Environmental Regulation In China Research Articles

Defining the Optimal Implementation Space of Environmental Regulation in China’s Export Trade

Properly designed environmental regulation policy is an important basis for the high-quality development of trade. Based on the Chinese industry-level panel data in the period 2003 to 2016, and considering the adaptability of environmental regulation and industrial development, our study employs a threshold regression model to reveal the impact of environmental regulation on China’s trade competitiveness. The empirical research of our study finds that the impact of environmental regulation and trade competitiveness of the manufacturing industry presents a U-shaped trend that first increases and then decreases. At present, there is a trend of gradually crossing the inflection point, and only after crossing the inflection point can the full development stage be entered; that is, the implementation intensity of environmental regulation needs to be coordinated with industrial development. Furthermore, the impact of environmental regulation on trade competitiveness has a special threshold. Only when the level of technological development or cost-bearing capacity exceeds a certain threshold can environmental regulation effectively promote trade competitiveness. Our study has profound policy implications. The Chinese government needs to combine the technological development level and cost-bearing capacity of subdivided industries to implement environmental regulation policies by classification, cultivate a good innovation environment, make full use of the innovation-stimulating effect of environmental regulation, establish a more perfect cost-sharing and production transfer exit mechanism, and improve the resource reallocation effect of environmental regulation.

Impact of different types of environmental regulation on employment scale: an analysis based on perspective of provincial heterogeneity.

Firstly, we divided the existing environmental regulation policies into two types as "expense-type" and "investment-type" according to their characteristics. And then we analyzed the mechanism how the two kinds of environmental regulation policies acted on employment and tested the affected degree of two kinds of environmental regulation on employment through using the panel data of 30 provinces in China from 2000 to 2015. Finally, we did the empirical research by subdividing types of above 30 provinces according to the provincial heterogeneity in industrial structure and education level of the residents. Results showed that (1) the effect of expense-type environmental regulation on the provincial employment exhibited as "U" curve form and the intensity of environmental regulation in China were still on the decline phase of the "U" curve in "12•5" period. The effect of investment-type environmental regulation on the provincial employment was always positive, and it can indirectly increase provincial employment scale by rising provincial technology levels. (2) The effects of provincial economic development level, capital, and technology investment on regional employment were significantly positive. But due to the crowding-out effect of economic opening on indigenous technology, the effect of economic opening on regional employment wasn't significant. (3) The upgraded provincial industrial structure to tertiary industry as the main industry and strengthening the education level of residents all could reduce the inflection point of the "U" curve and accelerate the realization of the "Win-win situation" between environmental improvement and employment growth.

The "Three Lines One Permit" policy: An integrated environmental regulation in China

Integrated environmental management has been world widely treated as a fundamental means to support sustainable development. However, linking theoretical models to local practices in an effective framework remains to be a key challenge of such management. This study aimed to address progresses on technical development and practices of the integrated environmental regulation in China. We presented a new conceptual framework of the "Three Lines One Permit" (TLOP) Policy by combining a red line for ecological conservation (RLEC), a bottom line for environmental quality (BLEQ), an upper-limit line for resource use (ULRU), and a list of environmental permits for human activities (LEP). We also described the main achievements and effectiveness by a case study in the Yangtze River Economic Belt (YREB). Nearly 50% of the total territory of the YREB was designated as ecological space, including 29.4% of RLEC and 19.4% of ordinary ecological space. Over 9,800 water regulatory zones and 10,600 atmospheric regulatory zones were partitioned with environmental objectives and measures. There were over 15,000 integrated regulatory units with a multi-component list of environmental permits, in which 6,400 critical regulatory units contained all constructed urban areas, more than 280 million people, and 1,200 industrial parks. These integrated and spatially varied environmental regulatory units of TLOP will help to establish a preventive mechanism for ecological conservation, resource explorations, and emissions control. Suggestions were proposed to promote a more flexible and efficient policy toward the ecological civilization and sustainable development strategies.

