Working Paper: NBER ID: w22507
Authors: Zhao Chen; Matthew E. Kahn; Yu Liu; Zhi Wang
Abstract: China’s environmental regulators have sought to reduce the Yangtze River’s water pollution. We document that this regulatory effort has had two unintended consequences. First, the regulation’s spatial differential stringency has displaced economic activity upstream. As polluting activity agglomerates upstream, more Pigouvian damage is caused downstream. Second, the regulation has focused on reducing one dimension of water pollution called chemical oxygen demand (COD). Thus, local officials face weak incentives to engage in costly effort to reduce other non-targeted but more harmful water pollutants such as petroleum, lead, mercury, and phenol.
Keywords: No keywords provided
JEL Codes: Q25; Q52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased regulatory stringency in downstream cities (L59) | Decrease in industrial activity in downstream cities (R11) |
| Increased regulatory stringency in downstream cities (L59) | Increased pollution levels in upstream areas (Q53) |
| Decrease in industrial activity in downstream cities (R11) | Increased industrial activity in upstream areas (L71) |
| Regulatory focus on COD emissions (L98) | Neglect of other harmful pollutants (Q53) |
| Differential regulatory stringency across localities (H73) | Migration of polluting activities (F64) |
| Migration of polluting activities (F64) | Higher pollution levels in exposed cities (F64) |