The annual cost of economic losses and environmental damage in China recently exceeded 1.2 trillion yuan ($180 billion), according to a new report.

The Chinese Academy for Environmental Planning said direct economic losses caused by water, air and solid waste pollution and environmental incidents exceeded 894 billion yuan in 2008, or 2.7 percent of the country's total economic output.

Taking into account the ecological destruction of forests, wetlands and grasslands, as well as degradation caused by mining activities, the loss added up to 1.27 trillion yuan in 2008, according to the report.

The numbers suggest a large increase in the direct economic losses of pollution, which stood at 511 billion yuan in 2004.

"Despite the percentage (relative to economic output) remaining relatively stable, the absolute increase of the environmental cost is still quite striking, considering China's double-digit economic growth rates," Wang Jinnan, vice-president of the Chinese Academy of Environmental Planning, said on Monday.

The study was done in conjunction with a similar one in India led by two high-level think tanks.

The think tanks suggested the two countries, home to 37 percent of the global population and using 20 percent of the world's energy consumption, would benefit by cooperation into researching a more sustainable developmental path.

Such projects could include carbon capture technology, clean coal technology, energy efficiency and renewable energy resources.

In India, the estimated economic costs of environmental damage range from 3.5 to 7.5 percent of the country's total economic output, based on domestic studies. But the results are not comparable to China's figures, because the scopes and methodologies are different, Wang noted.

"Much of the cost in India is caused by air pollution, water contamination and solid wastes, as well as deforestation," said Rajendra K Pachauri, the chief executive of India-based The Energy and Resources Institute.

"Ensuring the sustainable use of natural resources during rapid socio-economic development poses a big challenge for both countries, and the implications confronted by us internally would be felt by the world at large," said Zhu Guangyao, secretary-general of the China Council for International Cooperation on Environment and Development.

As both countries are coal dependent, and still in the process of rapid industrialization and urbanization, China and India have been facing mounting international pressure to curb their greenhouse gas emissions.

"China and India are both facing the urgency to get rid of the poverty, you can't bring about the transition overnight," said Pachauri, "but green growth is important domestically because severe pollutions will affect livelihoods of our people."