REGULATIONS > Economic Incentives

The deprioritisation of environmental protection in favour of economic development and healthy GDP figures throughout China is well documented. Rewarding local officials for enabling economic growth is the primary reason that agencies charged with environmental protection have, in many localities, allowed a breakneck pace of development at the expense of the environment. The rapid and unsustainable development of the Pearl River Delta region in Southern China is one such case in point. Many factories that contribute to the local economy have simply been allowed to pollute.

Leading Chinese environmental advocate Ma Jun (Director of the Institute of Public and Environmental Affairs (IPE)), provides some useful insights and examples in the ‘chinadialogue’ article, “Defending Water Security”, as to how and why local officials put aside the protection of valuable water resources as an acceptable trade-off for local growth and development. Ma illustrates how the Central government’s environmental protection mandates are often at odds with the will of local officials, who remain incentivized by rapid, short-term economic growth, perhaps best illustrated by a chemical spill in Yancheng in March 2009. Despite the fact that under the 2002 Water Law it is illegal to construct sewage outlets that discharge into protected drinking water sources, this was blatantly flouted by local officials. Not only were sewage outlets built in such areas but waste from polluting chemical companies, including Biaoxin, was also allowed to mix with water designated for drinking. These breaches occurred in the wake of rapid economic growth following the arrival of chemical industrial parks in Yancheng, where the majority of subdivisions under the administration of Yancheng city saw their incomes rise by over 40 %.

The recent amendments to the Prevention and Control of Water Pollution Law have introduced bold provisions, such as i) sanctions for local officials who are in dereliction of enforcement duties, and ii) performance evaluations of local officials, at least in part, on achieving water environmental protection targets according to the “Target responsibility system”.

Is MEP’s bite about to get worse than its bark?

In September 2008, reported that China’s environment watchdog had warned local government leaders that they face penalties over failures to clean up the country’s major rivers and lakes. The Ministry of Environment Protection put the leaders of 21 provincial-level governments on notice that they would be held personally accountable for the continued pollution of seven main waterways. The ministry announced the measure at a national meeting on water pollution prevention in east China’s Jinan, which was attended by officials from the National Development and Reform Commission and the ministries of supervision, finance, housing and urban-rural development.

Environmental Protection Minister Zhou Shengxian stated during the meeting that the new measure would take effect early next year, although he did not reveal what penalties would be handed out. The 21 governments had given the ministry annual targets in their plans for pollution prevention in the basins of the Huaihe, Haihe, Liaohe and Songhua rivers, the middle and upper streams of the Yangtze and Yellow rivers as well Chaohu and Dianchi lakes. The plans were based on a five-year national guideline (2006-2010) to protect the water resources. Zhou said the ministry would hold specific officials responsible for any failures to meet GDP targets but he did not say which provinces missed their goals for the past two years.