Download Analysis of Efforts Put into Environmental Treatment and Solutions Mechanism

Analysis of Efforts Put into Environmental Treatment and Solutions
Mechanism
CHEN Chaolong
School of Management Science, University of Electronic Science and Technology of China
Chengdu 610054 China
Abstract: This paper is designed to conduct an analysis of how the Chinese government has long given
prominence to environmental treatment and the environmental quality has been suffering deterioration.
Taking spillover effects in treating environment into account, this paper also gives insights into the
causes why all grassroots areas cast usually their sights onto the improvement of economic benefits at
the price of environment whilst the pollution enterprises are deployed on the lower reaches in the bigger
regions. Based on the analytic results, suggestions to intensify environmental protection, punish or
reward results of environmental protection, and measure the punishment and stimulation are raised.
Key words: environmental treatment, spillover effects, game analysis, mechanism
1
The looming problem
An explosion on Nov 13, 2005 at a PetroChina plant in northeastern Jilin province poured 100 tons of
toxic benzene compounds into the Songhua River, leaving four millions of people in the downstream
city of Harbin without drinking water for four days. The fundamental elimination of pollution still needs
more than half a year, drawing attention from all over the world. Chengdu Evening News reported on
July 11, 2006, of Sichuan’s 1,000-odd rivers, seventy percent suffer pollution to a certain extent. Total
amounts of pollutants discharged exceeded the endurable capacity of environment, resulting in a salient
contradiction in the society between economic development and control of total volumes of pollutants.
According to Duangming Daily dated August 9, 2006, among 56 sections out of 20 rivers monitored in
Xinjiang, the water quality of 66.1% of the sections is classified anywhere between Category I and III,
and 8 plain lakes and reservoirs are polluted more or less. Many regions throughout China to gain
economic benefits at the price of environment are nothing short of a scenario like draining the pond to
get all the fish.
The governmental department at all levels, in particular the superior department in charge, has always
given prominence to environmental protection and poured into tremendous efforts (both human and
financial resources) (hereinafter referred to the bigger region as the ‘region’), nevertheless the executive
department or department in some of smaller areas compromised the commitment for purpose of
economic benefits. As a result, environmental treatment in China should be tackled from bottom
(hereinafter referred to the smaller area as the ‘area’).
Additionally, the tendency that pollution enterprises move to lower reaches of rivers in all areas is
looming, for instance the pollution enterprises in Chengdu are seen centralised in Qingbaijiang whilst
their counterparts in Chongqing relocated in Changshou and Wanzhou etc, leading to polluting areas on
lower reaches of rivers in facilitating the communities on upper reaches to acquire economic benefits.
Serve pollution in some areas across the country attributes to the fact of grabbing economic benefits by
densely polluting the communities on lower reaches of rivers, which is extremely harmful to the
establishment of economic order as well as the sustainable development of national economy.
II Analysis of causes
The environmental issues have in fact been put high on agenda of all circles of the society, and scholars
have already given insights into the realm. Hannigan (1995) argued that the general public is entitled to
the following four environmental rights: a) a right to be informed of the status quo of their environment,
b) a right to seriously listen to a proposition on pollution when it is occurred, c) a right to acquire
compensation from the polluter, and d) a right to democratically participate in deciding on the future of
816
the community polluted. Dungumaro’ s research (2003) indicated that, taking into consideration the
commonweal and non-exclusive characteristics of environmental resources, boosting the public to take
part in environmental protection not only reflects their recognition of the public decision-making
process related to their immediate interests and benefits, but also they may actualise their own
obligations and rights. Duda (2000) pointed out that the public involvement plays a pivotal role in
making full play of potential knowledge, increasing the public awareness of environmental protection,
and building up the public trust to steer clear of conflict and resistance in resources distribution. Wang
Shiguo’s research (2006) showed, the government should employ corresponding measures when the
environmental market fails to work out. On the one hand, it should strengthen and specify efficiency of
environmental protection, on the other, it should rely on the market mechanism to mobilise the
microcosmic muscles of the society.
Unfortunately, the existing research overlooked the preceding two issues, fundamentally. The thesis,
applying the game approach, analysed the influence of spillover effects upon environmental treatment.
(1) Spillover effects of environmental treatment
Spillover effects are known as externality, referring to the benefit and loss brought to the third party in
the process of transaction between the two parties. Such benefit or loss is not reflected via monetary or
market transaction and should not be burdened by the two parties.
