Environmental Economic Loss Evaluation Theory And Application Research

Sustainable development refers to the development that could satisfy the demands of the current generations but without harm to the following generations’ ability to satisfy their demands. In other words, economy, society, resource and environment may develop harmoniously. However, reviewing the history of economic development of the world, no matter in developed industrial countries or in developing countries, their economies grew on the cost of environment. With the deteriorating of environment quality, environmental issues started to be concerned seriously by almost all countries. Many researches focus on providing theoretical supports for governments to eliminate pollution. And one of the key issues that may influence the establishment and implementation of environmental policy is to measure economic losses caused by pollution reasonably and precisely.The subject of this paper is focus on the theory and methods of assessing the economic losses caused by pollution, and the application of Contingent Valuation Methods (CVM). Firstly, reviewing the general status of economic growth and pollution in China, and comparing the changes of environment quality during the economic growth of developed, emerging and developing nations, we find that their economies grew on the cost of environment. Thus environmental issues have been the concerns of decision-makers and scholars. Subsequently, analyzing the courses of environmental deterioration and the difficulty in pollution elimination, this paper suggests that the key point of dealing with market failure and government failure is to assess economic losses caused by pollution reasonably and precisely.Demonstrating the theoretical bases of the assessment of economic loss caused by environmental destruction, analyzing the concept of environmental value from three aspects, this paper confirms the feasibility of CVM. Basing on the comparison between different methods of assessing environmental value, showing the importance of CVM in assessing non-use value, this paper reviews the theoretical bases, implementation and critiques of CVM and its evolution in national and international studies. Applying CVM in the empirical study of assessing health loss caused by air pollution in Shanghai, it shows in this paper that:(1) The willingness to pay (WTP) for reducing mortality by 5/1000 in the future ten years (i.e. 5/10000 per year) is 741 RMB per year. The calculated Value of Statistical Life (VSL) is 1.482 million RMB, and the economic loss caused by air pollution is 9.633 billion RMB in Shanghai. (2) The WTP value is significantly affected by age, income, education level, health status and the attitudes towards commercial insurance. The main indicators pass validity and reliability tests.Basing on the empirical study, the final chapter proposes some related policy suggestions, and summarizes the experiences in the application of CVM: the advantages of CVM in assessing non-use value of environment; factors affecting the WTP; the validity of CVM results. As for the perspective of CVM in national theoretical researches and applications, this paper suggests that the multi-cooperation of several subjects is necessary for the development of CVM; furthermore, its validity and reliability are in need of researching by more applications.