China must use carrot-and-stick policy to create a higher level of environmental awareness

China has paid a high price for three decades of rapid economic growth. Environmental problems are already at a critical level and they are getting worse. Rapid development has transformed huge areas of the country into environmental wastelands. Acid rain corrodes the Great Wall; parts of the Grand Canal resemble open sewers; parts of Shanghai are slowly sinking because water beneath it has been sucked out; and some cities are so clogged with air pollution they don't appear in satellite pictures. Even though a big environmental cleanup was a big contributor to the success of the Beijing Olympic Games in 2008, today the Beijing smog is sometimes so bad, even in the clear winter months, that getting around on foot or by bike can be a problem.

A satellite camera has identified global concentrations of the poisonous nitrogen oxide produced by vehicles to be the largest in China, and within China, to be the worst around Beijing. Reports indicate that only 32 percent of China's industrial waste is treated in any sort of way. Already there are concerns of environmental refugees in China. The OECD projects that by the year 2050, if nothing changes, over 1 million people each year will die in China just from air pollution.

Lead poisoning can damage the nervous, muscular and reproductive systems. High levels of lead in the blood can damage the brain, kidney, liver, nerves and stomach and, in extreme cases, cause death. Children are particularly susceptible because they absorb lead more easily than adults, and it can damage their brains. China is the world's leading producer and consumer of lead. There have been some cases of massive lead poisoning in China. Most lead poisoning is caused by pollution from battery factories and metal smelters. In recent years, many new factories have opened that produce lead-acid batteries for electric bikes, motorcycles and cars.

Many Chinese ignore pollution in favor of profits and growth. Local governments tend to favor their own projects and economic benefits ahead of central government directives, and the concerns of local farmers and villagers. In 1994 masses of dead fish appeared in Huaihe River, indicating a level of pollution that shocked the Chinese government. Billions of yuan were spent cleaning it up. But a decade later, the Huaihe River was still a seriously polluted river with nearly 50 percent of it suffering from the worst kind of pollution. Local governments along the river, determined to create jobs and encourage economic growth, had simply ignored regulations passed down by the central government.

In 2006, the river that flows through the village of Shangba in Guangdong province was heavily polluted by heavy metals. The source of much of the pollution was the Dabaoshan mine, which produced huge piles of tailings discarded next to rice fields. It also dumped large amounts of cadmium, a known carcinogen, as well as lead, zinc, indium and other metals into water supplies. Tests showed high levels of cadmium and zinc in the drinking water and in the rice grown by the villagers. Stomach, liver kidney and colon cancer accounted for 85 percent of the cancers acquired by villagers.

Even though the Dabaoshan mine and the local government constructed a reservoir for the village in 2006, three years later a villager told a local newspaper that due to poverty, the villagers were still eating rice contaminated by cadmium. In 2010, a Chinese journalist visited Shangba and found that the water was still seriously polluted.

Between now and 2050, Chinese energy use and water demand are projected to grow at 5-10 percent a year. Using water wastefully means building new water plants and irrigation systems, which are expensive. Coal use for heating and energy generation is at the heart of the air pollution problem. Coal is a cheap and available resource in China. Using other energy forms would increase costs significantly. But Chinese factories and energy plants that use coal will have to use more modern, cleaner furnaces, while households must be encouraged to use gas, rather than coal, to heat their homes. All this costs money. But no one really knows at what point the environment can simply start to break down under the weight of the pollution. What will the environment in China look like in 2050?

Still, most developed countries passed through a stage of heavy pollution before becoming rich enough to want and be able to address environmental problems. There were reports of red lakes in Japan in the 1970s. And I can recall a three-day smog in London when I was growing up in the early 1960s that was so thick, you couldn't see further than the end of your arm. In fact, London Fog became the brand name for a raincoat sold in the US. The "Kuznets environmental curve" suggests that, at some level of economic development, a country will start to put environmental issues alongside or above those of economic growth. Although for some years China has argued that the country must place economic growth first, the determination to take action has begun to take shape as environmental problems have worsened.

Going green means becoming more appreciative of our natural assets, making better use of them and protecting them. There are real economic benefits to be gained here. Productivity can be enhanced by reducing waste. Taxes on pollution provide new revenue streams and innovation produces new technologies that can give China advantages in international trade, as well as the means to tackle existing environmental problems at home. The Chinese government started to recognize the significance of its environment in its 11th Five-Year Plan (2006-10). The current 2011-15 plan goes much further.

In 2008 the Ministry of Environmental Protection was established, with six environmental protection bureaus to monitor pollution around China. In December 2011, the government issued a national five-year plan for environmental protection, with four main platforms: improve the quality of the environment, control air pollution, protect the soil and strengthen ecological protection. About 3.4 trillion yuan ($538 billion; 414 billion euros) has been allocated to the environment in the five-year plan. Progress reports will be made to the State Council in 2013 and 2015 and will reportedly be made public.

One of the best ways to incorporate environmental concerns into the economy is by way of pricing: using taxes or tradable permit systems to discourage environmental damage. In some situations, government regulation, supported by legal processes, is required; in others, a voluntary approach is better. Spreading the news about environmental degradation certainly helps these approaches. The important thing, though, is to create a stable environmental policy that is understood nationwide, along with a mixture of price signals and regulations.

To succeed in reversing the tide of environmental damage, China has to use both encouragement and punishment to create a higher level of environmental awareness. You can't bring back to life the people who have died and are dying from pollution. But, given a chance, nature renews itself. A visit to the former industrial heartland of the United Kingdom shows how. Japan and Germany, who each continue to be major forces in global manufacturing, are even better examples of how money and serious effort can clean up a heavily polluted environment. China can do the same, but it will take a lot of money, many years, and most important of all, a national desire for a clean environment strong enough to match the search for profit.

The author is a visiting professor at Guanghua School of Management, Peking University. The views do not necessarily reflect those of China Daily.