IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v83y2024icp530-547.html
   My bibliography  Save this article

Is green place-based policy effective in mitigating pollution? Firm-level evidence from China

Author

Listed:
  • Cheng, Qi
  • Yang, Jun

Abstract

The green place-based policy is crucial for balancing economic competitiveness and environmental protection. However, there is scarce literature examining its impact on environmental pollution and the underlying mechanisms at the micro level. This paper treats China's National Demonstration Eco-Industrial Parks (EIP) as a quasi-natural experiment and systematically evaluates its effect on pollution using a difference-in-differences (DID) approach. With data from Chinese industrial firms and counties, this research reveals that the EIP leads to a significant reduction of 54.36% in firms’ sulfur dioxide (SO2) emissions. Moreover, increasing R&D investment, reducing SO2 emission intensity, implementing production process pollution control, and dynamic adjustments of firm entry and exit are significant influencing mechanisms. Heterogeneity tests indicate a stronger SO2 reduction effect of the EIP program on firms in eastern regions, capital-intensive industries, and non-state-owned enterprises. This study suggests that the Chinese government should support the establishment of EIP, conduct a coordinate system, strategically plan the industrial chain, establish a pollution monitoring and early warning system, enhance information disclosure, and give greater emphasis to the construction of EIPs in central and western China.

Suggested Citation

  • Cheng, Qi & Yang, Jun, 2024. "Is green place-based policy effective in mitigating pollution? Firm-level evidence from China," Economic Analysis and Policy, Elsevier, vol. 83(C), pages 530-547.
    • Handle: RePEc:eee:ecanpo:v:83:y:2024:i:c:p:530-547
    DOI: 10.1016/j.eap.2024.07.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592624001693
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eap.2024.07.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Guariglia, Alessandra & Liu, Xiaoxuan & Song, Lina, 2011. "Internal finance and growth: Microeconometric evidence on Chinese firms," Journal of Development Economics, Elsevier, vol. 96(1), pages 79-94, September.
    2. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    3. Michael Greenstone & Rema Hanna, 2014. "Environmental Regulations, Air and Water Pollution, and Infant Mortality in India," American Economic Review, American Economic Association, vol. 104(10), pages 3038-3072, October.
    4. C. Cindy Fan & Allen J. Scott, 2003. "Industrial Agglomeration and Development: A Survey of Spatial Economic Issues in East Asia and a Statistical Analysis of Chinese Regions," Economic Geography, Taylor & Francis Journals, vol. 79(3), pages 295-319, July.
    5. Venables, Anthony & Duranton, Gilles, 2018. "Place-Based Policies for Development," CEPR Discussion Papers 12889, C.E.P.R. Discussion Papers.
    6. Paul Lanoie & Jérémy Laurent‐Lucchetti & Nick Johnstone & Stefan Ambec, 2011. "Environmental Policy, Innovation and Performance: New Insights on the Porter Hypothesis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(3), pages 803-842, September.
    7. Helsley, Robert W. & Strange, William C., 2007. "Agglomeration, opportunism, and the organization of production," Journal of Urban Economics, Elsevier, vol. 62(1), pages 55-75, July.
    8. Yang, Shubo & Jahanger, Atif & Hossain, Mohammad Razib & Wang, Yanming & Balsalobre-Lorente, Daniel, 2023. "Enhancing export product quality through innovative cities: A firm-level quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 462-478.
    9. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    10. Joseph S. Shapiro & Reed Walker, 2018. "Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade," American Economic Review, American Economic Association, vol. 108(12), pages 3814-3854, December.
    11. Brülhart, Marius & Mathys, Nicole A., 2008. "Sectoral agglomeration economies in a panel of European regions," Regional Science and Urban Economics, Elsevier, vol. 38(4), pages 348-362, July.
    12. He, Guojun & Liu, Tong & Zhou, Maigeng, 2020. "Straw burning, PM2.5, and death: Evidence from China," Journal of Development Economics, Elsevier, vol. 145(C).
    13. Petra Christmann & Glen Taylor, 2006. "Firm self-regulation through international certifiable standards: determinants of symbolic versus substantive implementation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 863-878, November.
    14. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    15. Liu, Lingxuan & Zhang, Bing & Bi, Jun & Wei, Qi & He, Pan, 2012. "The greenhouse gas mitigation of industrial parks in China: A case study of Suzhou Industrial Park," Energy Policy, Elsevier, vol. 46(C), pages 301-307.
    16. Chen, Yvonne Jie & Li, Pei & Lu, Yi, 2018. "Career concerns and multitasking local bureaucrats: Evidence of a target-based performance evaluation system in China," Journal of Development Economics, Elsevier, vol. 133(C), pages 84-101.
    17. Zhao, Chuanmin & Qu, Xi, 2024. "Place-based policies, rural employment, and intra-household resources allocation: Evidence from China’s economic zones," Journal of Development Economics, Elsevier, vol. 167(C).
    18. Arik Levinson, 2009. "Technology, International Trade, and Pollution from US Manufacturing," American Economic Review, American Economic Association, vol. 99(5), pages 2177-2192, December.
    19. Geng, Yong & Liu, Wei & Li, Kai & Chen, Hanshu, 2021. "Environmental regulation and corporate tax avoidance: A quasi-natural experiment based on the eleventh Five-Year Plan in China," Energy Economics, Elsevier, vol. 99(C).
    20. Wu, Haitao & Hao, Yu & Ren, Siyu, 2020. "How do environmental regulation and environmental decentralization affect green total factor energy efficiency: Evidence from China," Energy Economics, Elsevier, vol. 91(C).
    21. Yan, Sen & Sun, Xinyu & Zhang, Yurong, 2024. "High-speed railway ripples on the greenness: Insight from urban green vegetation cover," Transportation Research Part A: Policy and Practice, Elsevier, vol. 179(C).
    22. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1197-1287, Elsevier.
    23. Yan, Junna & Su, Bin, 2020. "What drive the changes in China's energy consumption and intensity during 12th Five-Year Plan period?," Energy Policy, Elsevier, vol. 140(C).
    24. Sun, Chuanwang & Zhang, Wenyue & Luo, Yuan & Xu, Yonghong, 2019. "The improvement and substitution effect of transportation infrastructure on air quality: An empirical evidence from China's rail transit construction," Energy Policy, Elsevier, vol. 129(C), pages 949-957.
    25. Douglas Zhihua Zeng, 2012. "China'S Special Economic Zones And Industrial Clusters: The Engines For Growth," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 1-28.
    26. Liu, Xiaozi & Heilig, Gerhard K. & Chen, Junmiao & Heino, Mikko, 2007. "Interactions between economic growth and environmental quality in Shenzhen, China's first special economic zone," Ecological Economics, Elsevier, vol. 62(3-4), pages 559-570, May.
    27. Abdoul G. Sam & Madhu Khanna & Robert Innes, 2009. "Voluntary Pollution Reduction Programs, Environmental Management, and Environmental Performance: An Empirical Study," Land Economics, University of Wisconsin Press, vol. 85(4), pages 692-711.
    28. Maxwell, John W & Lyon, Thomas P & Hackett, Steven C, 2000. "Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 583-617, October.
    29. Li, Shanjun & Liu, Yanyan & Purevjav, Avralt-Od & Yang, Lin, 2019. "Does subway expansion improve air quality?," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 213-235.
    30. Zeng, Dao-Zhi & Zhao, Laixun, 2009. "Pollution havens and industrial agglomeration," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 141-153, September.
    31. John Ehrenfeld & Nicholas Gertler, 1997. "Industrial Ecology in Practice: The Evolution of Interdependence at Kalundborg," Journal of Industrial Ecology, Yale University, vol. 1(1), pages 67-79, January.
    32. Tanaka, Shinsuke, 2015. "Environmental regulations on air pollution in China and their impact on infant mortality," Journal of Health Economics, Elsevier, vol. 42(C), pages 90-103.
    33. Li, Xuehui & Xu, Yangyang & Yao, Xin, 2021. "Effects of industrial agglomeration on haze pollution: A Chinese city-level study," Energy Policy, Elsevier, vol. 148(PA).
