Update: Sorry, but I wasn’t able to work the redirect function so you are going to have to do this manually. Just click on the link above. I promise it will be worth it.  Thanks.

My friends Caroline, Max and River have produced a remarkable documentary film about sustainable development in China. During the summer of 2007 they traveled to nine cities along China’s rapidly developing eastern seaboard from Harbin in the north to Shenzhen in the south. Their goal was “to investigate common misconceptions about the potential for mass-scale sustainable construction.” 

  

This map shows the 9 cities visited. From north to south; Harbin, Beijing, Tianjin, Qingdao, Lianyungang, Suzhou, Cixi, Shanghai, Shenzhen

They have produced a film which “portrays the sheer scale of China’s construction industry while engaging the viewer in the reality of how this industry works. It also provides an in-depth discussion of the barriers and opportunities for China to ‘go green’. High level developers present their experiences alongside government officials, product manufacturers, architects and lawyers.” Don’t let the mention of that last profession discourage you from buying this film. The Green Dragon filmmakers have miraculously found a lawyer who is not only knowledgeable, articulate, and benevolent, but extremely photogenic as well. An in-depth online multi-media report accompanies the film and can be accessed here. A DVD of the film is only $15, or you can download it for a measly $8 here.  

For those of you in or around Washington, DC there will be a screening of the film on March 19:

The Green Dragon – Environmental Film Festival Screening
Wednesday, March 19 2008, 12:00 p.m. – 2:00 p.m.
Jennifer L. Turner, Woodrow Wilson Center; Caroline Harrison, Filmmaker
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The overarching law is the Environmental Protection Law. It was the first comprehensive environmental statute passed in China (a “trial version” was enacted in 1979, and a “final” version in 1989). Following this enactment, China began to adopt media specific, “command-and-control” environmental laws similar in name (if not detail) to the major US environmental laws; thus, China has a Clean Air Act, a Clean Water Act, a Solid Waste Act.

Well, I could go on . . . and I will, after all that’s what this blog is about, but let me first take us back to the dawn of China’s environmental age, its Silent Spring, its Cuyahoga River fire. China’s environmental wake-up call was placed by a couple of bad fish at a Beijing market in 1972. Here’s the story from Green Action in China (pp. 5-7), an official publication of China’s Foreign Language Press:

In March 1972, some Beijing residents reported food poisoning symptoms such as weakness, headache, stomach-ache and nausea after eating fish bought from a Beijing market. The health department immediately reported this to the State Council. Premier Zhou Enlai instructed the case be investigated.

The State Planning Commission and the State Reconstruction Commission immediately set out to investigate. It was established that fish from the Guanting Reservoir, in Hebei Province, were contaminated . . . . An investigation group headed by Comrade Wan Li was set up to study and then control the pollution. . . . After more than a decade’s hard work, pollution of the Guanting Reservoir was brought under control. This, the first pollution control project in the history of the People’s Republic of China, provided crucial experience for the country’s later environmental endeavors.

Now that’s one inspiring story! In China, every one of the hundreds or thousands of food poisoning cases occurring every day are apparently reported directly to the Premier; he, in turn, routinely issues orders that no stone be left unturned in getting to the bottom each incident. Had I known this top level concern for the food-induced tummy ache, I would have reported to Premier Wen the distress I suffered yesterday after eating a street vendor 油条.The skeptics among us may scoff. They may note that Nixon had come and gone the month before this incident and he probably gave the Chinese leadership a few tips on how to use the environment to political advantage, or they may suggest that it was a Mr. or Mrs. Mao who dined on the toxic bio-accumulator from Hebei Province (natch!) that galvanized the nation.

In any event, there is something poetic in the fact that Hebei Province and northeast Ohio share much in common. May the Cuyahoga River and the Guanting Reservoir remain forever sister symbols in the fight to preserve our environment!

Look at this bone chilling provision (Article 338) from China’s Criminal Code:

Whoever, in violation of the regulations of the State, discharges, dumps or treats radioactive waste, waste containing pathogen of infectious diseases, toxic substances or other hazardous waste on the land or in the water or the atmosphere, thus causing a serious environmental pollution accident which leads to the serious consequences of heavy losses of public or private property or personal injuries, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined; if the consequences are especially serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.

