Workshop on Cost-Benefit Analysis in Environmental Policy

On June 28, Duke Kunshan University, Duke University, Resources for the Future (RFF), Ministry of Environmental Protection (MEP) Policy Research Center for the Environment and Economy and MEP Chinese Academy of Environmental Planning jointly organized a workshop on “Cost-Benefit Analysis in Environmental Policy” in Beijing. 

Cost-Benefit Analysis in Environmental Policy is a research practice that scientifically evaluates the costs and benefits associated with the implementation of environmental policy, done by analyzing the resulting economic, social and ecological developments. The aim is to improve the enforceability of environmental policy, which is an indispensable link in the scientific formulation and implementation of environmental management.

 

From the practical experience of other countries, the implementation of cost-benefit analysis in environmental policy is an important requirement of environmental management. In fact, it is considered part of the basis of scientific policy. In the United States, cost-benefit analysis is not just an economic analysis method; it also has been used widely in administrative law. At present, China's environmental cost-benefit analysis tools have not yet been incorporated into the environmental policy design and implementation process, a deficiency that impacts its effectiveness. 

The workshop was under the framework of the PRCEE-Duke Kunshan Joint Laboratory on Quantitative Environmental Policy Analysis, a cooperative research group that carries out activities like this in the area of cost-benefit analysis for environmental policy.

Richard G. Newell, the President of Resources for the Future and the Former Director of the US Energy Information Administration

The morning session mainly discussed the research and policy practices of cost-benefit analysis in environmental policy in China and the United States. Jinnan Wang, the Vice President of Chinese Academy of Environmental Planning at Ministry of Environmental Protection, offered Beijing-Tianjin-Hebei Region as an example, sharing background on China's ecological civilization system reform and innovation. He introduced the framework of China's ecological civilization system as “1+2+6,” the current domestic implementation of the ecological space control system, and how to use market incentives such as increasing the environmental protection tax to protect the environment. Richard D. Morgenstern, the Senior Researcher at Resources for the Future, discussed the theory and practice of cost-benefit analysis in environmental policy in the US. He described the history and fundamentals of cost-benefit analysis, and explained the difference between CEA and CBA, emphasizing that the core of CBA is benefits more than costs. After that, he sorted out the challenges of policy implementation and the policy changes that have arisen since Trump came to power. 

Following the opening session, Zhixuan Wang, the Vice President of China Electricity Council, delivered the keynote speech. Entitled “Analysis of control cost and the environmental price of China’s coal-fired air pollution,” this report provided a brief overview of the power industry and the problems it faced, coal-fired power plant air pollution control effectiveness, cost control analysis, environmental protection power price policy and reform outlook. A representative of the Chinese Academy of Environmental Planning, Ministry of Environmental Protection introduced the policy of eliminating the yellow-trailer cars in the Beijing-Tianjin-Hebei Region, cost-benefit analysis and economic and social impact analysis of the subsidy and policy implementation, rounded out by a comprehensive comparison. Jun Bi, the Professor of Nanjing University, took Nanjing City as a case to establish a model, making a value assessment of PM 2.5 attributed to loss of happiness, resulting in environmental pollution that has an indirect impact on health and causes certain economic losses.

Jinnan Wang, the Vice President of Chinese Academy of Environmental Planning, Ministry of Environmental Protection

The afternoon discussion began with a group discussion. Richard Newell, the President of the Resources for the Future, introduced the background and importance of carbon social costs, the conclusions and recommendations for cost-effectiveness analysis from the US National Academy of Sciences, and the initiative for the carbon social costs of Resources for the Future. After that, he discussed the challenges of environmental policy cost-benefit analysis in the United States with two researchers, Richard D. Morgenstern and Jeremy Schreifels, along with Professor Billy Pizer.


Left to right: Richard G. Newell, President of Resources for the Future, Former Director, the US Energy Information Administration Billy Pizer, Professor, School of Sanford Public Policy, Duke University, Former Deputy Assistant Secretary, the US Treasury Richard D. Morgenstern, Senior Researcher, Resources for the Future, Former Director, the Office of Policy Analysis, the US EPA Jeremy Schreifels, Researcher, Resources for the Future, Former Department Director, the US EPA

Subsequently, Mun Ho, the Visiting Scholar at Harvard University and the Researcher at Resources for the Future, delivered a keynote speech on cost-effectiveness analysis in China's environmental policy implementation, introduced the CBA framework and the impact of the carbon tax. After the speech, Ji Zou, the Professor of Harbin Institute of Technology (Shenzhen) and Renmin University of China, Junjie Zhang, the Professor of Duke Kunshan University, Jiwen Chang, the Deputy Director of the Institute of Resources and Environmental Policy of the Development Research Center of the State Council, and Mun Ho, the Visiting Researcher, jointly debated the prospects and challenges of cost-benefit analysis in China’s environmental policy.

Jiwen Chang, the Deputy Director, divided the practice of cost-benefit analysis into two parts: the analysis of problems that need to be solved, and the analysis of policy tools and management approaches. Addressing the issue of fairness, he described the current approach is to determine which region has more historic issues as well as higher financial incomes, which leads to more investment in environmental protection. However, even if the issue of transparency were to improve, data sharing remains a major obstacle in the formulation of environmental policies.

Left to right: Ji Zou, Professor of Harbin Institute of Technology (Shenzhen) and Renmin University of China Jiwen Chang, Deputy Director of Institute of Resources and Environmental Policy of the Development Research Center of the State Council Junjie Zhang, Professor and Director of Environmental Research Center, Duke Kunshan University Mun Ho, Researcher at Resources for the Future

From start to finish over the two days, Prof. Junjie Zhang and President Richard Newell hosted and summed up the discussions, put forward the focus of following research, and encouraged parties to positively carry out communication and cooperation.