China Policy Journal Volume 1, Number 1, Fall 2018 | Page 7

China Policy Journal
2012). Thus, the gap in the top–bottom
enforcement approach and the mechanism’s
disconnection provide more
space and flexibility for local officials
to geographically transfer pollution
(Kahn, Li, and Zhao 2015). The existing
empirical evidences focus primarily
on the correlation between economic
growth and industrial pollution (Gao,
Su, and Yang 2014; Li 2015; Wang, Wu,
and Yan 2008), and on finding a technical
solution for the water-pollutant
discharge (Hammer 1996), so that the
discussion of the water-pollution discharge-fee
system has limited to pollutants
theoretical analysis (Liu 2009). Indepth
systematic and comprehensive
studies combining the characteristics
of water-resource utility are insufficient
and unable to provide strong support
for decision making.
1. Design of the Water-Pollutant
Discharge-Fee System
During China’s transformation
to a market-oriented economic
structure, the country’s environmental
deterioration cast a shadow
on its unprecedented economic growth.
The environmental externality was paid
by the environment and the public that
was exposed to the pollution, rather
than by polluters. Water pollution issues
became highly sensitive for the
conventional water-utilization mode in
the early developing stage. Increasing
contaminated water and the conflict between
water supply and demand stimulated
the government towards water-resource
sustainability.
1.1. Development of the Water-
Pollutant Discharge-Fee System
The water-pollutant discharge-fee system
in China was designed as an indispensable
component of the broader
discharge-fee system and enforced in
1982. It was approved as an independent
section in the Temporary Regulation
of Pollutant Discharge Fee, which
aimed to balance the water-resource
shortage and the environmental costs
by using price lever. The issue of water-resource
protection and sewage
discharge was first officially mentioned
in the Environment Protection
Report of 1978. In accordance with the
polluter pays principle (PPP), the report
stressed that polluters should pay
for pollutants in the wastewater they
discharged. In 1979, water-pollutant
discharge fee was written in the Environmental
Protection Conditional
Law, which stated that pollutants exceeding
the national standard should
be charged. The water-pollutant discharge-fee
collection was systematically
redefined in the Temporary Regulation
of Pollutant Discharge Fee of 1982,
including revisions of its purpose,
objects, charging standard, and management
method, based on two years
of pilot implementation and contamination
facts. It was applied through
the top–bottom political mechanism
at the central, provincial, prefectural,
and county levels. The approval of the
temporary regulation provided legal
support for the fee collection of water-pollutant
discharge.
Then the approval of the water
pollution prevention law in 1984 was an
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