Is there a ripple effect in environmental regulation in China? – Evidence from the local-neighborhood green technology innovation perspective

Environmental regulation and green technology progress are important means to solve the negative externalities of the environmental pollution. Despite the widespread concern on the impact of environmental regulation on green technology progress, the existing literatures focus on the relationship between them mainly in the local parts of the same regions, lack of further convincing investigation from local-neighborhood perspective. Based on the spatial panel Durbin model, this paper examines the ripple effect of environmental regulation in different adjacencies by using the data of the provincial level in China, and further investigates the formation mechanism of ripple effect in local-neighborhood environmental regulation combined with the characteristic facts in regional industrial investment structure transformation. The results show that environmental regulation has a ripple effect, namely, environmental regulation can not only affect the green technology progress in the local regions but also change the innovation of green technology in the neighboring regions. Both of them show a U-shaped change characteristic. When subdividing industrial neighborhood from the economic neighborhood, the ripple effect of environmental regulation in geographical neighboring or industrial neighboring regions is significant, but this ripple effect in the pure economic neighboring regions is not significant. The ripple effect of geographic neighboring environmental regulation in neighboring overlapping areas is significantly strengthened. Given two regions with close industries distance, the closer the geographical distance is, the more ripple effect of environmental regulation will present. Environmental regulation will restrain the green technology innovation of neighboring regions by increasing investment in polluting industries in the neighboring regions, but the income growth effect of industrial transfer will not enhance the green innovation capacity in the neighboring regions and will deteriorate permanently.

Spatial Heterogeneity Influences of Environmental Control and Informal Regulation on Air Pollutant Emissions in China.

High air pollutant emissions in China have become serious environmental issues threatening public health. While spatial heterogeneity plays an important role in environmental regulation in China, it is necessary to analyze the spatial heterogeneity influences of air pollution control policies and informal environmental regulation on air pollutant emissions in China. Based on the quantification of air pollution control policies, this paper incorporates the central government’s policy formulation and local government’s policy implementation into the intensity of air pollution control policy. This paper uses the panel data of China’s 30 provinces to examine the spatial impact of air pollution control policy and informal environmental regulation on air pollutant emissions. The results show that (a) air pollutant emissions represented by soot and dust emission intensity has a significant positive spatial spillover effect; (b) air pollution control policy and informal environmental regulation play significant inhibitory roles in air pollutant emissions; (c) informal environmental regulation has a negative moderating effect on the negative relationship between air pollution control policy and air pollutant emissions. Other implications for environmental management have also been discussed.

Watering Down Environmental Regulation in China*

AbstractThis article estimates the effect of environmental regulation on firm productivity using a spatial regression discontinuity design implicit in China's water quality monitoring system. Because water quality readings are important for political evaluations and the monitoring stations only capture emissions from their upstream regions, local government officials are incentivized to enforce tighter environmental standards on firms immediately upstream of a monitoring station, rather than those immediately downstream. Exploiting this discontinuity in regulation stringency with novel firm-level geocoded emission and production data sets, we find that immediate upstream polluters face a more than 24% reduction in total factor productivity (TFP), and a more than 57% reduction in chemical oxygen demand emissions, as compared with their immediate downstream counterparts. We find that the discontinuity in TFP does not exist in nonpolluting industries, only emerged after the government explicitly linked political promotion to water quality readings, and was predominantly driven by prefectural cities with career-driven leaders. Linking the TFP estimate with the emission estimate, a back-of-the-envelope calculation indicates that China's water regulation efforts between 2000 and 2007 were associated with an economic cost of more than 800 billion Chinese yuan.

Strategic interaction of environmental regulation and green productivity growth in China: Green innovation or pollution refuge?

