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Dynamics of Sewage Charge Policies, Environmental Protection Industry and Polluting Enterprises—A Case Study in China

The game model of sewage charges, based on incremental mode, was developed. Four modes of high/low sewage charge standards were utilized to analyze the relationship between control strategy on sewage discharge and the development of environmental protection industry. Results showed that the selection of control strategy was heavily dependent on the level of sewage charges. An empirical study was carried out to investigate the environmental protection industry in 31 regions in China in 2010. It was revealed that the sewage charge standards, formulated by the local governments and the development of environmental protection industry, varied significantly in different regions. The optimal level of environmental quality and social welfare, as a whole, was not achieved in China. It is proposed that different regions should adopt different sewage charges standards based on their economic development level and the current environmental quality. Similarly, the scientific and technological innovation of environmental protection industry should be further strengthened.