Development of a Parsimonious Set of City-level Environmental Performance

Abstract The potential tradeoff between the twin goals of reducing environmental impact while maintaining growth will require China's cities to evaluate the economic impact of urban pollution at the local level. Using economic input-output analysis, city level indicators of economic activity and environmental impact and available estimates of the benchmark relationships between output and pollution by sector, we outline a method to quantify in monetary terms the marginal damages of air pollution by sector at the city level. By applying the framework of environmental accounting to the pilot case of Jiyuan, a small city in Henan province, we demonstrate a method for local public agencies to facilitate administrative tracking of monetized air pollution based on underlying economic activity, and outline a minimum set of metrics which a small city in China must track in order to estimate the monetized damage of air pollution by sector. Our methodology leverages economy-wide aggregate models Nielsen 2007, The World Bank 2007) to significantly reduce the metrics required for a simple approximation of the relative value added per unit of emission by sector for medium-sized cities in China.