The strategic interaction of inter-regional environmental regulation is a typical feature of local government behavior in China, which can affect the green productivity growth in the local region through the Porter effect and the pollution refuge effect. Based on the panel data of 274 prefecture-level cities from 2005 to 2015 in China, this thesis constructs a comprehensive indicator of environmental regulation, accurately identifies the mode of China's inter-regional strategic interaction of environmental regulation and calculates the green total factor productivity, green technology efficiency and green technology progress in 274 cities. In addition, this thesis also conducts an empirical analysis on the effect of the strategic interaction of environmental regulation on the green productivity in China. The author of this thesis finds that: (1) the mode of strategic interaction of environmental regulation in China is complementary “race to the top”, that is, the local region will strengthen its environmental regulation, if the environmental regulations in its adjacent regions are strengthened; (2) the environmental regulation in the local region promotes the green productivity in China, while the weighted environmental regulation in the adjacent regions inhibits the green productivity. What's more, environmental regulations in economic-proximity regions have greater negative spatial spillover effects on green productivity in the local region, compared with those in geographic-proximity regions; (3) environmental regulation in the local region and its adjacent regions can affect the green productivity growth in China through the channels of green innovation and pollution transfer, that is, the Porter effect and pollution refuge effect coexist in China. They mean that in the process of China's regional environmental governance, it is necessary to reduce pollution transfer, and promote green innovation so as to achieve sustainable and high-quality economic development.

Do energy technology innovations contribute to CO2 emissions abatement? A spatial perspective

With growing concerns about global warming, energy technology innovation has attracted attention from scholars. Many studies have explored the relationship between energy technology innovations and energy consumption, while the influence of energy technology innovation on carbon emissions (CEs) has not received enough attention. Utilizing the spatial econometric model, this study aims to examine whether energy technology innovations are beneficial for CO2 emissions abatement in China. The results indicate that, first, renewable energy technology innovation facilitates CO2 abatement, while fossil energy technology innovation is ineffective in reducing CEs. Second, the influences of energy technology innovations on CEs are trans-regional. Third, economic growth would agglomerate CEs from low-growth province to neighboring high-growth provinces; mandatory environmental regulation in China would transfer CEs from provinces with strict regulations to neighboring provinces with loose regulation. Based on these findings, a series of policy recommendations are put forward to tackle China's CEs. One possible innovation is that this study considers geographic location when investigating how energy technology innovations affect CEs.

Assessment on the effectiveness of environmental regulation in China-evidence from a panel data analysis.

In the context of global warming and environmental deterioration, the environment impact assessment is a crucial institutional guaranty to assure less or no pollution during the process of the economic growth and rapid social development. This paper selected the environmental regulation system in China as a research target and assesses the effectiveness of green tax on the environment through an empirical analysis. The panel data from 2005 to 2015 in different cities in China are employed to analyze with a two-way fixed regression model; it analyzes the impact of environmental instruments like resource tax, excise tax, vehicle purchase tax, and pollutant discharge fees on environmental pollution and finds that the modeling conditions with green tax reform can lead to higher effect on environmental pollutant constrain but is distributed differently among east, central, and west based on the empirical analysis in China. Moreover, resource tax has a significant effect in the east and midwest of China. The effectiveness of excise tax on integrated pollution is not statistically significant. Compared with the midwest, eastern China's green tax had a much better performance on reducing environmental pollution. Pollutant discharge fees indicates a significant negative correlation to integrated pollution. The consumption of the other goods (like meat consumption) plays a mediating effect between vehicle purchase tax and integrated environmental pollution. In addition, the relevant policy recommendations are proposed against different tax types.

