Wednesday, November 23, 2005

A "Non-Green" City in China: A Test of the Catalyst Hypothesis

Can there be a large "silver lining" from environmental disasters? A Chinese city called Harbin offers another natural experiment today for thesting this hypothesis. A chemical plant exploded in Harbin and this has increased the local river's toxic benzene content. Clearly this city will need a new drinking water source.

Will this shock lead to new industrial regulation? Will the Chinese government now demand that industries engage in greater precautionary investment to reduce the probability of future negative shocks?

Since China is not a democracy, it does not have a free press. People in Harbin may have trouble organizing to voice their concerns with the status quo. In this case, industrial polluters face fewer incentives to take costly actions to reduce their possible environmental impacts. In the United States, only in the early 1980s was the Toxic Release Inventory created. Does China have a similar data base that it freely distributes to people? Somehow, I doubt it.

Is Harbin a "green city"? Clearly a city's industrial composition matters in determining its environmental quality. A city that specializes in chemical plants is at greater risk to experience these types of negative shocks.

This interesting article also highlights the cross-boundary issues that arise with water pollution. Russia is worried that its water quality may be affected by the pollution from Harbin. If Russia could credibly punish China for the externality it imposes on Russia's water quality, then China would be more likely to take ex-ante steps to minimize the likelihood of future industrial accidents that pollute the water.

Toxic Leak Shuts Down Chinese City

By JOE McDONALD, Associated Press Writer 1 hour, 7 minutes ago

BEIJING - A Chinese city of 3.8 million people closed schools and was trucking in drinking water Wednesday after shutting down its water system following a chemical plant explosion that officials said polluted a nearby river with toxic benzene.

The announcement of the shutdown in Harbin in China's frigid northeast set off panicked buying this week of bottled water, milk and soft drinks that left supermarket shelves bare.

The water system was shut down at midnight Tuesday and probably will stay out of service for four days, said an official of its Municipal Water Supply Group. He would give only his surname, Chen.

An explosion Nov. 13 at a chemical plant in the nearby city of Jilin left the Songhua River, Harbin's main water source, polluted with benzene, a toxic, flammable liquid, the government said.

Though local officials denied it, water supplies were also cut in at least one district of Songyuan city in neighboring Jilin province, about 90 miles southwest of Harbin, residents said.

A doctor from the Ningjiang District Central Hospital and a teacher from Ningjiang No. 1 Middle School said the water had been cut off for between five to seven days already. Both refused to give their names when reached by telephone.

Another Songyuan resident from a separate district said his neighborhood's water supply had been uninterrupted because it came from a well, not the river.

Russian television reports said Wednesday that concern was growing over the pollution threat in the Russian border city of Khabarovsk, about 435 miles down river from Harbin on the Songhua.

In Harbin, officials tried to downplay the crisis.

"The provincial government is sending in bottled drinking water from other cities," Chen said. "It must be very inconvenient for the public — taking showers or flushing toilets. But this is an emergency and it will only last a few days."

Schools canceled classes through Nov. 30 "for fear that catering and sanitation cannot be secured," the official Xinhua News Agency said.

There is no sign that benzene got into the city water system, said an employee of the Harbin Environmental Bureau who would give only his surname, Wang.

Water service was reinstated for about 12 hours on Wednesday after experts concluded the benzene wouldn't reach the city until Thursday afternoon, the city government said on its Web site.

There were no reports of anyone injured by drinking the polluted water but 15 hospitals were ordered to be ready to treat possible poisoning cases.

Harbin is one of the coldest places in China, with overnight temperatures this week of 10 degrees. It is best known abroad for its winter "ice lantern" festival, when giant slabs of ice cut from the Songhua are used to construct copies of famous buildings and artworks in public parks.

Companies that supply steam heat to buildings have been ordered to ensure they have adequate water supplies from wells in order to ensure that heat is not interrupted, Xinhua reported.

The explosion in Jilin killed five people and forced the evacuation of 10,000 others. It was blamed on human error in a tower that processed benzene.

The disaster highlighted the precarious state of China's water supplies.

The country's 1.3 billion people and the factories and farms of its booming economy compete for scarce supplies. The government says all of China's major rivers are dangerously polluted.

Due to its vast population, China ranks among countries with the smallest water supplies per person.

In Harbin, the government is using wells to supply hospitals and some residential areas, according to local news reports. Retailers were warned not to overcharge for drinking water.

The shutdown affects the city of Harbin but not its suburbs, Chen said. The city has 3.8 million people, while the surrounding area has about 5 million more.

Photos in newspapers and on news Web sites showed people in packed supermarkets pushing carts overflowing with cases of bottled water and soft drinks.

Families prepared by filling buckets and bathtubs with water while the government said supplies were still safe, according to state media.