the lack of cooperation on the part

the lack of cooperation on the part of local government officials who are interested in increasing output of their own regions. The central government needs to establish and monitor a clear set of environmental standards and severely punish the governor of the violating province even by relieving him of his position. When Zhu Rongji was President of the People’s Bank in the 1990s, he succeeded in restricting the quantity of money supply by enforcing the policy that the President of a provincial People’s Bank would be replaced if the extension of credit in his province were to exceed the quota set by the Central Bank. The same method for the enforcement of environmental policy may be needed. Given the risk of such a severe punishment a provincial governor would apply the same policy to enforce environmental standards in cities and counties in his province by similarly punishing the mayors and county officials. It would be difficult to decentralize the enforcement of environmental protection to provincial governments because they may be more interested in regional development at the expense of the environment; if regional governments were concerned with the environment they would be enforcing the policy of the central government already. It is doubtful, however, whether the central government would have the strong resolve to enforce environmental protection policies as suggested above.

Third, a multinational effort needs to be made to limit the emission of CO₂. As pointed out previously if the level of carbon dioxide reaches twice the level existing before the Industrial Revolution great climate instability will occur. How to achieve an international political consensus to reduce the rate of increase with each country taking its fair share so as not to exceed the above critical level is a most pressing problem today, but the solution to this problem is beyond the scope of this paper and the wisdom of its author. It suffices to note that China has some incentives to reduce emissions as it receives benefits from the Clean Development Mechanism (CDM), an arrangement under the Kyoto Protocol that allows industrialized countries with a greenhouse gas reduction commitment (called Annex 1 countries) to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries.