Winter Heating or Clean Air? Unintended Impacts of China's Huai River Policy

18 Pages Posted: 15 Jan 2009

See all articles by Douglas Almond

Douglas Almond

Columbia University - Graduate School of Arts and Sciences, Department of Economics; National Bureau of Economic Research (NBER)

Yuyu Chen

Peking University - Guanghua School of Management

Michael Greenstone

University of Chicago - Department of Economics; Becker Friedman Institute for Economics; National Bureau of Economic Research (NBER)

Li Hongbin

Tsinghua University

Date Written: January 9, 2009

Abstract

This paper assesses the role of heating entitlements in generating stark air quality differences across China. During the 1950-1980 central planning period, the Chinese government established free winter heating of homes and offices as a basic right via the provision of free coal fuel for boilers. The combustion of coal in boilers is associated with the release of air pollutants, especially total suspended particulates (TSP). Due to budgetary limitations, however, this heating entitlement was only extended to areas to the north of the line formed by the Huai River and Qinling Mountains in central China. We find this procrustean policy led to dramatically higher TSP levels in the north; the difference is roughly 5-8 times current TSP concentrations in the US. This result holds both in a cross-sectional regression discontinuity-style estimation approach and in a panel data setting that compares the marginal effect of winter temperature on TSP in northern and southern China. In contrast, we fail to find evidence that the heating policy has a meaningful impact on sulfur dioxide (SO2) and nitrogen oxide (NOx) concentrations.

Keywords: air pollution, total suspended particulates, China, externalities, environment, heating, coal, Huai river

JEL Classification: H23, Q48, Q53, P36

Suggested Citation

Almond, Douglas Vincent and Chen, Yuyu and Greenstone, Michael and Hongbin, Li, Winter Heating or Clean Air? Unintended Impacts of China's Huai River Policy (January 9, 2009). MIT Department of Economics Working Paper No. 09-02. Available at SSRN: https://ssrn.com/abstract=1327498 or http://dx.doi.org/10.2139/ssrn.1327498

Douglas Vincent Almond

Columbia University - Graduate School of Arts and Sciences, Department of Economics ( email )

420 W. 118th Street
International Affairs Building, MC 3308
New York, NY 10027
United States
212-854-3239 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yuyu Chen

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

Michael Greenstone (Contact Author)

University of Chicago - Department of Economics

1126 East 59th Street
Chicago, IL 60637
United States

Becker Friedman Institute for Economics ( email )

Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Li Hongbin

Tsinghua University ( email )

Beijing, 100084
China

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