The Consequences of Spatially Differentiated Water Pollution Regulation in China

40 Pages Posted: 16 Aug 2016 Last revised: 2 Jul 2021

See all articles by Zhao Chen

Zhao Chen

Fudan University

Matthew E. Kahn

University of Southern California; National Bureau of Economic Research (NBER)

Yu Liu

Fudan University - School of Economics

Zhi Wang

Fudan University - School of Economics

Date Written: August 2016

Abstract

China’s environmental regulators have sought to reduce the Yangtze River’s water pollution. We document that this regulatory effort has had two unintended consequences. First, the regulation’s spatial differential stringency has displaced economic activity upstream. As polluting activity agglomerates upstream, more Pigouvian damage is caused downstream. Second, the regulation has focused on reducing one dimension of water pollution called chemical oxygen demand (COD). Thus, local officials face weak incentives to engage in costly effort to reduce other non-targeted but more harmful water pollutants such as petroleum, lead, mercury, and phenol.

Suggested Citation

Chen, Zhao and Kahn, Matthew E. and Liu, Yu and Wang, Zhi, The Consequences of Spatially Differentiated Water Pollution Regulation in China (August 2016). NBER Working Paper No. w22507, Available at SSRN: https://ssrn.com/abstract=2823315

Zhao Chen (Contact Author)

Fudan University ( email )

Shanghai, 200433
China

Matthew E. Kahn

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yu Liu

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China
02165642263 (Phone)

Zhi Wang

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

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