Spillover of environmental treatment means that the environmental improvement of areas e.g. villages
and towns will play a proactive role in pushing forward the development of its adjacent areas, forming
spillover of environmental treatment through radiation and shift of such benefits to other areas. Albeit
the spillover contributes to the environmental improvement of the region as a whole, benefits and
interests of the area implementing environmental treatment are barely realised.
To a region (e.g. a province), its benefits and interests appears integration, and it are in fact other areas
within the region to benefit from environmental treatment at a large extent. Accordingly, spillover of
environmental treatment across the region is by all means a redistribution of internal resources. A region
of this kind therefore attaches great importance to environmental treatment.
Also as a cause of spillover effects, all regions relocated their heavily polluting enterprises on lower
reaches of rivers, leading to a shared pollution of other areas, and these regions themselves gained in
turn extra economic benefits.
(2) Game model of efforts put into environment
Each area (grassroots organisation) within a region strives for its own benefits. In pursuit of
maximisation of benefits of each grassroots organisation poses not only a motivation towards
cooperation and materialisation of regional strengths, but also generates a cause leading to failure of
cooperation. It’s hard for each grassroots organisation to possess all of advantaged resources,
accordingly cooperation is obviously an effective way to reduce costs, mitigate risks, increase benefits
of the whole region, and maximise benefits of each grassroots organisation. The pursuance of
maximisation of self benefits triggers each area to easily sprout opportunism, i.e. to increase its own
benefits by occupying or depriving other areas of reasonable benefits. In the event that a grassroots
organisation can not acquire corresponding return from environmental treatment, to the contrary, other
areas gained more benefits than they deserved, rest assured that the enthusiasm of environmental
treatment is certainly hurt. Areas of this kind may opt for other plans once they have opportunities,
which unavoidably results in deterioration of environment.
Collective sense ensures maximisation of reward in the game model of regional environmental treatment,
in which participants are required to choose cooperation to ascend optimum of Pareto principle.
However it may neither meet requirements of individual sense nor reach Nash balance. From individual
sense’s perspective, the best choice for participants is about maximisation of self payoff and benefits.
This mirrors a profound issue, i.e. individual and collective senses usually coexist in a conflicting
manner, in other words, only after relevant conditions are mature can environmental treatment be
undertaken among areas.
2.1Competition in environmental treatment amongst all areas
If cooperation on environment treatment throughout the region is, principally, subject to the game theory.
817
According to the game theory, benefits of certain area rely on not only its own behaviours but also other
areas’. Its game strategy falls into two categories: cooperation and no-cooperation, the former one
means that the two parties restrain its respective behaviours and treat environment for both its own and
mutual benefits. While either party decides its own strategy, also it has no clue of the other’s well-be
strategy, however each party would anticipate the opposite’s strategy. Both parties with sensible
involvement target maximisation of their respective benefits as an objective.
Supposedly, there are two areas (participants of the game) in a region, namely Area 1 and Area 2, both
of whom have their respective strategies, i.e. cooperation (to intensify environmental treatment) and
no-cooperation (not to intensify environmental treatment). Being a sensible person, individual choice of
cooperation or no-cooperation must be based on the cost vs. benefit consideration. It is assumed that
both parties are fitted with the same payoff structure, and then the payoff matrix should be employed to
express the game mix of the two parties in order to conduct analysis, shown as Graph 1.
Area 2
Area 1
Coop
C C
B D
，
，
Coop
No-coop)
No-coop
D B
N N
，
，
Graph 1 Game matrix of environmental treatment among areas
C in the aforesaid graph stands for payoff of each area when both parties perform cooperation; B
represents payoff when Party A holds cooperative attitude but Party B turns its back on cooperation; D
means payoff when Party A would not like to cooperate but Party B expresses its willingness to
cooperate on this issue; N symbolises payoff of each party when neither of the two parties moves
forward to cooperation. In the process of environmental treatment game of each area, if each side adopts
a strategy to strengthen environmental treatment, coordinated development of the region may heighten
payoff of each area. However if each side turns a blind eye to environmental treatment, the status quo is
remained, and environmental profits are not achieved. If one party reinforces environmental treatment
but other areas don’t give a hand, spillover of benefits from the area with improved environment upon
treatment would unmistakably benefit other areas, however its payoff may be reduced even negative
because the area can not be rewarded for increment of its investment. Consequently, the models are C>N,
C>D, B>C, N>D, and B+D<2C.
