Environmental- Economics - Case Study Example

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It is mainly caused by the high rate of air pollution, emission of Carbon Dioxide, water pollution and the shortage of energy owing to the release of…
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Environmental- Economics Case Study
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Case Study on the Energy and Environmental Problems in China Case Study on the Energy and Environmental Problems in China Background history of the environmental problem
The case discusses the impact of degradation problems that are related to the energy sources and the environment in China. It is mainly caused by the high rate of air pollution, emission of Carbon Dioxide, water pollution and the shortage of energy owing to the release of harmful substances into the environment. In this particular case, the problem has been an issue since the effects of global warming started to be felt in many parts of the world. In essence, it describes the time when no particular rules were placed about the usage of energy and the laws that have since been put in place to ensure that the problem is adequately dealt with (Lipke, 2001).
The solution to the problem was found in china through the creation and implementation of the energy laws that were created by the Central goverment. This is because the government of China has been aware of the environmental problems. There were several policies that were introduced in the effort to find a solution for the energy environment problems. One of these was the Environmental Protection Law for trial Implementation, which was created in 1979. Provisions to protect the environment were also made within the constitution in 1982 in addition to the Article 26 of the constitution which requires that the state provides protection and improvement of the environment where people and other ecological organisms live through the reduction of pollution. These laws and policies were also established to make it possible to practically apply the governmental environmental policies. In addition, this kind of depletion and exhaustion of resources called for the reduction in the used of energy in the production and consumption areas. There was also a need to save the energy and use methods that were friendly to the environment and to promote technological innovations that would reduce the intensity of energy while at the same time increasing its efficiency as illustrated in Shanghai (Fig. 1). This was enabled by the enactment of the conservation laws and the application of economic incentives whereby the used of energy would be regulated and the emission of pollutants limited (Economy & Lieberthal, 2007). At this point, the main people who were affected by the particular policy included the producers and manufacturers who were required to use energy efficient means of production. The consumers would also be affected as either the prices of goods would go up or the number of products made available would reduce (Wheeler, Susmita & Hua, 2003).
Fig. 1: Reduced rate of use of coal in Shanghai
Policy and Economics
For the successful implementation of the mentioned policy, there was a need to reorganize and restructure the specific use of funds between the producers and the consumers. As such, economics played a vital role in creating a balance between the supplies and demands of manufactured goods. In particular, economics played a great role since it greatly influenced the agenda of the policy. This was by the need to reduce the amount of emissions or use more energy efficient techniques. On the other hand, the policy agenda also played a significant role by influencing the economics because energy plays a vital role in production and consumption that also affects the environment. There was a significant relationship created the supply and demand which ensured that productions were slightly reduced owing to the changes suggested. (Pacala & Socolow, 2004). In this case, the consumers and the producers were also affected in the sense that either of them was expected to bear the cost that came with increased cost of production. Moreover, there was also the effect of the price and the quantity in the sense that the amount of products would reduce meaning that there would be a need to increase the prices of cement to cater for the high demand (Tietenberg, 2007) Fig. 2.

The policy agenda and its implementation brought about relevant outcomes to the environment. It led to the solution of the problem that unlike in other areas, China was able to reduce the amount of carbon and energy consumed per each dollar of the GDP. Although it was not possible for the government to completely stop the emission. The policy stated by the Premier Wen Jiabao in 2007 stated that owing to the 11.1 percent economic growth in the first quarter of 2007 the power consumption surged by 14.9 percent while the energy consumption as part of the GDP declined by 1.23 percent in 2006. Without the policies, there would have been the increased depletion of energy sources and the release of harmful gases into the environment. The outcome to this problem is highly related to the concept of sustainability which is conserved with the conservation of biodiversity. It discusses on how through the control of human activities harm can be reduced towards biodiversity. It is likely to improve in the future as shown in Fig. 3

Fig. 3: The rate of emissions is likely to reduce in the future with the energy efficient policies.
Chow, G. C. (2007). China’s Economic Transformation. Oxford: Blackwell Publishing
Economy, E. & Lieberthal, K. (2007). “Scorched earth: will environmental risks in China overwhelm its opportunities?” Harvard Business Review, June, 88-96.
Pacala, S. & Socolow, R. (2004). “Stabilization wedges: solving the climate problem for the next 50 Years with current technologies,” Science, 305 (5686), August 13; 968-972.
Tietenberg, T. (2007). Environmental Economics and Policy. New York: Pearson Addison Wesley.
Wheeler, D., Susmita D., & Hua, W. (2003). “Can China grow and safeguard its environment? The case of industrial pollution.” in Nicholas, Dennis Tao Yang and Mu Yang Li, ed. How Far Across the River? Chinese Policy Reform at the Millennium. Stanford: Stanford University Press. Read More
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