by Vaclav Smil and Mao Yushi
(Cambridge: American Academy of Arts and Sciences, 1998)
Table of Contents
A need clearly exists for a realistic assessment of
the socioeconomic impacts of environmental pollution and ecosystem degradation.
To achieve a realistic assessment, we must go beyond impressionistic,
qualitative statements and offer sensible quantitative estimates on the impact
of environmental pollution and ecosystem degradation. However, converting this
need into a reality presents a daunting challenge, even for affluent countries
with traditions of good statistical services and a growing interest in
Three principal difficulties complicate the task.
First, no standard generally accepted procedures for quantitative evaluations
exist. Therefore, individual researchers cannot avoid subjective judgments
about what to evaluate and how to quantify.1
To give just a single example, quantification of the impact of chronically high
air pollution on health may range from the minimalist account-limited to the
value of labor time lost due to higher morbidity, to the all-encompassing
valuation - a monetary estimate of individual discomfort and the cost of
premature death. An enterprising researcher will find a relatively rich
literature on this subject, but no objective criteria for quantifying the
discomfort of an asthma attack. Furthermore, the researcher will discover
persuasive arguments for life valuations that differ by an order of magnitude.
Even if internationally recognized methods for
quantifiable evaluations existed, the second factor - the dearth of statistics
- would remain. Even the most affluent countries may lack some of the specific
statistics necessary to ascertain the total number of people exposed to various
pollutants (for example, how many people ingest excessive doses of common
pesticides), or to assess the impact of human interventions on the altered
rates of biospheric fluxes (for example, the average rates of farmland soil
erosion). As a result, researchers must repeatedly rely on various assumptions
and develop ingenious estimating procedures.2
While this approach may produce fairly good estimates, it may also result in
major inaccuracies. In the case of cumulative assumptions, for example, a
slight shift in the initial value of three or four parameters may easily halve,
or double, the final outcome.
And third, it is impossible to arrive at a meaningful
monetary estimate of some degraded or lost environmental goods and services.
How do we evaluate the loss that arises when a farmer in a fuel-scarce region
of China removes cereal straw from the field in order to cook family meals or
provide heating? Expressing the loss of nutrients in the soil resulting from
the removal of straw (above all nitrogen, potassium and phosphorous), can be
easily calculated by figuring the cost of synthetic fertilizers needed to make
up the resultant shortfall. Evaluating the water-retention capacity of straw
incorporated into the soil is obviously a greater challenge. Furthermore, I
have yet to discover an economist even musing on how to express the lost
value of straw as an indispensable feed for myriad soil bacteria and fungi, as
well as for numerous earthworms - organisms without which there can be no
living, productive soils, and hence, no sustainable farming.
Consequently, no correct single-figure answers exist.
No valuations of this kind can be truly complete, and even the most
comprehensive estimates undervalue the real impact of human actions on the
long-term integrity of the biosphere. Although striving to arrive at a
completely accurate total is a counterproductive quest, attempting to estimate
the relative magnitude of the cost of environmental degradation and depletion
is a worthwhile goal.
Needless to say, attempting to quantify the impact of
human actions on the long-term environment in China - a country abounding in
dubious statistics and unverifiable claims, and peopled by masses of
uncooperative bureaucrats prone to treat any unflattering statistics as a deep
state secret-is a far more complicated task than similar efforts in the
European Union or in North America. And yet, such a study was attempted in
China in 1984. Among the earliest attempts of its kind, this study estimated
the cost of environmental pollution to the country at 6.75 percent of the 1983
Gross Domestic Product (GDP).3
Largely as a result of this study, I decided to
prepare my own independent assessment, striving to make it as comprehensive as
While in the process of developing my set of estimates, I came to the
conclusion that it would be very useful to have a small group of knowledgeable
Chinese scientists prepare, quite independently, a similarly comprehensive
appraisal. Thanks to funding provided by the Rockefeller Foundation to
The Project on Environmental Scarcities, State Capacity and Civil Violence,
directed by Thomas Homer-Dixon, we were able to commission the necessary
studies. I turned to Professor Mao Yushi to recommend the authors.
Professor Mao is one of China's leading economists, a
member of the Chinese Academy of Social Sciences (CASS), and the director of
the Unirule Institute of Economics in Beijing. He has expressed a keen interest
in the complex issues of modernization and environmental economics. To quantify
the costs of deforestation, other land use changes, and pollution, Professor
Mao recommended, respectively, Professor Wang Hongchang of the CASS, Professor
Ning Datong of Beijing Normal University, and Mr. Xia Guang of the National
Environmental Protection Agency. None of the authors had an easy task, and each
developed his own approach to arriving at satisfactory estimates.
