Saturday, January 20, 2007

Pollution and Olympics 2008: A showcase or a PR disaster?

A good post on China, the Olympics 2008 and the effects of pollution. There is also a little on how pollution may drag down China's growth and lead to excessive health care costs. Some of the law literature can provide interesting insights for economists.

Will the 2008 Olympics in Beijing Showcase Pollution as Well as World-class Athletes?
Runners coughed and gagged as they limbered up. Thick smog shrouded the Tsing Ma Bridge. Pollution index readings on this morning in February 2006 were at 149, the highest in months. Any reading over 100 is considered unhealthy.

But the 40,000 runners who had signed up to participate in China's largest footrace, the Hong Kong Standard Chartered Marathon, were ready to go, unaware of the tragedy ahead. By the end of the day, Tsang Kam-yin, a 53-year-old three-time marathoner would collapse and die about a third of the way through the event. About 20 runners would be hospitalized, many for respiratory ailments. In Internet postings following the race, runners complained about asthma attacks and hacking fits after crossing the finish line. "Everyone who took part in the marathon was at risk of harm to their health from pollution," Anthony J. Hedley, an official with the department of community medicine at the University of Hong Kong, wrote after the race, chiding the organizers for not taking more precautions.

Clearly things will need to improve before 2008. This is what is being attempted - I have pretty much included all of this section of the article as it all makes fascinating reading.
Transforming Beijing
China is clearly worried about its image. In the Olympic run-up, the government is attempting to transform Beijing into a national model of environmentalism -- a Chinese beacon of "greenism." In a recent interview, Sun Weide, deputy director of the Beijing Organizing Committee for the Games of the XXIX Olympiad, described a Herculean effort by authorities to bring Beijing's air pollution into line with global standards before the Olympic games. The city has relocated, or plans to relocate, more than 100 chemical, steel and pharmaceutical factories outside the city and replace 300,000 polluting taxis and buses with lesser-polluting vehicles. It is seeking to replace coal furnaces with natural gas furnaces and rushing builders to finish construction well before the Olympic games so that dust from the building projects has a chance to settle. Beijing authorities are building four new subway lines, adding many miles of rails and boosting the efficiency of public transportation.

Environmental experts applaud Beijing's efforts and suggest that a cleaner Chinese capital could be the legacy of the 2008 event. But they also note that China needs more than a quick-fix for its broader environmental crisis-in-the-making. They say China's problems stem from a weak legal system, corruption, poverty, two decades of double-digit industrial growth, government policies that put job growth ahead of the environment, and Communist propaganda that over-promoted man's ability to conquer nature.

The effects of pollution can be seen everywhere. Smokestack factories spew toxins and particulates into the air. Rivers teem with sewage. According to Worldwatch Institute's State of the World 2006 report, acidification has spread to 30% of China's cropland. Another study, by the Atlanta-based Georgia Institute of Technology, reports that the range of ozone exposure in agricultural regions in the Yangtze River Delta is enough to reduce yields by 10%.

Environmental officials in Guanxi Province, in southern China, note that 92% of the sewage from the province's cities flows directly into rivers. Installing treatment plants would cost $400 million, a prohibitively large amount in an area where the per capita income is about $1,500 to $2,000 a year.

China is far behind peer countries in air quality standards. According to the World Bank, 16 cities in the world with the worst air pollution are located in China. The country's Ministry of Science and Technology has estimated that 50,000 newborn babies a year die from the effects of air pollution. Tens of thousands of factories in the Pearl River Delta, an area where U.S. retailers like Wal-Mart source products for stores, are blamed for polluting Hong Kong. Some have suggested closing the factories in the days before the Hong Kong marathon as a way to help reduce the pollution.

Other countries aren't insulated from China's environmental problems. Chemical spills have flowed into eastern Russia, contaminating Russian drinking water, and Chinese-borne pollution has been detected on the California coast. Long reliant on coal for power, China's emissions of carbon dioxide, the most important global warming gas, are expected to surpass those of the United States in 2009, according to the International Energy Agency.

Pan Yue, vice minister of China's State Environmental Protection Administration, summed up the problem when he wrote, in a November 2006 commentary republished in the Wall Street Journal, that "China is dangerously near a crisis point" with its environment. A third of China's people drink substandard water and a third breathe badly polluted air, according to Pan. "True, China has made the kind of economic advances in three decades that required 100 years in Western countries. But China has also suffered a century's worth of environmental damage in 30 years."

One culprit is the weak legal system.
Weak Legal System

Eric W. Orts, professor of legal studies and business ethics at Wharton, says that pollution, if left unchecked, will drag down China's economic growth and result in huge healthcare costs. In addition, China's pollution will, over time, erode its competitive position in the global economy. "If you want to be an international player, you have to be a place where executives can come and live and not worry about their kids getting lung cancer."

And who can blame them.
One obstacle to faster environmental improvements is a weak legal system, according to Orts. Without the threat of economic damages from civil lawsuits, pollution controls have a "classic externality problem." There is no outside legal mechanism to punish polluters. "Mao [Zedong] basically killed or reeducated most of the lawyers and judges. There was a whole generation wiped out by the Cultural Revolution....You really didn't worry about contracts or personal property under Mao."

Close links have developed between private business and local governments, which jointly operate enterprises, even though local governments are charged with enforcing environmental and economic regulations. Yet enforcing environmental laws often works against the economic interests of local government. "The system is corrupt and there are no lawyers who can bring a basic lawsuit," Orts notes.

China hasn't embraced grassroots movements or non-profit organizations, such as Greenpeace or the Sierra Club, which have been forces for cleaner environmental movements around the world. The central government cracks down on non-governmental organizations, or NGOs, "because it's not part of their view of how society develops," Orts says.

There are signs of improvement and as quoted in the article:
The analogy that the Chinese offer is that "the nation is a construction site and everything is not tidy," Zhang says.

A good crtique of the Orts article can be found in the China Law Blog
Orts is right to list China's weak legal system as a cause of its environmental problems -- it certainly is not the solution it could be. But, he is both dead wrong and insulting to many fine Chinese lawyers to claim "there are no lawyers [in China] who can bring a basic lawsuit." I personally have worked with a number of Chinese lawyers who not only can bring basic lawsuits, but can bring complex lawsuits as well. And these lawyers are not just confined to Shanghai and Beijing either. I have seen them do it.

Orts is also wrong to believe money will greatly strengthen China's legal system. China's legal system is weak because it lacks independence and because so many of its older judges are poorly educated and not very knowledgeable about the law. Increased legal funding will not create judicial independence, nor will it have much effect on outmoded judges.

Orts' ascribing Beijing's intolerance towards NGOs because of "differing views on how Chinese society should develop" is just strange. Beijing cracks down on NGOs because it is a Communist country and Communist countries do not like rivals. It is strictly an issue of power.

China's legal system is a factor in its environmental problems, but blaming the lawyers and calling for throwing more money at it is not likely to solve anything. China is a one party state and until that one party deems curbing pollution more important than coddling its local bureaucrats, China's environment will continue to worsen.

For more recent news on China and the environment see this recent TIME blog article.

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