Abstract
This paper makes a first empirical attempt at estimating the effects of environmental regulation on air pollution, total factor productivity (TFP), and factor structure based on a quasi-natural experiment method using a novel dataset of 216 prefectural-level cities during the years 1998–2016 in China. Specifically, we are focused on the policy impact of the listed key environmental protection (KEP) prefectures which subject to more stringent environmental regulations than non-KEP prefectures. Our empirical results show that the PM2.5 intensity, environmental performance, and TFP of the KEP prefectures are significantly lower than the non-KEP prefectures. The environmental policy also affects the factor structure of KEP cites. Heterogeneity analysis indicates that the policy significantly lowered the PM2.5 for central and western cities while it is unclear for eastern cities. Our findings also document that the policy effects are unclear in the long term. Various robustness checks confirm the internal validity. These estimation results are instructive to the policymakers. We suggest that the central government should measure the effectiveness of policies within 5 years of policy formulation. Governments at all levels should make targeted adjustments based on actual impact effects. The central government should be granted local governments more speaking power and flexibility in policy implementation when formulating environmental regulatory policies. Otherwise, the central government also needs to improve the communication medium with provincial governments.
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Notes
Toward an Environmentally Sustainable Future: Country Environmental Analysis of the People’s Republic of China was published by the Asian Development Bank (ADB) and Ministry of Ecological and Environment of the People’s Republic of China in 2012.
Some heavy industry sectors, such as steel smelting processing and chemical industry, these sectors may produce more pollutants than light industry sectors.
Air Quality Standards published (GB 3095—2012) by the Ministry of Ecology and Environment of the People’s Republic of China and General Administration of Quality Supervision, Inspection and Quarantine of People’s Republic of China. The 35 μg/m3 of annual PM2.5 intensity is the dividing standard between the primary and secondary cities. We average the PM2.5 intensity within 1998–2016.
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Funding
We thank the financial support provided by the National Key R&D Program of China (2018YFC0213600), National Natural Science Foundation of China (91746112, 71822402), and Research Center on Low-carbon Economy for Guangzhou Region. This research also supported by National Natural Science Foundation of China (71532013, 71903068) and China Postdoctoral Science Foundation (2019M653301).
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Highlights
• Total factor productivity of 216 Chinese prefectural-level cities is estimated.
• The effects of environmental regulation on air pollution, productivity, and factor structure are investigated using DID and DDD estimators.
• The mechanism and heterogeneity analysis are fully considered.
• Empirical results are robust to alternative measures of air pollution, alternative the year of implementing KEP policy, etc.
Appendices
Appendix 1. Grouping data
The grouping data of prefectures in this paper can be downloaded at the following website: https://github.com/zhaokeke-cn/paper-grouping-data.
Appendix 2. Long-term effects of the KEP policy
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Zhang, N., Zhao, K. & Yu, Y. The effect of environmental regulation on air pollution, productivity, and factor structure: a quasi-natural experiment evidence from China. Environ Sci Pollut Res 27, 20392–20409 (2020). https://doi.org/10.1007/s11356-020-08462-4
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DOI: https://doi.org/10.1007/s11356-020-08462-4
Keywords
- Environmental regulation
- Air pollution
- Difference-in-differences
- Total factor productivity
- Key environmental protection policy