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Environmental regulation, emissions and productivity: Evidence from Chinese COD-emitting manufacturers

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  • Wang, Chunhua
  • Wu, JunJie
  • Zhang, Bing
Abstract
In recent years, China's environmental regulation efforts have mainly focused on severely polluted “key regions.” The central government has designated the “three rivers and three lakes basins” (3Rs3Ls) as key regions for water pollution control and has imposed a variety of regulations to improve water quality in those basins. This paper evaluates the effects of the water quality regulations on firms' emissions of chemical oxygen demand (COD) and productivity in the 3Rs3Ls basins. We find that although the water quality regulations forced many small, heavily-polluting firms to shut down, they had no statistically significant effects on surviving firms' productivity because they were ineffective in reducing their COD emissions. A policy that forces the surviving firms to reduce their emissions would reduce their output values and productivity, at least in the short run. However, the effect is likely to be small. Specifically, a 10% reduction in total COD emissions from the industrial sectors would require only a 0.1% reduction in output values under the current production technologies. These findings are robust to alternative specifications and sampling strategies.

Suggested Citation

  • Wang, Chunhua & Wu, JunJie & Zhang, Bing, 2018. "Environmental regulation, emissions and productivity: Evidence from Chinese COD-emitting manufacturers," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 54-73.
    • Handle: RePEc:eee:jeeman:v:92:y:2018:i:c:p:54-73
    DOI: 10.1016/j.jeem.2018.08.004
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    More about this item

    Keywords

    Environmental regulation; Emissions; Productivity; Chemical oxygen demand; Manufacturing; China;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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