When the game is undertaken once, each participant cast his/er eyes onto short-term benefits and
interests, the possibility of cooperation between the two parties in the game is highly unlikely, should
the uncooperative party be imposed only little punishment or its uncooperative attitude is hardly proven.
The regional department in charge places paramount emphasis upon establishing a long-term strategic
cooperation in a direct manner, however such a relationship will be only maintained by repeated games
(relatively independent) and obtained trust. This is to say, in the event of a game to be repeated many
times, participants may, by sacrificing immediate benefits, opt for different balance strategy for purpose
of long-term benefits, veering impossible cooperation to possible at the time-off game in a bid to
materialise more effective balance.
2.2Selection of balance on competition among all areas
Pareto distributions of strategies (C, C) are better than that of (N, N) specified as Graph 1, it’s obvious
that the optimal choice for areas must be (Cooperation, Cooperation). To Area 1, if the probability that
Area 2 chooses not to cooperation is p2, the following equation is established, and there is no difference
whether or not Area 1 opts for cooperation or no-cooperation:
1 p2 u1 C C
p2u1 C N
1 p2 u1 N C
p2u1 N N
ui (*,*) stands for expected benefits under different choices in the preceding equation.
If di (C) is employed to represent loss of Area i arising out of deviating from (C,C) at its will, then d1 (C)
u1 (C C)
u1 (N C) (since (C,C) is a rigorous Nash balance, its loss is always greater than 0), the
same theory can apply to defining di (N).
（ － ） （ ， ）＋ （ ， ）＝（ － ） （ ， ）＋ （ ， ）
＝
， －
，
818
p2 =
d 1 (C )
d 1 (C ) + d1 ( N )
When the probability that Area 2 opts for no-cooperation is smaller than p2, to choose cooperation is
optimal for Area 1; when the probability that Area 2 opts for no-cooperation is greater than p2, the
optimal strategy of Area 1 is to veer to no-cooperation from cooperation. Accordingly, p2 can be used to
reflect the scale of risk posed to Area 1, the greater p2, the safer for Area 1 to choose cooperation; the
smaller p2, the less safe for Area 1 to choose balance cooperation.
Based on the game theory, the following equation may be set up:
p1 =
d 2 (C )
d 2 (C ) + d 2 ( N )
To (N, N), if let Area I choose the probability of cooperation, then:
qi 1 pi
p1 p2 is used to measure risks of cooperation, the smaller the value, the bigger the risk. In comparison
with q1+q2, if p1 p2 < q1 q2, i.e. p1 p2<1, the risk of no-cooperation is less than that of cooperation;
if p1 p2 > q1 q2, i.e. p1 p2>1, then the result is opposite; if p1 p2 q1 q2, risks of cooperation and
no-cooperation are seen in parallel. An equivalent form of value is as follows: if d1 (C) d2 (C) > d1 (N)
d2 (N), the risk of cooperation is bigger than that of no-cooperation, because loss of deviating from
balance is huge and not deviating from balance is proven much safer.
Based on the aforesaid analysis, to Area 1 and 2, the risk to choose no-cooperation is obviously less than
that of cooperation, i.e. each area is inclined to opt for no-cooperation. This scenario may compromise
payoff of each area even the entire region, and even downgrade the environmental treatment level of the
region as a whole. How to boost effective cooperation of environmental treatment amongst all areas,
experience benign competition, and give a strong push to the holistic payoff is kernel of the regional
management, this is to say, each area won’t shoulder risks possibly occurred for overall benefits of the
region. Lack of powerful restrains or punishment measures may cause each area less enthusiastic
towards cooperation at their will. It’s nearly impossible to rely on its own consciousness only in
ensuring all areas to abide by cooperation conditions, to acquire authority of the regional department in
charge to promote cooperation amid all areas is a must.
The preceding research also may explain why each area resettled its pollution enterprises on lower
reaches of rivers.
＋
＋
＝－
＋
＋
＋
＋
＋
＋ ＝ ＋
III Regional role in boosting cooperation of environmental treatment amid all
areas
To rely on external forces, i.e. regional role, is a must to change the embarrassment of environmental
treatment amid areas. Not only may the region restrain areas’ behaviours and punish the area
implementing the no-cooperation strategy, but also it advocates each area to choose the cooperation
strategy.