Xia's contribution benefited from previously published
studies on economic valuation of environmental impacts. The author also relied
on his familiarity with the relevant literature on the economic costs of
environmental pollution both in China and abroad. Although he could not avoid
making certain assumptions, his conclusions are based largely on many
relatively reliable statistics, and on a number of well-defined cost factors.
In contrast, for lack of any definite agreement on
alternative, more precise figures, Professor Ning was forced to depend on
official statistics, many of which are clearly incorrect. For example, while
the State Statistical Bureau claims that China has 95 million hectares (Mha) of
farmland, the Land Management Bureau estimates a total of 122 Mha, and other
organizations provide figures ranging from 110 to 140 Mha. When even such a
basic figure is so uncertain, we cannot expect solid estimates on the costs of
Professor Wang chose to estimate economic costs
resulting from deforestation in China by taking a historical approach. Although
there are clearly no binding norms on how to proceed with such an analysis, a
most likely approach would be to estimate the environmental cost of
deforestation on the basis of the current excess of tree cutting. However, this
approach would fail if official statistics were taken at face value.
According to the most recent official Chinese claims,
China's total wood increment has surpassed the annual cut throughout most of
the early 1990s. If valid, this claim would mean that China has no net
deforestation problem, and that there is no economic burden attached to
deforestation. This claim is absurd. China's afforestation rate, as well as its
rate of timber production, are clearly below desired levels. While total wood
increment may indeed be expanding, the overwhelming bulk of this growth comes
from young plantation trees that will require decades before being ready for
harvesting. By contrast, the wood volume of the economically most valuable
trees, those ready for harvesting, has been shrinking. This trend has prompted
some Chinese foresters to conclude that there will be virtually no mature trees
to harvest before the end of the next decade.
In view of these realities, Professor Wang's
approach-basing the appraisal of economic cost on the total of accumulated
deforestation losses-provides a useful corrective. In addition, his study is an
interesting example of a "deep ecological" approach, calling attention to the
true extent of human interference in a number of key biospheric services.
The authors arrived at estimates of economic costs
resulting from environmental degradation. Xia estimates the economic burden of
environmental pollution at almost exactly 100 billion yuan, equivalent to about
five percent of China's GDP. When all of the values presented by Ning are
expressed in terms of annual rates, the total economic loss resulting from
conversions of natural ecosystems equals almost 40 billion yuan, roughly two
percent of annual GDP. Finally, according to Wang's calculations, losses due to
deforestation amount to almost 250 billion yuan a year, or some 12 percent of
the country's annual GDP.
To reiterate, these exercises, much like any
valuations of these kinds outside China, make no claims concerning absolute
accuracy, and their authors would readily admit a number of shortcomings
inherent in their work. The importance of these reports lies elsewhere. They
confirm, and extend, preliminary work done in China during the 1980s, as well
as my comprehensive evaluation prepared for the East-West Center.
Most importantly, these reports, in concert
with previous studies, illustrate the costs of environmental degradation and
depletion in China. Even if the cost of deforestation as calculated by
Professor Wang was only half the estimated value, the price China pays for its
environmental pollution and ecosystemic degradation is an annual burden on the
order of 13 percent of the country's GDP. This cost is over ten times larger
than total government outlays for environmental protection. This disparity
clearly justifies greater attention for such matters even when judged by the
narrowest cost-benefit criteria.
- Vaclav Smil
1. Even a brief perusal of the proposed international
framework for assessment win show that most countries will not have relevant
statistics ready for decades to come. United Nations, Integrated Environmental
and Economic Accounting (New York: United Nations, 1993).
2. For a comprehensive survey of possible techniques
see J.A. Dixon, et al., Economic Analysis of Environmental Impacts (London:
3. National Environmental Protection Agency, Environmental
Forecast and Countermeasure in China of the Year 2000 (Beijing: Qingbua
University Publishing, 1990).
4. V.Smil, Environmental Problems in China: Estimates
of Economic Costs (Honolulu: East-West Center, 1996), p. 62.
Table of Contents
I: Deforestation and Desiccation in China: A
II: An Estimate of the Economic Consequences of
Environmental Pollution in China
III: An Assessment of the Economic Losses Resulting
from Various Forms of Environmental Degradation in China