It is timely therefore that China are now considering the implementation of a pollution tax on polluters.
The question is how do they know at what rate set the tax - what in other words is the "optimal tax" level?
China Considers Environmental Tax on Polluters [Planet Ark]
BEIJING - China is considering an environmental tax on polluters to cut emissions, a senior government official said on Monday.
"We are actively promoting this idea. But we have to consult with relevant ministries," Pan Yue, deputy head of the State Environmental Protection Administration, told reporters on the sidelines of the ruling Communist Party's five-yearly Congress.
Beijing has put environmental protection at the centre stage of its macro policies guiding the world's fourth-largest economy to achieve sustainable growth, though analysts are skeptical when it comes to implementing the well-intented rules.
Pan did not give details on the scope of the tax levy or a timeframe when such a new policy would come into effect.
President Hu Jintao, speaking earlier on Monday to delegates at the 17th Party Congress, said China's economic growth has come at "an excessively high cost of resources and the environment." He vowed to improve the pricing mechanism for scarce resources to account for environmental costs, among other market factors.
Already the world's top emitter of sulphur dioxide, which causes acid rain, China will overtake the United States as the biggest producer of greenhouse gas carbon dioxide this year or next.
China said last month that it would take environmental costs into account in electricity pricing, to encourage power generation using clean and renewable resources.