Bearing in mind, the region to stimulate the areas to opt for cooperation can be conducted from various
facets, not only can it adopt the punishment measures, but also it needs to stimulate the areas to move
forward to cooperation. The provision of conditions meeting the needs of areas for benefits and interests
pursuance may give all areas an impulse to pinpoint cooperation.
Cooperation is unquestionably able to bring tremendous interests and benefits to both area and region,
the region may therefore consider rewarding the participator for its behaviour picking up the cooperation
strategy. If both parties intend to cooperate, it will enhance payoff of the areas, which is universally
welcomed by all areas concerned. It’s accordingly unnecessary for the region to additionally reward the
two cooperating parties. Reward will never play its part unless the punishment measures are put into
place, only when these two means are employed can the areas concerned be stimulated to opt for the
cooperation strategy. Of course, the similar effects are expected if the relevant leaders of the cooperating
819
areas are administratively rewarded, for instance promotion etc.
Assumedly, v symbolises the punishment the region gives to the area not opting for cooperation and E
stands for the expectation value to stimulate the cooperating area, and then the game model for the area
is as follows:
Area 1
Coop
Area 2
，
，＋
Coop
No-coop
C C
D-V B E
No-coop
B E D-V
N-V, N-V
＋，
Graph 2 A game matrix considering punishment and stimulation
Stimulation measures instituted within the region may intensify the restrain that the region imposes onto
the area. If the probability that Area 1 opts for cooperation is less than p
**
=
N − B −V − E
,
C−B−E−D+N
the optimal choice for Area 2 is not to cooperate; if the probability that Area 1 opts for cooperation is
greater than p**, the best choice for Area 2 is to choose cooperation. On the contrary, if the probability
that Area 2 opts for cooperation is less than q
**
=
N − B −V − E
, it’s better for Area 1 not to
C−B−E−D+N
choose cooperation; if the probability that Area 2 opts for cooperation is greater than q**, Area 1’s
optimal choice is to cooperate. The region increases the stimulation measures, and the stimulation of
participator is synonymous of the punishment. In the same production environment, the intensity of
punishment that the region restrains all areas to opt for cooperation is V1 > Max{ D C ,
N B
E }. In other words, if Area 2 clicks on no-cooperation, then the sensible area is bound to select the
cooperation strategy as far as benefits the participator gained are greater than that of the two parties
opting for no-cooperation.
As a matter of fact, it is believed that all areas are destined to lock on the cooperation strategy should the
preceding mechanism exist. To all areas, the punishment and reward are nothing less than a threat or
commitment, which will never come true in the de facto scenario. The superior governmental
department, through punishment and reward, guides all areas to move onto track of cooperation,
effectively tackling weak environmental treatment throughout the region. Nevertheless, to the entire
region, to echo the administrative and personnel reward to further restrain behaviours of the area is
imperative.
Aside from playing a role of appointing and dismissing the management of the area, the region should
not excessively interfere the administration of the area, and instead it should regulate cooperation as a
kind of system or a set of conduct codes. In case the area employs the no-cooperation strategy, not only
will it be economically punished, but also its decision-makers would be removed from their posts. To
the leaders of the areas, this measure may be more effective than economic ones.
（－）（－－
）
References
[1]Duda A M ,Eleashrymt. Addressing the global water and environment crises through integrated approaches to the
management of land , water and ecological resources[J ] . Water International Journal ,2000 ,25(1) :1152126 .
[2]Dungumaro E W , Madulu N F. Public participation in integrated water resources management : the case of
Tanzania [J] . Physics and Chemistry of the Earth ,2003 ,28 :100921014 .
[3]Hannigan ,J . A . Environmental Sociology : A Social Const ructionist Perspective [M ] . Routledge London and
New York , 1995 .
[4]Wang Shiguo. Comparative Analysis and Appropriate Choice of Environmental Protection of Government (J).
Conglomerated Economy(In Chinese),2006,204(8):P77~79
[5] Zhang Zhaogui. Economic Game and Application (M) (In Chinese). Chengdu: Publishing house of South West
820
：
University of Finance and Economics, 2006 P35~38
The Author can be contacted from Email: [email protected]
No.4
CHEN Chao-long: Settlement of Internal Cutthroat Competition Amid IT Group Companies: Away from
“Prisoners’ Dilemma” of Price Wars
821