Working Paper: NBER ID: w27790
Authors: Matthew E. Kahn; Weizeng Sun; Siqi Zheng
Abstract: The surprise economic shutdown due to COVID-19 caused a sharp improvement in urban air quality in many previously heavily polluted Chinese cities. If clean air is a valued experience good, then this short-term reduction in pollution in spring 2020 could have persistent medium-term effects on reducing urban pollution levels as cities adopt new “blue sky” regulations to maintain recent pollution progress. We document that China’s cross-city Environmental Kuznets Curve shifts as a function of a city’s demand for clean air. We rank 144 cities in China based on their population’s baseline sensitivity to air pollution and with respect to their recent air pollution gains due to the COVID shutdown. The largest experience good effect should take place for cities featuring a high pollution sensitive population and where air quality has sharply improved during the pandemic. The residents of these cities have increased their online discussions focused on environmental protection, and local officials are incorporating “green” industrial subsidies into post-COVID stimulus policies.
Keywords: Air Quality; Environmental Policy; COVID-19; Urban Economics
JEL Codes: Q52; Q53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| COVID-19 shutdown (H12) | reduction in PM2.5 concentrations (Q53) |
| reduction in PM2.5 concentrations (Q53) | increased public demand for clean air regulations (Q52) |
| increased public demand for clean air regulations (Q52) | regulatory pressure on local officials (H70) |
| improved air quality (Q53) | increased citizen engagement (D72) |
| increased citizen engagement (D72) | shift in Environmental Kuznets Curve (EKC) downward (O44) |