Violate the regulations, discharge some hazardous waste, cause a serious accident that hurts people or property and you’re facing up to seven years in the big house. Note the absence of any requirement that the regulations be “negligently” or “knowingly” violated as required in the criminal provisions of the US Clean Water Act, 33 USC §1319(c).

In my personal calculus the prospect of three years in a Chinese lockup is more motivational than losing half my annual salary (another note: this penalty bears a striking, coincidental (?) resemblance to China’s personal income tax scheme which already takes half my salary).

But this criminal provision only applies in a mega-blow out like the Songhua River spill I can hear the skeptics saying. Au contraire! On July 28, 2006 the Supreme People’s Court (SPC), issued an Judicial Interpretation (JI) that set a pretty low threshold for the application of Article 338 and several other environmental crimes provisions:

“Serious consequences of heavy losses of private or public property” was interpreted (JI, Article 1) to include:

• private or public property losses not less than RMB 300,000 (approx.US$40,000). Article 4 of the JI clarifies that these losses “include actual losses due to the destruction or damage of property directly resulting from environment pollution, and any reasonable expenses incurred which are necessary to prevent the spread of pollution or clean the pollution;”
• the permanent destruction or loss of use of not less than 5 Mu (slightly less than one acre) of farm or forest land; or
• the death of not less than 40 cubic meters of “forestry” or other woods, or the death of not fewer than 250 young trees.

“Serious consequence of personal injuries” was interpreted (JI, Article 2) to include:

• the death of one or more people;
• serious injury of not fewer than three people; or
• “light wounds” to not fewer than 10 people.

“Especially serious” consequences which can earn you up to seven years were interpreted (JI, Article 3)to include:

• private or public property losses of not less than RMB 1,000,000;
• the permanent destruction or loss of use of not less than 15 Mu of farm or forest land; or
• the death of not less than 3 people, or serious injury of not less than 10 people, or “light wounding” of not less than 30 people.

A 7 year maximum sentence is a relatively low one in the grand scheme of Chinese criminal sentences. People are but in prison for life for causing a broken ATM machine to stand & deliver so a 3 year term in the hoosegow for seriously injuring three people doesn’t strike me as unreasonable, where there has been at least negligence.

Of course, motivating the prosecutors at the local level faces the same, if not greater, challenges as motivating the local EPB staff, but here’s a suggestion for the next “environmental whirlwind” campaign — throw a dozen environmental malefactors in the clink under Article 338 and see what effect that has on compliance rates.

Old tree grows out of living room

Guo Zhongping and his wife Wu Zuyan, both 78, have a special decoration for their living room, a over 20-meter tall honey locust that pierces through the ceiling. This photo, taken on March 2, shows a huge tree growing out of the living room in a farmer’s home in Qunying village of Shiquan County in Shanxi Province.
[Photo: Xinhua]

The tree with a trunk that’s about one-meter in diameter stands right in the middle of the room and its crown spreads over the house, which is in Qunying village of Shiquan County in Shanxi Province. In 1980, the couple bought the three-room house at 1,100 yuan and moved in with their three kids.
The tree was already there at the time, so they used the tree-room as the living room and the other two as bedrooms, the couple told Xinhua New Agency. No one can tell when the house was built. It has been there, with the tree, and has had five owners since he began to remember things, said Yang Shoucheng, a 91-year-old local resident. A worker from the local forest bureau estimates that the tree is several hundred years old. Guo Zhongping and his wife Wu Zuyan touch the tree that grows in their living room on March 2.

[Photo: Xinhua]

Most of the stories about China in the Chinese English-language news services have all the analysis and objectivity of a press release. The articles concerning the recent introduction of China’s “green insurance system” by SEPA were no exception. Did any reporter consider asking “what’s so ‘green’ about industrial accident insurance?” It’s no greener than your automobile insurance. This particular insurance product will cover “environmental pollution accidents,” but that just means the insurance company and not the government will ultimately pick up the tab for compensating those injured by the accident (the operating assumption is that the corporate polluting entity will have declared bankruptcy in the wake of the accident). Its impact on ensuring environmental compliance is less clear, and, in fact, it could, perversely, lead to less corporate focus on environmental issues. SEPA acknowledges this fact, and Pan Yue is quoted as saying that merely having insurance in place “doesn’t mean polluting companies can rest assured to pollute as the insurance premium is in proportion to a company’s pollution risks.” The premium had better be set at a level significantly above the cost of compliance or the motivational power of this insurance will be nil.

