Chinese dust storms

http://www.planetark.com/dailynewsstory.cfm/newsid/40474/story.htm

Not sure how to upload graphs, but i do have them on my computer.

China's rapid economic development has caused the sand of the Gobi desert to be blown to South Korea. The Chinese and Mongolians have over-grazed and over-logged the Gobi desert and left it bare, allowing the dust to be picked up by winds. Few times a year, these storms are blown to major cities and even other countries where they cause great damage. The industrial growth and the major increase in polluting companies in and around Beijing have caused the dust storms to become harmful.

Because of the increase in number of factories in china, the effects on third parties such as South Korea have increased. The storms are now more frequent and increasingly toxic. The storms have increased from 4 per year, in the 1980's to twelve in 2000. The dust passes over Chinese industrial sites and picks up toxins, which it in turn carries over to Korea.

This is a result from over allocation of resources towards the products which produce the pollution. Therefore this is a market failure of the Chinese market. A market failure occurs when firms do not allocate their resources most efficiently. The externalities of the production of products such as the computer chips mentioned in the article, cause serious harm to the Korean society even though they had nothing to do with the production of these Chinese products. The social cost of these storms befalls the Korean people. The entire daily life of many people is disturbed when the storms hit, schools are closed down and people are advised to stay indoors. The storms not only disrupt social lives, but they also kill approximately 165 people per year and cause illnesses in over 1, 8 million people. But there is still more damage, the Korea Environment institute estimates that the storms annually cause between 4.2 trillion won to 5.5 trillion won ($4.47 billion to $5.86 billion).

The computer chips and other polluting goods that are produced in China are demerit goods because they create too much pollution. Demerit goods are goods which are over produced by the market; in this case they are over produced because the level of pollution has become a social cost to the Korean people.

To decrease these social costs, the Chinese government is trying to contain desertification in China's arid regions. To contain desertification, the Chinese government can do a number of things. It can tax polluting companies and/or they can make it illegal for farmers to let their cattle graze on the Gobi grasslands. It also is trying to repair the damaged land in the desert, in order to contain the decrease the number of storms. The Beijing Olympics of 2008 will be dust storm to the free according Chinese government.

If the government taxes the firms more for pollution, this will make it more expensive for firms to pollute. Therefore in order to keep their costs low, they will pollute less, which in turn will decrease the toxicity of the storms. Leading to an immense decrease in the damage done by the storms to the health of people affected. The government however can also use other methods to control pollution output. They can sell trade able permits to firms to restrict their totall output. Permits can allow the company that owns it to pollute a certain amount. If the firm wants to pollute more, it can buy more permits. But also if they want to pollute less, they can sell their permits and make profits.