    34. Wu, Jianxian & Nie, Xin & Wang, Han & Li, Weijuan, 2023. "Eco-industrial parks and green technological progress: Evidence from Chinese cities," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    35. Loren Brandt & Johannes Van Biesebroeck & Luhang Wang & Yifan Zhang, 2017. "WTO Accession and Performance of Chinese Manufacturing Firms," American Economic Review, American Economic Association, vol. 107(9), pages 2784-2820, September.
    36. Zeng, Douglas Zhihua & Cheng, Lei & Shi, Lei & Luetkenhorst, Wilfried, 2021. "China’s green transformation through eco-industrial parks," World Development, Elsevier, vol. 140(C).
    37. Tao, Wang & Guang-shun, He & Jing, Guo & Yue, Yin & Lin-lin, Li, 2020. "Energy consumption and economic growth in China’s marine economic zones-an estimation based on partial linear model," Energy, Elsevier, vol. 205(C).
    38. Robert Innes & Abdoul G. Sam, 2008. "Voluntary Pollution Reductions and the Enforcement of Environmental Law: An Empirical Study of the 33/50 Program," Journal of Law and Economics, University of Chicago Press, vol. 51(2), pages 271-296, May.
    39. Robert Feenstra & Hong Ma, 2007. "Optimal Choice of Product Scope for Multiproduct Firms under Monopolistic Competition," NBER Working Papers 13703, National Bureau of Economic Research, Inc.
    40. Barla, Philippe, 2007. "ISO 14001 certification and environmental performance in Quebec's pulp and paper industry," Journal of Environmental Economics and Management, Elsevier, vol. 53(3), pages 291-306, May.
    41. Han, Feng & Xie, Rui & Fang, Jiayu, 2018. "Urban agglomeration economies and industrial energy efficiency," Energy, Elsevier, vol. 162(C), pages 45-59.
    42. John A. List & Daniel L. Millimet & Per G. Fredriksson & W. Warren McHone, 2003. "Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 944-952, November.
    43. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    44. Yuan, Huaxi & Feng, Yidai & Lee, Chien-Chiang & Cen, Yan, 2020. "How does manufacturing agglomeration affect green economic efficiency?," Energy Economics, Elsevier, vol. 92(C).
    45. Wang, Jin, 2013. "The economic impact of Special Economic Zones: Evidence from Chinese municipalities," Journal of Development Economics, Elsevier, vol. 101(C), pages 133-147.
    46. John Ehrenfeld, 2003. "Putting a Spotlight on Metaphors and Analogies in Industrial Ecology," Journal of Industrial Ecology, Yale University, vol. 7(1), pages 1-4, January.
    47. Wang, Qian & Zhu, Linke, 2021. "Environmental regulation, firm heterogeneity, and intra-industry reallocation," China Economic Review, Elsevier, vol. 68(C).
    48. Kairui Cao & Laiqun Jin & Yuanyuan Zhu & Zilong Nie & Hao Li, 2022. "Does China’s National Demonstration Eco-Industrial Park Reduce Carbon Dioxide and Sulfur Dioxide—A Study Based on the Upgrading and Transformation Process," IJERPH, MDPI, vol. 19(19), pages 1-19, October.
    49. Yang, Zhihao & Hong, Junjie & Wang, Xuan, 2022. "Environmental spillovers in international joint ventures: Evidence from Chinese industrial firms," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    50. Edward Miguel & Michael Kremer, 2004. "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities," Econometrica, Econometric Society, vol. 72(1), pages 159-217, January.
    51. Zhao, Chuanmin & Xie, Rui & Ma, Chunbo & Han, Feng, 2022. "Understanding the haze pollution effects of China's development zone program," Energy Economics, Elsevier, vol. 111(C).
    52. Gollop, Frank M & Roberts, Mark J, 1983. "Environmental Regulations and Productivity Growth: The Case of Fossil-Fueled Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 654-674, August.
    53. Wu, Jianxian & Nie, Xin & Wang, Han, 2023. "Curse to blessing: The carbon emissions trading system and resource-based cities' carbon mitigation," Energy Policy, Elsevier, vol. 183(C).
