Costs of Selected Policies to Address Air Pollution in China

Air pollution has been one of the most pernicious consequences of China’s last three decades of economic transformation and growth. Although Chinese governments—federal, provincial, and municipal—have made considerable efforts in this field and air quality has improved by some measures, it remains a serious problem: Concentrations of pollutants exceed standards recommended by the World Health Organization (WHO) in virtually every major urban area. The large costs of air pollution are driven by health impacts and loss of labor productivity, running 6.5 percent of China’s gross domestic product (GDP) each year between 2000 and 2010, and rising as China’s population becomes more urbanized and productive.