An Empirical Study On The Relationship Between Volumes Of Industrial Waste Water Discharged And Economic Growth

Population accounts for about 21% of the world in China, but there is only 7% of the world’s freshwater resource, furthermore,60% of the water is located in sparsely populated areas. Our country is one of thirteen water-lacked countries. Water resource per capita is only 2,200 cubic meters, which is less than the quarter of the world’s water resource per capita, and is only equal to one-fifth of United States, one-seventh of Russia, and one-fiftieth of Canada. Since the policy of reform and opening-up, the economic rapidly grows, and the nominal gross domestic product increases from 364.52 billion yuan in 1978 to 24952.99 billion yuan in 2007. The pattern of extensive economic growth has an effect on the water resource. On the one hand, it increases the consumption of water; On the other hand, it aggravates the pollution of water. Experts predict that China will maintain a high economic growth rate in the next 20 year. Therefore, it is significant to seek one path of coordination between economic growth and water environment. Based on this background and data availability, this paper researches the relationship between economic growth and volumes of industrial waste water discharged in our country, and puts forward the corresponding policies that realize the coordinated development of them.First, this paper interpretates the theories about economic growth and environment, and summarizes and evaluates the existing research results. It expounds the environmental effects of proximate variables-economic scale, economic structure, and technology progress, as well as underlying variables such as elasticity of demand for environmental quality, environmental regulations and market mechanism, which can only have an effect via the proximate variables. Then it points out the defects of the existing researches.Secondly, based on relevant theories and evaluations of existing research, this paper adopts the way of empirical analysis of panel data and decomposition analysis to compensate for the inadequacies of previous studies. First of all, using the data in 1985-2007, it qualitatively studies the evolution characteristics of the environmental effects of proximate variables—economic scale, economic structure, and technology progress. The results show that the effects of economic scale and economic structure are positive that make the water quality degradation, while the technique effect is negative that make the water quality improvement.Then, under the assumption that the industrial water pollution has no effects on economic growth, it quantitatively analyzes the relationship between volumes of industrial waste water discharged and economic growth by the panel data of 30 provinces (municipalities and autonomous regions) in 1998-2005. The results of regression indicate that the curve of China’s industrial water EKC is inversed N-type (ie, U-Type+Inverted U-Type). According to the range of GDP in the research phase, actual experience of track is U-Type, and it is at the right part of the U-Type curve, which means that the conditions of the industrial water pollution aggravate, and the situation of industrial water pollution is not optimistic.Using the relevant data of major polluting industries in 1998-2007, it studies the underlying reasons that volumes of industrial waste water discharged change with the economic growth by the way of decomposition analysis. Based on the analyses, two main conclusions have been drawn.1. The order of absolute value of contribution rate from the large to the small is technical effects (negative), scale effects (positive), structural effects (positive).2. The results of decomposition analysis well explain the U-Type relationship between volumes of industrial waste water discharged and economic growth in China.In order to research the effects of indirect factors on volumes of industrial waste water discharged, it adds control variables to the simple style of EKC. Control variables include the completed amount of investment in the regulations of industrial wastewater and the relative index of market-oriented. The results are as follow:1.The coefficient of the completed amount of investment in the regulations of industrial wastewater is negative but not significant.2. The coefficient of the relative index of market-oriented is negative and significant.3. Since adding two indirect control variables, the type of the curve has not changed, still on inverted N-Type, which further illustrates that the curve relationship between volumes of industrial waste water pollution and economic growth is stable. Finally, according to the results of empirical study, some policy suggestions are put forward. The suggestions include upgrading industrial structure, implementing the cleaner production, promoting scientific and technological innovation and enhancing environmental regulations.