    54. Wu, Haoyi & Guo, Huanxiu & Zhang, Bing & Bu, Maoliang, 2017. "Westward movement of new polluting firms in China: Pollution reduction mandates and location choice," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 119-138.
    55. Liu, Mengdi & Tan, Ruipeng & Zhang, Bing, 2021. "The costs of “blue sky”: Environmental regulation, technology upgrading, and labor demand in China," Journal of Development Economics, Elsevier, vol. 150(C).
    56. Qian, Long & Xu, Xiaolin & Sun, Ying & Zhou, Yunjie, 2022. "Carbon emission reduction effects of eco-industrial park policy in China," Energy, Elsevier, vol. 261(PB).
    57. Tang, Maogang & Li, Zhen & Hu, Fengxia & Wu, Baijun & Zhang, Ruihan, 2021. "Market failure, tradable discharge permit, and pollution reduction: Evidence from industrial firms in China," Ecological Economics, Elsevier, vol. 189(C).
    58. Zhang, Cong & Tao, Ran & Yue, Zihang & Su, Fubing, 2023. "Regional competition, rural pollution haven and environmental injustice in China," Ecological Economics, Elsevier, vol. 204(PA).
    59. Hongwei Xu & Wenquan Liang & Kuanhu Xiang, 2022. "The Environmental Consequences of Place‐Based Policies in China: An Empirical Study Based on SO2 Emission Data," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(4), pages 201-229, July.
    60. Nouri Najjar & Jevan Cherniwchan, 2021. "Environmental Regulations and the Cleanup of Manufacturing: Plant-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 103(3), pages 476-491, July.
    61. Chang, Zheng & Zheng, Longfei, 2022. "High-speed rail and the spatial pattern of new firm births: Evidence from China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 155(C), pages 373-386.
    62. Yue Hua & Mark Partridge & Weizeng Sun, 2023. "Pollution effects of place‐based policy: Evidence from China's development‐zone program," Journal of Regional Science, Wiley Blackwell, vol. 63(3), pages 703-727, June.
    63. Paul Krugman, 1998. "Space: The Final Frontier," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 161-174, Spring.
    64. Yune, Jeremy H. & Tian, Jinping & Liu, Wei & Chen, Lujun & Descamps-Large, Cathy, 2016. "Greening Chinese chemical industrial park by implementing industrial ecology strategies: A case study," Resources, Conservation & Recycling, Elsevier, vol. 112(C), pages 54-64.
    65. Yi Lu & Jin Wang & Lianming Zhu, 2019. "Place-Based Policies, Creation, and Agglomeration Economies: Evidence from China's Economic Zone Program," American Economic Journal: Economic Policy, American Economic Association, vol. 11(3), pages 325-360, August.
    66. Imelda,, 2020. "Cooking that kills: Cleaner energy access, indoor air pollution, and health," Journal of Development Economics, Elsevier, vol. 147(C).
    67. repec:bri:cmpowp:13/331 is not listed on IDEAS
    68. Seema Arora & Timothy N. Cason, 1996. "Why Do Firms Volunteer to Exceed Environmental Regulations? Understanding Participation in EPA's 33/50 Program," Land Economics, University of Wisconsin Press, vol. 72(4), pages 413-432.
    69. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cheng, Qi & Yang, Jun, 2024. "High-speed rail, resource allocation and haze pollution in China," Transport Policy, Elsevier, vol. 157(C), pages 124-139.
    2. Lu, Yunguo & Zhang, Lin, 2022. "National mitigation policy and the competitiveness of Chinese firms," Energy Economics, Elsevier, vol. 109(C).
    3. Zhang, Ming & Zhao, Yingxue, 2023. "Does environmental regulation spur innovation? Quasi-natural experiment in China," World Development, Elsevier, vol. 168(C).
    4. Dietrich Earnhart & Dylan G. Rassier, 2016. "“Effective regulatory stringency” and firms’ profitability: the effects of effluent limits and government monitoring," Journal of Regulatory Economics, Springer, vol. 50(2), pages 111-145, October.
