Can the water resources tax promote the water-saving innovation performance of high water consumption companies? -Empirical analysis from the pilot provinces in China

Abstract

Water resource shortages and groundwater overexploitation in China restrict high-quality economic development and cause serious environmental issues. To promote the intensive use of water resources, suppress groundwater overexploitation and force high water consumption companies to save water, the Chinese government implemented “interim measures for expanding the reform of the water resources tax” in 2017. We represent water-saving innovation performance as the number of authorized green patents promoted by the water resources tax. By selecting the annual reports and patent data of 818 high water consumption listed companies and 727 nonhigh water consumption listed companies in pilot and nonpilot provinces, we use double difference and triple difference methods to verify the influence of the water resources tax policy on promoting the water-saving innovation performance of high water consumption companies in pilot provinces. Then, the parallel trend test, PSM-DDD robustness test and placebo test are used to demonstrate the rigor and effectiveness of this study, where all possible factors that interfere with the results of the study are excluded. In addition, the heterogeneity analysis shows that the water resource tax policy is more significant for promoting the water-saving innovation performance of nonstate-owned and small and medium-sized companies than it is for promoting that of state-owned and large-scale companies.