title: Reduction potential, shadow prices, and pollution costs of agricultural pollutants in China.
abstract: This paper analyses the reduction potential, shadow prices, and pollution costs of agricultural pollutants in China based on provincial panel data for 2001-2010. Using a parameterized quadratic form for the directional output distance function, we find that if agricultural sectors in all provinces were to produce on the production frontier, China could potentially reduce agricultural emissions of chemical oxygen demand (COD), total nitrogen (TN), and total phosphorus (TP) by 16.0%, 16.2%, and 20.4%, respectively. Additionally, our results show that the shadow price of TN increased rapidly and continuously, while that of COD and TP fluctuated for the whole period. For the whole country, the average shadow price of COD, TN, and TP are 8266 Yuan/tonne, 25,560 Yuan/tonne, and 10,160 Yuan/tonne, respectively. The regional shadow prices of agricultural pollutants are unbalanced. Furthermore, we show that the pollution costs from emissions of COD, TN, and TP are 6.09% of the annual gross output value of the agricultural sector and are highest in the Western and lowest in the Eastern provinces. Our estimates suggest that there is scope for further pollution abatement and simultaneous output expansion for China's agriculture if farmers promote greater efficiency in their production process. Policymakers are required to dynamically adjust the pollution tax rates and ascertain the initial permit price in an emission trading system. Policymakers should also consider the different pollution costs for each province when making the reduction allocations within the agricultural sector.
authors.affiliation: Resources Environmental Economic Research Centre, China University of Geosciences (Wuhan), Wuhan 430074, China; School of Economics and Management, China University of Geosciences (Wuhan), Wuhan 430074, China; School of Agricultural and Resource Economics, University of Western Australia, WA 6009, Australia. Electronic address: kai.tang@research.uwa.edu.au.
authors.forename: Kai
authors.initials: K
authors.lastname: Tang
authors.affiliation: Resources Environmental Economic Research Centre, China University of Geosciences (Wuhan), Wuhan 430074, China; School of Economics and Management, China University of Geosciences (Wuhan), Wuhan 430074, China; School of Agricultural and Resource Economics, University of Western Australia, WA 6009, Australia. Electronic address: chengzhu.gong@uwa.edu.au.
authors.forename: Chengzhu
authors.initials: C
authors.lastname: Gong
authors.affiliation: School of Agricultural and Resource Economics, University of Western Australia, WA 6009, Australia.
authors.forename: Dong
authors.initials: D
authors.lastname: Wang
keywords: Agricultural pollutant emissions; China; Parameterized directional output distance function; Pollution cost; Reduction potential; Shadow price