    5. Li, Zhen & Wu, Baijun & Wang, Danyang & Tang, Maogang, 2022. "Government mandatory energy-biased technological progress and enterprises' environmental performance: Evidence from a quasi-natural experiment of cleaner production standards in China," Energy Policy, Elsevier, vol. 162(C).
    6. Xu, Hao & Xu, Jingxuan & Wang, Jie & Hou, Xiang, 2023. "Reduce production or increase efficiency? Hazardous air pollutants regulation, energy use, and the synergistic effect on industrial enterprises' carbon emission," Energy Economics, Elsevier, vol. 126(C).
    7. Yuan, Huaxi & Feng, Yidai & Lee, Chien-Chiang & Cen, Yan, 2020. "How does manufacturing agglomeration affect green economic efficiency?," Energy Economics, Elsevier, vol. 92(C).
    8. Liu, Yazhou & Ren, Tiantian & Liu, Lijun & Ni, Jinlan & Yin, Yingkai, 2023. "Heterogeneous industrial agglomeration, technological innovation and haze pollution," China Economic Review, Elsevier, vol. 77(C).
    9. Wang, Xuliang & Xu, Lulu & Ye, Qin & He, Shi & Liu, Yi, 2022. "How does services agglomeration affect the energy efficiency of the service sector? Evidence from China," Energy Economics, Elsevier, vol. 112(C).
    10. Liu, Mengdi & Tan, Ruipeng & Zhang, Bing, 2021. "The costs of “blue sky”: Environmental regulation, technology upgrading, and labor demand in China," Journal of Development Economics, Elsevier, vol. 150(C).
    11. Huaxi Yuan & Longhui Zou & Xiangyong Luo & Yidai Feng, 2022. "How Does Manufacturing Agglomeration Affect Green Development? A Spatial and Nonlinear Perspective," IJERPH, MDPI, vol. 19(16), pages 1-23, August.
    12. Shi, Xinzheng & Zhang, Ming-ang, 2023. "Waste import and air pollution: Evidence from China's waste import ban," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    13. Zhang, Hua & Xu, Tiantian & Feng, Chao, 2022. "Does public participation promote environmental efficiency? Evidence from a quasi-natural experiment of environmental information disclosure in China," Energy Economics, Elsevier, vol. 108(C).
    14. Xie, Yu & Wu, Desheng & Li, Xiaoyan & Tian, Suhua, 2023. "How does environmental regulation affect productivity? The role of corporate compliance strategies," Economic Modelling, Elsevier, vol. 126(C).
    15. Mian Yang & Yining Yuan & Fuxia Yang & Dalia Patino-Echeverri, 2021. "Effects of environmental regulation on firm entry and exit and China’s industrial productivity: a new perspective on the Porter Hypothesis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(4), pages 915-944, October.
    16. Bai, Caiquan & Liu, Hangjuan & Zhang, Rongjie & Feng, Chen, 2023. "Blessing or curse? Market-driven environmental regulation and enterprises' total factor productivity: Evidence from China's carbon market pilots," Energy Economics, Elsevier, vol. 117(C).
    17. Yi Li & Lili Ding & Yongliang Yang, 2020. "Can the Introduction of an Environmental Target Assessment Policy Improve the TFP of Textile Enterprises? A Quasi-Natural Experiment Based on the Huai River Basin in China," Sustainability, MDPI, vol. 12(4), pages 1-19, February.
    18. Liu, Wei & Zhao, Zhihui & Wen, Zhao & Cheng, Shixiong, 2022. "Environmental regulation and OFDI: Evidence from Chinese listed firms," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 191-208.
    19. Kwon, Ohyun & Zhao, Hao & Zhao, Min Qiang, 2023. "Global firms and emissions: Investigating the dual channels of emissions abatement," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    20. Gao, Yanyan & Zheng, Jianghuai, 2024. "The opposite innovation impacts of air and water pollution regulations: Evidence from the total emissions control policy in China," Journal of Asian Economics, Elsevier, vol. 92(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:83:y:2024:i:c:p:530-547. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.