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Polluters in China Face Public Scrutiny

May 17, 2006

May 17, 2006—China has one of the fastest-growing economies and one of the worst pollution problems on the planet. In fact it's second after the United States in carbon dioxide emissions, according to the World Bank's Little Green Data Book 2006, released May 9 at the United Nations Commission on Sustainable Development.

But a new plan to expose polluters—and reward good environmental performers—could help reduce more than 300,000 deaths a year from pollution.

The country has officially adopted a low-cost program that calls for sharing formerly confidential information on factory emissions with the public. The information is distributed to the media and published on the Web to encourage polluters to change their ways.

The program—informally known as GreenWatch—was developed by China’s environmental protection agency, with technical assistance, ideas and advice from the World Bank’s Development Research Group.

After pilot GreenWatch projects proved successful in 22 Chinese municipalities, the Chinese national government decided in November to extend GreenWatch to every city in the country by 2010.

Already, several municipalities are working toward implementing the program, and the State Environmental Protection Administration (SEPA) has started a training program, according to Bank Senior Environmental Economist Hua Wang.

Changing Behavior

China was motivated to try GreenWatch because of its “serious” environmental problems, says Wang, “The most polluted cities are mainly located in China.”

China's carbon dioxide emissions increased by 33 percent from 1992 to 2002 despite improvements in energy efficiency, according to the Little Green Data Book.

Wang approached the Chinese in 1998 and worked with SEPA, academics, and the media to set up the first Chinese environmental performance rating and disclosure programs in Zhenjiang, Jiangsu Province, and Hohhot, Inner Mongolia, with funds from a grant from the Bank’s Information for Development Program.

Similar programs in the Philippines and Indonesia in the mid- to late-1990s increased the number of factories complying with environmental laws by 50 percent and 24 percent, respectively.

The Chinese government had tried different regulatory approaches to deal with pollution, including collecting levies from companies for discharging pollutants.

But, even today, about 60 percent of companies still violate emissions standards, Wang says. A common argument against stronger enforcement was that environmental laws were too restrictive and that environmental issues were not as important as economic development.

But the pilot programs won out and proved the threat of public disclosure could effectively combat pollution, he says.

In the Zhenjiang GreenWatch program, firms were given a year’s grace to improve their environmental performance before their rating would be publicly disclosed. The number of superior performers doubled—from 31 percent to 62 percent.

“The GreenWatch strategy really can help the environmental agencies to enforce the standards,” Wang says. “We understand that the companies care about their image, their reputation, both in the market and also in the society and the community.”

“After we tested it, it turned out companies really cared about this and changed their behavior.”

In 2005, with a $268,000 grant from the Trust Fund for Environmentally and Socially Sustainable Development, GreenWatch was extended to seven provinces, covering 8,500 firms and 100 million people.

Color Coding Polluters

The program interprets pollution data for the general public, using color to highlight the cleanest and dirtiest factories. It divides environmental performance into five categories, each represented by a color—green, blue, yellow, red and black—with green the best and black the worst.

After rating and color-coding performance, the program sends information to the public through the media, mainly Chinese-language newspapers and television stations. Some cities are also publishing information on the Web, Wang says.

The idea of color coding polluters originally came from Nabiel Markarim, the Indonesian Director of Pollution Control when the Bank launched a similar program in Indonesia in collaboration with the country’s Environment Ministry in 1995.

Bank researchers soon realized color-coding was a very important part of the program, because the program works through “public perception,” says David Wheeler, Lead Economist in the Development Research Group.

“In thinking about how you grade performance, you need something that will appeal to the public mind,” Wheeler says.

“What we learned very early was colors are always a matter of discussion, because they mean different things in different cultural contexts. And even in the same cultural group in China there was quite a bit of discussion about which color should be used.”

Red as the next to worst color was controversial because of the color’s association with revolution, and also with happiness, Wang says. But red also means “stop,” so was deemed appropriate. .

“Black basically means dead. For the company it basically means that the company should be shut down,” he says. .

Form of Government No Barrier

Wheeler says GreenWatch and other public disclosure programs seem to work no matter the political ideology of the country.

The first programs in Indonesia (then an autocracy under President Suharto) and the Philippines (a democracy with a free press) “pretty much went the same in both places.”

He expects future programs in Africa and other areas of the world to have the same result.

“What has surprised us about these public disclosure programs is that even in very poor places, where you might think that people would not value environment so highly, it turns out not to be true,” Wheeler says.

 “In Indonesia, where we started, we got such a striking result almost overnight from these disclosure programs.”

With disclosure, companies get a chance to compare their environmental performance with that of other similar firms. They have fewer excuses to fare more poorly than their competitors, Wheeler says.

“There’s a very powerful competitive, comparative, element to this.”