Effects and Choices of Environmental Pollution Liability Insurance in Provinces of China

China began a pilot application for environmental pollution liability insurance in 2008. Although implementation situations vary substantially in different regions in China, it is appropriate to test how much contribution pollution insurance may make to environmental risk mitigation and other factors. Based on an analysis of pollutant emissions and investment completed in the treatment of industrial pollution, we find that pollution liability insurance, both compulsory and voluntary, does not work as expected in reducing environmental pollution. The value of this insurance mainly lies on the concern of the government for victims in environmental disasters. Considering the high administrative costs, it is not proper to push compulsory insurance across the country indiscriminately. Thus, this paper further classifies all 31 provinces in mainland China according to their economy and pollution characteristics and establishes guidelines for adopting pollution insurance for each province. The result shows that compulsory insurance is unnecessary for most provinces, while voluntary insurance can match their needs better.