Environmental regulation, hidden economy, and China's outward foreign direct investment

The need to balance economic growth and its environmental impact continues to be a serious issue in China. As environmental regulation in China increases in importance, it is critical to understand how it impacts economic growth drivers such as outward foreign direct investment (OFDI) to formulate effective policies. One consideration should be the hidden economy, which can weaken the effects of environmental regulation on OFDI. This study investigates the scale of the hidden economy in 30 provinces and province-level municipalities in China in the period 2004 to 2015. The study uses the multiple indicators and multiple causes (MIMIC) model and the systematic generalized method of moments (GMM) test to analyze the impact of environmental regulation and the hidden economy on China's OFDI. The results show that stronger environmental regulation promotes OFDI. However, the hidden economy inhibits China's OFDI, as the positive effects of environmental regulation that drive OFDI are distorted. From a regional perspective, stronger environmental regulation promotes OFDI as well, while the hidden economy inhibits it. The interaction between environmental regulation and the hidden economy also inhibits it significantly.

What comes after picking pollution intensive low-hanging fruits? Transfer direction of environmental regulation in China

Environmental regulation has played an important role in energy conservation and emissions reduction. In the context of a worsening environment, the Chinese government has realized the disadvantages of extensive development and has launched a full range of actions for energy-intensive and heavy-polluting industrial sectors, which are called “low-hanging fruits.” However, this principle has challenges, such as bottlenecks in emissions reduction and development restrictions in certain sectors. To solve these problems, this paper divides 37 industries into heavy-, middle-, and low-polluting industrial sectors according to a pollution intensive index. Subsequently, three types of environmental regulation measurements (mandatory control environmental regulation, market incentive environmental regulation, and voluntary compliance environmental regulation) are applied to verify the heterogeneous effects of environmental regulations on the green total factor productivity. In this study, super-epsilon-based measure model and global Malmquist-Luenberger index are used to calculate the green total factor productivity of these industries. Thus, a better understanding of environmental regulations in regards to polluting industrial sectors is provided. The results show that different types of environmental regulations exhibit heterogeneous effects on the green total factor productivities of different polluting industrial sectors. The relationship between the mandatory control environmental regulation/market incentive environmental regulation and the green total factor productivity for heavy-polluting industries is shown to be an inverse U shape that crosses an inflection point, indicating that the environmental regulation intensity of heavy-polluting industry is sufficient, perhaps even excessive. Notably, the relationship between the three environmental regulations and the middle-polluting industries all present a U shape, and the environmental regulation intensities are far away from the inflection point. In that regard, excessive regulation may lead to high operating costs and may burden low-polluting industrial sectors. In such cases, strengthening the environmental regulations for middle-polluting industries should be an efficient and reasonable way to achieve a win-win direction for both environmental protection and economic development.

Would environmental regulation improve the greenhouse gas benefits of natural gas use? A Chinese case study

Abstract Along with rapidly increasing natural gas consumption and carbon dioxide (CO2) levels and the gradually strengthening environmental regulation, further investigation of the emission-natural gas-environmental regulation nexus in China is particularly useful for mitigating the country's CO2 emissions. To empirically investigate whether environmental regulation improves the greenhouse gas benefits of natural gas use in China, this study investigates the causal relationships among CO2 emissions, natural gas consumption, and environmental regulation in China, based on panel data of China's 30 provinces covering 2005–2015. Fully considering the potential cross-sectional dependence, the system general method of moments (SYS-GMM) estimation method is utilized. The empirical results reveal that: (1) Environmental Kuznets curve (EKC) hypothesis for CO2 emissions is valid in China; (2) environmental regulation will not only directly affect CO2 emissions, but also indirectly affect CO2 emissions by influencing the energy consumption structure; (3) environmental regulation cannot significantly improve the greenhouse gas benefits of natural gas use, as environmental regulation in China can indirectly reduce CO2 emissions by decreasing coal consumption rather than increasing natural gas consumption; and (4) the causality analysis for three regions confirms the existence of significant regional differences. These findings offer several targeted policies for reducing CO2 emissions and promoting growth in the natural gas industry in China.

