Solutions To Negative Environmental Externalities And Reform Of Property Rights System In China's Mining Industry

The original motivation to write this paper stemmed from the project "The Research of Problems in Mineral Resources Legislation in Foreign Countries", which is a cooperation project between the Management College of CUG and the Ministry of Land and Resources P.R.C.. The main task of this project is to research the mineral legislation system, including mineral resources property rights system, taxes and fees system, relative macro-management system, environment protection system and so on, and then make conclusions and learn some lessons. As a project member, the author participated in some research work such as compiling materials and making summaries. In the process of researching the environment protection and property rights systems of foreign mineral resources, the author found there exists serious environment pollution and ecological disturbance in China's mineral industry, which prevent its sustainable development. According to the mature theories and successful practices of foreign countries and China's fact, the solution must be sought from property rights system to change the current situation.The paper consists of five parts.The part of introduction presents the meaning of this paper, the current research status and existing problems in this field, and the theories and methods applied by the author.The first chapter is the general introduction of the negative externality theory. The connotation of negative externality is expressed in the form of a function. The analysis of its consequence - inefficiency of resources allocation - is combined with a rectangular coordinates. And three kinds of solutions to negative externality and their advantages and disadvantages are presented. The first is the administrative, economic and legal measures executed by the government, such as a Pigouvian tax or a direct quantity control of the externality and other compulsive measures. The problems of this kind of measures are asymmetric information, high cost of supervision and "hitchhiking". The second kind of solution is to define the property rights and make them tradable in special market, such as defining the mineral rights, allocating the rights of polluting the environment and so on. The problem is the possible transaction cost. The third way is utilizing moral guidelines to restrict negative externality. But whether moral restrictions are in accordance with the wealth-maximizing natureof economic agents is worth of forward consideration.The second chapter discusses property rights, proper rights system and its relationship with market economy. First, the author puts forward her viewpoints toward "property rights" based on summarizing several different definitions of this concept. Then, after exploring the connotation of property rights system, three kinds of system are compared, considering their efficiency and effectiveness in allocating resources, and the reasons are offered for why clear-cut and stable private right system can promote the progress of economy. At last, the requirements of market economy for property rights system are listed.The third chapter describes the embodiment of negative externality in China's mineral industry and analyzes the reason. The negative externality in mineral industry includes destruction of soil, contamination of air and water, destruction to ecological environment, geological calamities and safety accidents. The reasons can be found from market failure and government failure. Market failure results from the "public goods" characteristic of environment and the ambiguous delimitation of property rights. Government failure results from the defects of systems, policies or laws.The forth chapter attempts the approaches of property rights system reform to overcome the negative externality in mineral industry. One approach is to establish a trade system of polluting right. The ideaistic foundation of this system is introduced based on the comparison of pollution right and traditional pollution fee system. The America's practical experience can be a useful ref...