China Policy Journal Volume 1, Number 1, Fall 2018 | Page 6

Water-Pollutant Discharge-Fee System in China
The contamination fee is charged based
on two major principles: one is based
on environment quality, which entails
that discharging pollutants into water
bodies would be charged for a pollution
discharge fee; the other is based on an
environmental standard, which entails
that water pollutants exceeding the national
standard would be charged by
the quantity and concentration of contaminants
(Lv 2009).
Water-pollutant discharge-fee
system was introduced in the 1980s in
China, by which the government and
administrative departments charged
for external environmental loss by
translating the loss into internal costs
for the pollutant discharger (Xu and
Ni 2004). The development of water-pollutant
discharge-fee system is
a landmark in environmental law systems
and has become one of the most
significant elements contributing to
environmental protection in China.
The system developed during the vast
expansion of environmental protection
on institutions, laws, and policies
in the first decade after implementing
the policy in the 1980s (Xiang and
Wang 2003), at which time the dramatic
degradation of environmental
quality aroused governmental and
public concerns. Thus, China turned
to economic incentives to address the
environmental problems and achieve
equity, fairness, and efficiency. Technically,
China developed a series of
management systems to deal with environmental
pollution, among which
the discharge-fee system was the earliest
and most important one. The
water-pollutant discharge-fee system
was set up within the discharge-fee
system, thereby aiming to regulate
pollution behavior and the relationship
between polluters and other social
parties, stimulate enterprises and
polluters to take their responsibilities,
reduce and control the amount of total
waste, quantify the environmental
cost, and maximize social welfare
(Zhang 2008).
Research on the water-pollutant
discharge-fee system in China has been
pursued only sporadically. Because the
system is defined within the broader
discharge-fee system, most studies
focus on analyzing the whole system
and the emission trade, rather than the
water-pollutant discharge-fee system
specifically. The legal framework of water-pollution
control is designed based
on a watershed-control zone and pollution-control
unit to promote firms’
pollution reduction (Ma, Wang, and
Wang 2013; Wu, Xu, and Ma 2015). But
the system’s implementation in China’s
provinces is disconnected due to hydrological
conditions and regional administrative
regulations. The political
mechanism determines the central government’s
implementation of the system
to the county level. Although the
environmental reform intensity varies
across space and time, the decentralized
environmental targets are poor to fulfill
due to economic growth is overriding
(Ge and Wang 2001; Zhou and Chen
2008). In addition, simple emission-reduction
targets with career-promotion
opportunities for local governors has
appeared too aggressive to examine
detailed problems during the fee system’s
enforcement (Genia and William
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