The effect of the end-number license plate driving restriction on reducing air pollution in China

Abstract

This study investigates the long-term efficiency of the long-run end-number license plate driving restriction in China, a traffic control policy that is partially aimed at reducing urban air pollution. A difference-in-differences regression is performed on a panel including nine cities that implemented this policy in staggered manner between 2008 and 2013. The results show that overall, this driving restriction does not improve air pollution in policy cities over the long-term. Quantitatively, the city-level air quality index has close-zero statistically insignificant changes by the policy, reaching only 3.9% reduction by 95% confidence interval lower bound of the estimate, translating to welfare gains of only 11.24 USD (70.62 CNY) per person per year, or 0.447 life years per capita. Further analysis with regression discontinuity in time and heterogeneity subgroup analysis illustrates that air pollution may first decrease due to the policy but then bounce back because of the behavioral adaptations of drivers purchasing a second car in cities without simultaneous car purchase restrictions. This shows that need to combine the end-number license plate policy with car purchase restrictions or electric vehicle promotions to achieve effective air pollution reductions over the long-term.