• Valuation impacts of environmental protection taxes and regulatory costs in heavy-polluting industries

      Tu, Wen-Jun; Yue, Xiao-Guang; Liu, Wei; Crabbe, M. James C.; Ningbo University; European University Cyprus; Porto Polytechnic; Qingdao University; Oxford University; University of Bedfordshire; et al. (MDPI, 2020-03-20)
      In 2016, the issue of the Environmental Protection Tax Law indicated the enhancement of environmental protection in China. This study examines the market reaction to firms in heavy-polluting industries, and the effects of external legal institutional quality and internal environmental disclosure on firm value around the passage of Environmental Protection Tax Law. Using an event study approach coupled with ordinary least square regressions, the researchers find a significantly negative market reaction to firms in heavy-polluting industries, but this negative reaction varies depending on the expected increase in future regulatory costs. Specifically, the above negative reaction is stronger when the firm reveals that itself or its subsidiary belongs to heavy-polluting industry, however it would be mitigated when a firm is in a region with better quality of legal institutions or discloses environmental improvement activities. Overall, the results are consistent with the market perceiving that the environmental protection tax law enacted would increase regulatory costs for firms in heavy-polluting industries, and also show the higher-quality regional legal institutions and more efforts on environmental protection could relieve the market’s pessimism caused by uncertainty.
    • Water use for shale gas extraction in the Sichuan Basin, China

      Wang, Jianliang; Liu, Mingming; Bentley, Yongmei; Feng, Lianyong; Zhang, Chunhua; China University of Petroleum; University of Bedfordshire; Economics & Technology Research Institute, Beijing (Elsevier, 2018-08-07)
      This study investigates the use of water for extracting shale gas in the Sichuan Basin of China. Both net water use and water intensity (i.e., water use per unit of gas produced) of shale wells are estimated by applying a process-based life cycle inventory (LCI) model. The results show that the net water use and water intensity are around 24500 m3/well and 1.9 m3 water/104m3 gas respectively, and that the fracturing and completion stage of shale gas extraction accounts for the largest share in net water use. A comparison shows that China's water use for shale gas extraction is generally higher than that of other countries. By considering the predicted annual drilling activities in the Sichuan Basin, we find that the annual water demand for shale gas development is likely to be negligible compared to total regional water supply. However, considering the water demand for shale gas extraction and the water demand from other sectors may make water availability a significant concern for China's shale gas development in the future.