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Navigating and Evaluating the Labyrinth of Environmental Regulation in China

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  • Valerie J. Karplus
  • Junjie Zhang
  • Jinhua Zhao

Abstract

We examine the development of China’s environmental regulatory system over nearly 50 years and review economic studies of its effectiveness. China’s environmental regulation system has evolved over time into a complex and multilayered labyrinth. However, studies in the economics literature tend to focus on a few policies that span periods for which data are available and that allow causal identification. While the literature suggests that the policies have been generally effective in improving environmental quality, it also reveals several challenges for conducting empirical analyses: a firm’s regulatory status is frequently endogenous, data quality is variable, although improving over time, and overlapping policies may undermine traditional identification approaches. Further research is needed to comprehensively evaluate the cost-effectiveness of China’s environmental regulations, identify the interactions of multiple policies, and extend the analyses beyond water and air to also include soil and other types of pollution.

Suggested Citation

  • Valerie J. Karplus & Junjie Zhang & Jinhua Zhao, 2021. "Navigating and Evaluating the Labyrinth of Environmental Regulation in China," Review of Environmental Economics and Policy, University of Chicago Press, vol. 15(2), pages 300-322.
    • Handle: RePEc:ucp:renvpo:doi:10.1086/715582
    DOI: 10.1086/715582
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    Cited by:

    1. Xu, Jia & Zeng, Shu & Qi, Shaozhou & Cui, Jingbo, 2023. "Do institutional investors facilitate corporate environmental innovation?," Energy Economics, Elsevier, vol. 117(C).
    2. Dong, Yan & Tian, Jinhuan & Wen, Qiang, 2022. "Environmental regulation and outward foreign direct investment: Evidence from China," China Economic Review, Elsevier, vol. 76(C).
    3. Mao, Jie & Wang, Chunhua & Yin, Haitao, 2023. "Corporate responses to air quality regulation: Evidence from a regional environmental policy in China," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    4. Xie, Rui & Zhang, Jiahuan & Tang, Chuan, 2023. "Political connection and water pollution: New evidence from Chinese listed firms," Resource and Energy Economics, Elsevier, vol. 74(C).
    5. Tan, Jing & Liu, Tianyi & Xu, Hao, 2024. "The environmental and economic consequences of environmental centralization: Evidence from China's environmental vertical management reform," China Economic Review, Elsevier, vol. 84(C).
    6. Li, Shuo & Wang, Min, 2022. "Environmental Regulation and Firms’ Extensive Margin Decisions," EfD Discussion Paper 22-15, Environment for Development, University of Gothenburg.
    7. Kai Lin & Yanli Shi & Hong Xu, 2023. "Can Grassroots Governments’ Environmental Attention Effectively Improve Air Pollution? Empirical Evidence from Satellite Remote Sensing Technology," Sustainability, MDPI, vol. 15(21), pages 1-19, October.
    8. Huang, Yumeng & Jiang, Mingdong & Bai, Yang & Zhao, Pujie & Wang, Qi, 2023. "Coordination or contradiction: Evidence from water and air pollution regulation in China," Energy Economics, Elsevier, vol. 127(PB).
    9. You, Chen & Cifuentes-Faura, Javier & Liu, Xiaoqian & Wu, Jinqun, 2024. "Can the government environmental vertical reform reduce air pollution? A quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 947-963.
    10. Deng, Zhengxing & Hao, Yu, 2024. "Energy price uncertainty, environmental policy, and firm investment: A dynamic modeling approach," Energy Economics, Elsevier, vol. 130(C).
    11. Yan, Zheming & Yu, Ying & Du, Kerui & Zhang, Ning, 2024. "How does environmental regulation promote green technology innovation? Evidence from China's total emission control policy," Ecological Economics, Elsevier, vol. 219(C).
    12. Kong, Dongmin & Liu, Chenhao, 2024. "Centralization and regulatory enforcement: Evidence from personnel authority reform in China," Journal of Public Economics, Elsevier, vol. 229(C).
    13. Guan, Jin & He, Dongwei & Zhu, Qigui, 2022. "More incentive, less pollution: The influence of official appraisal system reform on environmental enforcement," Resource and Energy Economics, Elsevier, vol. 67(C).
    14. Fan, Maoyong & Jiang, Hanchen & Zhou, Maigeng, 2023. "Beyond particulate matter: New evidence on the causal effects of air pollution on mortality," Journal of Health Economics, Elsevier, vol. 91(C).
    15. Xu, Zhiwei & Wen, Qiang & Zhang, Teng, 2023. "Trade policy and air pollution: Evidence from the adjustment of the export tax rebate in China," Economic Modelling, Elsevier, vol. 128(C).
    16. Fan Xia & Yunxin Hua & Bing Zhang, 2024. "Does non‐compliance pay? Environmental violations and share prices in China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1886-1904, May.
    17. Hongshan Ai & Xiaoqing Tan & Zhen Xia, 2022. "RETRACTED: The Effects of Environmental Regulations on Medical Expenses: Evidence from China," IJERPH, MDPI, vol. 19(13), pages 1-17, June.
    18. Chen, Xiaohong & Zhao, Jinhua & Zhou, Li, 2024. "Knowledge protects against pollution: The health effects of the cadmium rice event in China," World Development, Elsevier, vol. 175(C).
    19. Ai, Hongshan & Tan, Xiaoqing & Zhou, Shengwen & Zhou, Yuhan & Xing, Hongye, 2023. "The impact of environmental regulation on carbon emissions: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1067-1079.
    20. Yan, Zheming & Zhou, Zicheng & Du, Kerui, 2023. "How does environmental regulatory stringency affect energy consumption? Evidence from Chinese firms," Energy Economics, Elsevier, vol. 118(C).
    21. Zhu, Danyu & Gao, Xin & Luo, Zijun & Xu, Weidong, 2022. "Environmental performance and corporate risk-taking: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    22. Gong, Yazhen & Li, Shanjun & Sanders, Nicholas J. & Shi, Guang, 2023. "The mortality impact of fine particulate matter in China: Evidence from trade shocks," Journal of Environmental Economics and Management, Elsevier, vol. 117(C).
    23. Peng, Fei & Wang, Ling & Peng, Langchuan & Wu, Huaqing, 2023. "Local government fiscal squeeze, environmental regulation and firms’ polluting behavior: Evidence from China," Economic Modelling, Elsevier, vol. 125(C).

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