The policy has only been rolled out in a trial phase and is not scheduled for nationwide implementation until 2015. First up for insuring are those “companies that produce, sell, store, transport or use high-risk chemical products” and “petrochemical industries and dangerous waste disposing enterprises that are prone to heavy and serious pollution accidents”. “Enterprises and industries having caused serious pollution accidents in recent years will be specially targeted,” Pan Yue said. I should hope so, but shouldn’t they have been specially targeted by the enforcement authorities already.

I am skeptical about the efficacy of this policy. If a company is already ignoring environmental laws, why would it now decide to comply with this directive? At most, this program will only impact the largest, most sophisticated entities-the ones, as I have noted before, that should already be in the vanguard of environmental compliance. “Green” insurance seems to be part of a suite of initiatives, including “green listings” discussed previously, that SEPA is in the process of rolling out. Structured correctly these initiatives shouldn’t do any harm, and may be marginally helpful. It seems somewhat strange, however, that given the scope of the environmental compliance challenges in China, SEPA is concentrating on implementing relatively sophisticated financial regulations. This phenomenon is simply a function of the fact that SEPA only has real authority at the macro level, and thus, its policies tend to be directed toward or, as a practical matter, only impact those corporate entities that by their size come within the purview of national regulators. But wait a minute, isn’t that the real problem here: SEPA’s lack of effective local authority? Fix that problem and there may be real progress toward meeting China’s environmental compliance challenges.

 As I mentioned in my previous post on this topic, the as-passed version of the amendments to the Water Pollution Prevention and Control Law assesses penalties for “intentional,” i.e. not accidental, exceedances of discharge standards based on a multiple of the applicable “discharge fee” (up to a maximum of 5x this amount).  The comment draft applied a range of set fines for intentional exceedances (up to maximum of RMB1,000,000).  I have given up trying to determine which penalty type is actually tougher on polluters because there is not enough available information to construct a justifiable typical case for purposes of comparison.  A crucial issue is how to treat chronic over-standard dischargers.  In China this will first involve an issue of proof.  Since “continuous monitoring” is only now starting to be employed in some of the more environmentally progressive areas, the fact is that most wastewater dischargers to receiving streams are not required either to sample or report on a daily basis their flows or pollutant loads or concentrations.  At best, at the start up of plant operations they measured flow and pollutant loadings and their discharge fees were based on that data (another question: if I reported over-limit discharges at plant start up and have been paying the prescribed feed for these discharges, can I now be penalized for them?  I assume not, but the law is not clear on this point).  So, let’s assume the local EPB inspectors show up at the plant, take samples, estimate daily flow rates, and determine that a facility is exceeding discharge limits, does the plant get fined only for the exceedances occurring on that day, or is an assumption made the plant has been exceeding the standards since the start-up of operations (or last visit of the EPB)?  If the assumption is, or the proof will only support, a one-day exceedance, then in almost every case, the discharge fee multiple approach will be lower than the set fine approach.   

Two things of particular note are missing from the Penalty provisions.  First, as previously mentioned, the maximum fixed fine is RMB1,000,000, and that only applies where there have been illegal discharges into a “drinking water source protection zone.”  However, the initial reports were that maximum penalties would increase to RMB5,000,000, which is starting to get serious.  Even after the comment draft had been issued, I attend and event where a high-ranking SEPA official was confidently reporting that penalties would increase to RMB5,000,000.  They didn’t. 

Second, the provisions fail to adopt anything resembling an “economic benefit” penalty as used in the US and elsewhere.  “Economic benefit” penalties attempt to recover any financial benefits a company may have obtained by not complying with the law.  These penalties are based on the premise that the polluter should first cough up any benefit it received by failing to comply with the law and then additional penalties are assessed to actually punish the illegal behavior.  It ensures that theoretically at least there can never be a situation where it is cheaper to pollute and pay fines than to install and operate the required pollution control technology.  Although calculating “economic benefit” requires some financial modeling, it’s not rocket science.  In fact I think some NGO (which one escapes me at the moment) has tweaked US EPA’s BEN model for use in China. 

Given the fact that RMB1,000,000 is still the maximum fixed penalty and there is no provision for “economic benefit” recovery, I have to assume there are plenty of companies out there who have run the math and find that its still cheaper to pollute (and at worst pay the fines) than comply.