The Yellow River (Huang He) is perhaps China’s most historically significant geographical component. Its basin was the site of the first Chinese civilizations, and it was a very prosperous region from 2100-1046 BC. It is the most important water source of North China—which afforded settlers the opportunity to farm. It is China’s second-largest river—and the sixth largest in the world. It is also symbolically representative of Chinese spirit. The river’s yellow sedimentation represents bearing burdens, its changing course represents adaptation, and its continual flow represents Chinese perseverance.
But there is a dark side to the story of the Yellow River–nicknamed “China’s sorrow.” Its accumulating sediment causes a shift in the riverbed, making it prone to flooding. And this flooding had caused millions of deaths before modern agriculture brought damming to the river. It is also home to one of the most deadly natural disasters in human history: in 1931, 1 million died in a massive flood.
And the story of the Yellow River has only gotten worse in recent years. China’s economic development—which is correlated with pollution, hydropower, water extraction, agriculture, and industrial use—has harmed the river. The Chinese government has said that 66% of the river is too polluted for safe consumption. Also indicative of this phenomenon is that 30% of the river’s fish population has become extinct. Its floods have become even more disastrous with economic modernization. Deforestation and the embankment of tributaries have contributed.
What does this mean for economics? Environmental economics (a class I’m taking right now) suggests that the “pollution market” for the Yellow River is out of equilibrium. Many factors play into this. The costs—undrinkable water, the loss of life, loss of peace of mind due to the threat of floods, degradation a historic landmark—that Chinese society bears because of its pollution far outweigh the current benefits of the pollution. While basic economic modeling cannot put a price tag on these entities, they are clear losses. Pollution permits or taxes are ways of putting a price tag on these negative externalities, and would be a step forward to improving the condition of an important Chinese symbol.