Responsibility-sharing and compensation scheme of transboundary water pollution embodied in China's inter-provincial trade: a perspective from economic value capturing

Abstract

Transboundary water pollution induced by inter-regional trade is a complex and challenging issue due to the multiple jurisdictions involved. This study combined water pollution discharge inventory, multi-regional input-output analysis, discharge responsibility-sharing, and ecological compensation model to advance the collaborative control of water pollution embodied in China's inter-provincial trade. Over a fifth of China's water pollution discharges in 2017, equivalent to 1376 Kt, were a result of inter-provincial trade, which primarily flowed from wealthier coastal provinces to less developed ones. Moreover, the analysis demonstrates a mismatch between economic gains and environmental costs. In particular, Jiangxi and Guangxi bear the greatest environmental impact (64 and 58 Kt, respectively) while only receiving meager economic returns (131 and 80 billion Yuan). The economic benefit shared responsibility results for the great majority of provinces fell between production- and consumption-based discharges, and this compromise-based allocation of responsibility is more likely to gain acceptance across various regions. Provinces such as Shanghai, Jiangsu, and Beijing necessitate the highest compensation volumes to others, with 31 Kt, 25 Kt, and 20 Kt, respectively, while provinces including Guangxi, Jiangxi, and Ningxia require the largest inflows of compensation, totaling 26 Kt, 23 Kt, and 18 Kt, respectively. The compensation outcomes ensure that less developed regions, bearing a greater pollution burden, receive compensation from more developed regions with lower pollution burdens. The compensation values aligned with compensation volumes, with a few exceptions driven by variations in shadow prices of water pollution. Our study sheds light on the inter-provincial water pollution burdens and benefits and provides a quantitative basis for optimizing the responsibility-sharing and compensation strategies in China, thereby promoting regional cooperation on water pollution control.

Keywords: China; Ecological compensation; Multi-regional input–output analysis; Responsibility-sharing; Trade; Water pollutant equivalent.