Short-Term and Long-Term Impacts of Air Pollution Control on China's Economy

Abstract

To deal with severe air pollution arising from rapid development, a series of air pollution control policies have been implemented in China. Previous literature has explored the short-term economic impacts of air pollution control, but the long-term economic impacts, which can better reflect the effectiveness of air pollution control, have received less attention. This paper has constructed an integrated assessment framework combining a multi-sectoral computable general equilibrium (CGE) model, air quality estimation module, and health impact module, to explore the short-term (2016) and long-term (2030) impacts of air pollution control on China's economy, by setting 2015 as the base year. The possible future air pollution reduction scenarios were set based on the Thirteenth Five-Year Plan (FYP13) proposed by the Chinese government. Our results have shown that air pollution control would harm China's economy and such adverse effects would be increased by stricter pollution reduction targets. Taking the health benefits of air pollution control into account can effectively alleviate the GDP losses, and even reverse them into economic benefits in the long term. Compared with business-as-usual (BAU) scenario (no policy constraints on SO₂ and NO_x emissions), the impact of air pollution control on GDP in the TAC_VIII scenario (emission reduction targets of 20% for SO₂ and NO_x are set every five years after 2015) would change from a loss of 1.20% in 2016 to an increase of 0.28% in 2030. Our results can provide policy implications for the optimization of China's air emissions control in the future.

Keywords: Air pollution control; CGE model; Feedback benefits; Long-term impacts; Short-term impacts.