Estimated pollution cost fails to tell full story

PUBLISHED : Friday, 08 September, 2006, 12:00am
UPDATED : Friday, 08 September, 2006, 12:00am

Officials say figure of 3pc of GDP in 2004 does not reflect all environmental losses

Beijing has estimated that pollution cost the mainland economy about 3 per cent of GDP in 2004, but officials and analysts say the real price is much higher.

In a report jointly released yesterday by the State Environmental Protection Administration (Sepa) and the National Bureau of Statistics, economists said the mainland economy lost 511.8 billion yuan in 2004 due to pollution.

The report said it would cost 1.08 trillion yuan, or 6.8 per cent of 2004's GDP, to clean up all pollutants released in the year, and another 1.8 per cent of GDP in operational costs. But the total investment in environmental cleanups between 2001 and last year was only 1.18 per cent of GDP.

'The gap is huge,' it said. 'The numbers show once again that the environmental crisis is becoming an increasingly serious constraint on economic development.'

The report, the first of its kind on the mainland, took two years to compile and examined 42 industries. But the report's co-ordinator admitted yesterday that the document's conclusions heavily underestimated the actual situation.

'The real figure is much bigger than this,' said Wang Jinnan, chief engineer at the Chinese Academy of Environmental Planning.

Mr Wang said calculations of the economic toll should be based on the cost of using natural resources and environmental degradation. But the report only calculated the cost of pollution in certain areas due to technological limitations. 'If all the factors were taken into account, you can imagine how serious the loss caused by environmental pollution actually was,' Sepa deputy director Pan Yue was quoted by Xinhua as saying.

In July, Mr Pan wrote an article in the China Daily saying: 'While China's GDP has risen at an annual rate of 8 to 12 per cent since the nation embarked on opening-up and reform in the late 1970s, environmental damage has eaten away between 8 to 13 per cent of that GDP growth every year.'

In April, Premier Wen Jiabao admitted that while most national targets between 2001 and last year had been met, the environment goals were not.

Little progress has been made in reining in pollution. In the first half of the year, energy consumption per unit of GDP increased by 0.8 per cent, while the goal is to have a 4 per cent drop this year.

And there was also an increase in the volume of emissions of major pollutants in the first half of the year, Sepa chief Zhou Shengxian warned.

Tsinghua University professor Li Dun said environmental improvements were not only an issue for the central government, but also required the involvement of interest groups such as local administrations and large firms.

'We need a neutral government which can co-ordinate the interests of all departments. And within the government, there should be no frictions caused by different interests,' Professor Li said.