of the advantage in relieving the configuration inefficiency problem of emission rights to retain clean water and green mountains through energy saving and emissions reduction, improve public health, and also create golden and silver hills through promoting economic growth. However, ETS falters in China with the strong dependence on market. On the contrary, TCZ preserves in the long time and has developed to the whole country, although it has theoretical disadvantage. Therefore, China’s practice is likely to be contrary to theory of environmental policies. In order to determine the paradox, it can yet be regarded as a scientific criterion that using the new standard to compare two kinds of environmental policies through three effects on reducing air pollution, improving public health and boosting economic growth.(2) Two kinds of environmental policies all failed to reduce SO2 emissions, but ETS could be an effective measure to solve China’s environmental problems in the future. On the one hand, this paper examines the existent (short-term) effect on reducing air pollution by appling Single-stage DID and Two-stage DID, which are suitable methods for province-level and city-level datasets, respectively. On the other hand, the potential (long-term) effect is discerned by employing DEA with introducing SETPS, which assumes market is effective. The empirical research indicates that two kinds of environmental policies all failed to reduce SO2 emissions both in primary inspection of province-level dataset and further inspection of city-level dataset. However, compared with command-and-control regulation, ETS could achieve huge emissions reduction in the long run. During 2002 to 2012, SETPS could potentially reduce industrial SO2 emissions by 11.2% on average, and if expanded to the whole country, the potential emissions reduction would reach 52.7%. Therefore, it wound be an important way for China to seek sustainable development under the strong constraints of environment and energy in the "New Normal" phase.(3) Two kinds of environmental policies all failed to effectively control disease incidence and mortality, especially disease incidence of high-risk groups. Based on characteristics of health data obtained, this paper, on the one hand, examines the effects on reducing individual disease probability of heart and respiratory from micro-perspective by appling Multinomial Logit DID. On the other hand, this paper discerns the effects on reducing incidence (i.e., heart incidence and respiratory incidence) and mortality (i.e., cardio-cerebral-vascular mortality, respiratory mortality and lung cancer mortality) from macro-perspective by employing Two-stage DID and Least Squares Dummy Variable Method (LSDV) of Fixed-effects Model (FE), respectively. The empirical research indicates that two kinds of environmental policies all failed to effectively control disease incidence and mortality both in primary inspection of individual disease probability and further inspection of incidence and mortality. Considering that there are significant differences in exposures to air pollution and immune ability between different people, heterogeneity analysis is presented by distinguishing different people through individual information in China Health and Nutrition Survey (CHNS). The empirical research finds that two kinds of environmental policies all failed to effectively control disease incidence of high-risk groups (i.e., old people and infant) and even had a significantly positive effect on respiratory incidence of old people, although they had significantly negative effects on disease incidence of some people.(4) Two kinds of environmental policies all achieved the Porter effect in the short term of city level, but ETS couldn’t be sustained and failed to achieve in both the short and long term of province level. On the one hand, this paper examines the existent (short-term) Porter effect by appling Single-stage DID and Two-stage DID, which are suitable methods for province-level and city-level datasets, respectively. On the other hand, the potential (long-term) Porter effect of ETS is discerned by enmploying DEA with introducing SETPS, which assumes market is effective. The empirical research indicates that two kinds of environmental policies all had significantly positive effects on industrial gross output in existent (short-term) inspection of province level. The Porter effect of TCZ could strengthen over time, and the effect of five years after implementation was significantly positive. However, the positive effect of ETS on industrial gross output was less than one of TCZ, and even couldn’t be sustained, for its effect weakened over time and turned to be negative after 4.5 years. Moreover, compared with command-and-control regulation, ETS failed to achieve the Porter effect in both the short and long term of province level. To be specific, ETS had insignificantly positive effects on industrial gross output in the short term, and also had little sustained potential economic gains.(5) The emphasis for environmental policies to deal with inside and outside real challenges is on environmental regulations, which could be strengthened by introducing collaborative governance of three parties. Based on the Porter hypothesis and the primary idea of ETS, this paper concludes following findings from the paradox between China’s practice and theory of environmental policies, which is identified with three effects. The real challenges in China, which were formed by an inefficient market and a weak environmental regulation, caused firms lack of technical innovation of inside and outside engines and were the major determinant of ETS’s failure to make full use of its advantages in theory. To strengthen environmental regulations is the sticking point to advance market efficient. Moreover, a weak environmental regulation is also the leading reason of TCZ’s failure. Therefore, the emphasis to deal with real challenges is on environmental regulations. It could become dynamic mechanism of environmental policies to strengthen environmental regulations by three aspects of government’s law enforcement, individuals’participation