Collaborative governance of trade-driven transboundary air pollution in China: A responsibility-based fair compensation mechanism

Abstract

Transboundary air pollution poses a significant challenge in China, and collaborative governance presents a promising approach to tackle this problem. However, such approach is rarely implemented due to the influence of inter-regional trade dynamics. To address this issue, a comprehensive, responsibility-based fair compensation mechanism was established in the present study. The aim of the mechanism is to bridge the existing gap through the integrated utilization of air pollutant emission inventories, multi-regional input-output analysis, emission responsibility allocation, and an ecological compensation model. In 2017, approximately 50% of China's air pollutant emissions were embedded in inter-provincial trade, primarily originating from wealthier provinces and directed towards less-developed regions with higher pollution intensity. There exists a significant imbalance between the inter-provincial transfers of air pollution and economic benefits, owing to which Inner Mongolia and Liaoning have suffered from serious environmental inequity brought about by trade. The allocation of responsibility for trade-related emissions between producers and consumers is determined by the economic surplus they gain from trade. Such approach results in an intermediate outcome that falls between production-based and consumption-based emissions for the majority of provinces. The scheme highlights the import-related share of responsibility for economically developed provinces and the export-related share for less-developed, pollution-intensive provinces, which can primarily be attributed due to their differences in value chain specialization. The inter-provincial compensation volumes for trade-related emissions are determined based on the economically equitable emission responsibility sharing scheme. More developed provinces, characterized by industrial structures focused on low-pollution, high-value-added products, primarily function as compensation providers. In contrast, less-developed provinces with higher pollution intensity seek compensation from these more affluent regions. The present findings can offer a quantitative basis for the ecological compensation and collaborative control mechanism of trade-driven transboundary air pollution in China.

Keywords: China; Ecological compensation; Inter-provincial trade; MRIO; Responsibility sharing; Transboundary air pollution.