Ripples of change: Assessing the impact of water resource tax reform pilot on the green growth of China's coastal cities

Abstract

Coastal cities, despite being close to expansive oceans, are still susceptible to water constraints. The water resource tax reform pilot has been instrumental in promoting water conservation and effective utilization, so contributing significantly to the green growth of the coastal cities where it has been implemented. Utilizing data from prefecture-level cities in China's coastal areas from 2007 to 2019 and adopting the Green Total Factor Productivity as a measure of green growth, this study is dedicated to exploring the impact of water resources tax reform on the green growth of coastal cities. It treats the water resource tax reform pilot as a quasi-natural experiment and utilizes multi-period DID and PSM-DID methodologies to examine the effects of this reform on Green Total Factor Productivity. The findings indicate that the water resource tax reform pilot has made a significant contribution to green growth, primarily by reducing water consumption and enhancing governmental focus on marine environmental regulation. Expanding upon these findings, the article provides suggestions in several domains like the establishment of distinct tax rates, allocation of tax money, government oversight, and implementation of taxes on agricultural water resources. These findings can serve as a scientific benchmark for the development and execution of water resource tax policies in other areas.