Abstract
This study empirically evaluates the impact of air pollution on China’s economic growth, based on a province-level sample for the period 2002–2017. Air pollution is measured by the concentration of fine particulate matter (PM2.5), and economic growth is measured by the annual growth rate of gross domestic product (GDP) per capita. A panel data fixed-effects regression model is built, and the instrumental variables estimation method is utilized for quantitative analyses. The study reports a significant negative impact of air pollution on the macroeconomic growth of China. According to our instrumental variables estimation, holding other factors constant, if the concentration of PM2.5 increases by 1%, then the GDP per capita growth rate will decline by 0.05818 percentage points. In addition, it is found that the adverse effect of atmospheric pollution is heterogeneous across different regions. The effect is stronger in the eastern region and in provinces with smaller state-owned enterprise shares, fewer governmental expenditures for public health services, and fewer medical resources. The study results reveal that air pollution poses a substantial threat to the sustainable economic growth of China. Taking actions to abate air pollution will generate great economic benefits, especially for those regions which are heavily damaged by pollution.
Highlights
Air pollution is a severe threat to sustainable development in many regions around the world [1,2,3]
1%, the annual growth rate of gross domestic product (GDP) per capita will decline by 0.02108 percentage points
As the expansion of economic activities generates air pollutant emissions, there probably exists a reverse causality from economic growth to air pollution
Summary
Air pollution is a severe threat to sustainable development in many regions around the world [1,2,3]. Air pollution has a series of considerable economic consequences. It is important to understand the linkage between air pollution and economic growth, as good air quality and economic growth are both essential components of sustainable development. Studies on the link between environmental pollution and economic growth have been conducted within the framework of the environmental Kuznets curve (EKC). According to the EKC hypothesis, economic development initially leads to environmental degradation, but, after a certain income level, the degree of environmental pollution reduces. In the EKC model, changes in environmental quality are considered to be a consequence or byproduct of economic growth. Given that many economic activities are influenced by the surrounding pollution, pollution likely affects the economic growth rate
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