Analysis of cost-effective methods to reduce industrial wastewater emissions in China

Abstract

To reduce industrial wastewater emissions, likely scenarios involve saving water in the production process or treating the emissions that are discharged. In this regard, our paper aims to evaluate the costs of these two paths and then analyze whether the industrial sector has made a good trade-off. In particular, we measured costs of the two paths by shadow prices of water use and wastewater emissions, and then we built a non-parametric input-output model to produce the estimates. For 2015, the shadow price of water use was 37.85 RMB/ton at the national level, which indicated the marginal cost of saving each ton of water was 37.864 RMB and that of wastewater emissions was 141.759 RMB/ton, which meant that the marginal cost of abating each ton of wastewater emissions was 141.759 RMB. Over the period 2004-2015, both shadow prices exhibited an upward trend at the national and regional levels, which suggested there was an increased cost to reduce emissions. However, the two shadow prices did not follow a common trend, but deviated from each other in most of China's provinces, which resulted in a bad trade-off between the two scenarios. As a result, the bad trade-off not only lowered the efficiency to reduce emissions, but it was also linked to a high cost.