and media’s reports. The empirical research indicates that more environmental legislation from government, more participation and attention from individuals, and more pollution reports from media could contribute to two kinds of environmental policies to achive three effects, especially for organic combination of policies. In addition, compared with environmental legislation, government’s stricter law enforcement had a significantly promotion for environmental policies to improve their effects on public health and Porter effect.This paper has some important policy enlightenments, which are optimization design of policies, strength of environmental regulations and innovation of government systems for China to deal with environmental problems in the "New Normal" phase. To be specific, first, China should continue to implement combination of policies and gradually give priority to adopt market-oriented instruments. Second, China should strengthen environmental regulations and solve key issues of environmental policies, especially market-oriented instruments. Third, China should innovate upon environmental government systems and initiate new engines of China’s environmental policies by introducing collaborative governance of three parties, which is a new requirement of the Fifth Plenum of the 18th Central Committee of the Communist Party and 13th Five Year Plan. Moreover, some relevant beneficial policy enlightenments can be provided as follows. First, government should enforce law strictly to change current situations that no law to enforce and no law to be abided. Second, individuals should be guided to participate in and pay attention to environmental protection and bring their largest positive effect, which could be effectively guided by environmental protection society as an example. Third, media should be encouraged to report pollution events and sensible restore the truth for the society. In addition, we must and have to confront the extra short-term cost of environmental regulations. Therefore, we also should apply optimization of environmental incentive policies, which could make environmental protection clear for firms, urge them to improve productivity and competitiveness through innovation, and seek innovation offsets to partly or even wholly remedy the extra cost of environmental regulations.Compared with the existing literature, this paper has innovation or characteristic in three aspects of research contents, methods and data. With regard to research contents, this paper comprehensively compares two kinds of current major environmental policies, reasonablely designs empirical evaluation by combination style with three datasets of micro-, meso- and macro-level (i.e., province-level, city-level and individual-level datasets) and two inspections (i.e., existent/short-term and potential/long-term inspection), and makes a detailed study on real challenges and dynamic mechanism of environmental policies. As for research methods, this paper enmploys DEA with introducing SETPS according to China’s special situation, and applies Single-stage DID, Two-stage DID, and Multinomial Logit DID to do multi-level (i.e., province-level, city-level and individual-level) empirical researches by strictly following the principle of "methods not only serve problems, but also suit data". As far as research data, this paper selects three datasets of micro-, meso-and macro-level (i.e. province-level and city-level industrial datasets and individual-level health datasets) as the research sample, reasonably chooses index to identify effects on public health by using incidence and mortality data and comparing different people, and tries to use extract disease data from CHNS to investigate effects on public health.However, there exist many limitations in this paper, and future researches may be made as follows. First, study on the contribution of pollution sources to China’s public health and confirm whether industrial pollution emissions make the largest relative contribution. This paper cound focus on the industrial SO2 emissions environmental policies because of the presumption that industrial pollution emissions had been making the largest relative contribution to public health. However, according to an authoritative research published by Nature in 2015, the largest relative contribution of air pollution sources maybe not industrial pollution emissions. To do this study, of course, we need China to improve environmental data disclosure of residents, commerce and agricultural production and so on. Second, study on the positive effects of China’s energy structure reform on public health and seek effective environmental policies. There is little evidence in this paper supporting the positive effects of two kinds of environmental policies on public health. However, a research published in 2016 finds it relieves infant mortality caused by air pollution that widely adopting natural gas in Turkey from 1998. Furthermore, in regard to China’s energy consumption structure, a large number is still coal, and natural gas is accounted for only 5.8% of the total energy consumption in 2013. Comparing different industry, commercial natural gas is accounted for only 7.0% of its total energy terminal consumption, residential also only 10.5%, and rural residential less than 1.0%, only 0.4% in 2012. Accordingly, adjustment of energy structure, especially for residents and commerce, would be the priority to reduce impact of air pollution on public health in the future, and relative policies on energy structure reform must be the most effective environmental policies to improve public health. Third, study on the effects of environmental policies on other pollutants and industry-level emissions and identify much more practically generalizing findings. Considering that the complexity of environmental policies in response to environmental problems, it remains to be stricter demonstrated for these conclusions, which based on SO2 emissions environmental policies in this paper, to enlighten regulations on other pollutants and industry-level emissions. |
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