Tracing China's inter-regional cost transfer of air pollution through domestic supply chains

Abstract: Provinces that provide emission-intensive products now are facing huge financial pressure to control regional air pollutant emissions. Assessing the actual regional air emission abatement costs of each province from the consumer perspective can help to clarify regional pollution abatement responsibilities and formulate sound monetary compensation policies between consumers and producers in China. In this study, we employ a multiregional input-output model to estimate the total air pollution abatement costs and economic benefits caused by interregional trade for each region in 2012. The results indicate that regions with higher GDP per capita, such as the Beijing-Tianjin, East Coast, and South Coast regions, outsourced total pollution abatement costs (TPAC) for air emissions to undeveloped central and western regions via interregional trade within China. Based on a comparison of the cost-benefit index among regions, wealthy regions left nearly 80% of their consumption-based value added locally but outsourced more than 50% of their consumption-based TPAC to other regions, especially to northwestern and central regions with lower GDP per capita. Such a mismatch necessitates in-depth cross-boundary collaboration for control of air pollutant emissions in regions suffering terrible haze problems, such as the North China Plain.