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Cleaner production promotion law and pollution: Firm level evidence from China

Author

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  • Wei, Yueling
  • Zhang, Hongsheng
  • Feng, Yang

Abstract

Using the formulation and implementation of China's Cleaner Production Promotion Law (CPPL) in 2003 as a quasi-natural experiment and a unique combined dataset of Annual Survey of Industrial Production Database and China Industrial Enterprise Pollution Emissions Database over 1998–2013, we investigate the impact of ex-ante prevention policies on firm pollution emissions. Our DID and DDD results show that: 1) The CPPL has significantly reduced firm's per unit of output emissions of SO2 and COD; 2) China's CPPL reduced firm pollution emissions intensity by reducing resource consumption, increasing firms' TFP and the number of green patents (Porter effect), and increasing the total amount of pollutants removal per unit of output; 3) The impact of CPPL on pollution shows modest firm heterogeneity, with larger effects on SOEs and on large-scale enterprises. The conclusions of this paper reveal that China's CPPL, as a formal rule of law regulation and ex-ante prevention policy, not only reduces the pollution intensity of enterprises from the input side, but also stimulate the Porter effect, and reduces the pollution removal level.

Suggested Citation

  • Wei, Yueling & Zhang, Hongsheng & Feng, Yang, 2024. "Cleaner production promotion law and pollution: Firm level evidence from China," International Review of Economics & Finance, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:reveco:v:94:y:2024:i:c:s1059056024003927
    DOI: 10.1016/j.iref.2024.103400
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    Keywords

    Pollution emission; Cleaner production; Sulfur dioxide; Firm heterogeneity; Porter effect;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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