Why is COD pollution from Chinese manufacturing declining?——The role of environmental regulation

Abstract

This paper combines the datasets of the Annual Survey of Industrial Firms and Pollution Emission of Chinese Firms, and uses the difference-in-differences method to explore the impact of environmental regulation on firm chemical oxygen demand (COD) emissions. Using China's COD reduction targets in the 11th Five-Year Plan, we show that environmental regulation reduces firms' COD emissions. The mechanism analysis suggests that the decline of firms' COD emissions caused by environmental regulation is not only driven by the cutting of firm's output but also the falling of COD emission intensity, and environmental regulation's effect on COD emission intensity is much larger. Furthermore, we find end-of-pipe treatment is not at work to the decline of COD emission intensity and front-end preventive control takes effect. Besides, exit of the emission inefficiency firms also contributes to the improvement of firm's COD emissions efficiency.