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Water Pollution and Regulatory Cooperation In China

The costs of China’s record economic growth—including pollution—threaten to undercut its progress if left unchecked. Standing in the way of China’s efforts to control pollution is a complex political system of overlapping levels of local and national authorities. Ill-aligned incentives lead some officials to allow high levels of pollution.

In “Water Pollution and Regulatory Cooperation in China,” the authors examine recent changes in China’s water pollution regime that aim to iron out some of these inter-governmental inefficiencies. These new reforms impose stronger economic and bureaucratic discipline on local authorities to deliver better environmental outcomes, but leave political actors enough discretion to achieve the pollution controls in ways that suit them best. The result of these reforms has been an improvement in water pollution levels.

Although these reforms have strong potential, they should be reinforced with additional measures such as incentives for national officials in addition to local officials, expanded river basin planning to provide a regional approach to pollution prevention, and experimentation with compensation mechanisms and trading to reduce disparities between wealthy and poor regions. Other additions such as, information collection, the creation of more proportional penalties for non-compliant local actors, and an expanded role for cost-benefit analysis would also help alleviate some of the shortfalls of the existing law.