The economic consequences of environmental regulation in China: From a perspective of the environmental protection admonishing talk policy

AbstractEnvironmental regulation may lead to undesired economic consequences. China has tightened its environmental policies to deal with severe environmental pollution in recent years, but existing studies pay little attention to the economic consequences of China's environmental policies. Using the panel data of 211 prefecture‐level and above cities in China from 2003 to 2016, we for the first time estimate the economic impact of the environmental protection admonishing talk (EPAT) policy, a newly implemented environmental regulation policy in China. We use the difference‐in‐differences strategy to identify the economic effects of the EPAT policy combined with the propensity score matching method to control a potential selection problem. The results show that a relative decline occurs in gross domestic product per capita in target cities after the implementation of the EPAT, and the negative impact is exerted on the secondary industry rather than the tertiary industry. Furthermore, we find that target cities respond to the environmental protection requirements of higher authorities through a one‐size‐fits‐all approach of limiting the production activities of industrial enterprises. Meanwhile, the EPAT policy does not improve environmental efficiency. Such findings are instructive for policymakers who need to trade off economic welfare and environmental quality when formulating and implementing new environmental policies.

The illusion of “win–win” solution: Why environmental regulation in china promotes firm performance?

Porter (1991) and follow-up scholars hypothesize that environmental regulation stimulates innovation to promote performance. As a complement to the existing literature, this paper reveals an ironic reality: performance-friendly regulation as a proxy for the “win–win” solution of environmental regulation is an illusion due to ineffective intensity for sustainability. With firm-level evidence from China, we measure the intensity of environmental regulation by a firm's investments for environmental protection (IEP) or fees for environmental protection (FEP). After identifying a positive causal effect on performance of IEP or FEP, we document that IEP and FEP are complementary and thus ineffective for sustainable development. We further document that the effects between IEP and FEP are mediated by performance insignificantly from an economic perspective, thereby revealing the incentive incompatibility of a firm in IEP and FEP.

Evaluating the efficiency of industrial environmental regulation in China:A three-stage data envelopment analysis approach

Abstract Environmental regulation is of great concern to international academics and policy makers. Previous studies often regarded environmental regulation as an influencing factor when calculating eco-efficiency or energy efficiency. More attention should be given to the efficiency of environmental regulation, especially in industrial field. According to exiting studies, industrial environmental regulation efficiency (IERE) may be influenced by external environmental factors, to explore the influence and obtain an actual efficiency, this paper calculated IERE in China by using the panel data of 30 regions from 2011 to 2015 (the 12th Five-Year Plan period) through the three-stage data envelopment analysis approach. Firstly, the Undesirable-slacks-based model method was used to calculate the original IERE. Secondly, the economic base, industrial structure, urbanization level, and education level were taken as external environmental variables, and the effect of external environmental factors and stochastic disturbance were excluded. Thirdly, the actual IERE can be calculated after adjusting input values. The results showed that China’s IERE was underestimated due to the impact from external environmental factors. Moreover, the IERE was more influenced by pure technical efficiency than scale efficiency. The IERE of each region varied, thus, targeted policies should be formulated according to local conditions. This research provided a new analytical method for calculating environmental regulation efficiency. The method can be applied either in other countries or in other sectors.

Pollute first, control later? Exploring the economic threshold of effective environmental regulation in China's context

For most developing countries, local government faces a trade-off between economic growth and environmental protection. The intentions towards having a better environment as the economy grows will trigger a shift in the priorities of local government from economy to environment at a certain level of economic development. To investigate the “pollute first, control later” path in China and how environmental regulation performs differently due to economic development, this paper develops a conceptual model to depict the nexus between economic growth and environmental improvement. A panel threshold model is estimated based on Chinese data from different spatial scales – 30 provinces and 105 environmental monitoring cities. The results validate the threshold of economic development of approximately CNY 90,000 GDP per capita, which represents the turning point for the local government priority change; such that only when it is exceeded does environmental regulation significantly reduce emissions. Until 2016, only 4 provincial districts and 35 prefecture-level cities have crossed the threshold, these being mostly in the more prosperous eastern coastal areas. The results emphasize the need to consider timeliness when evaluating the effectiveness of environmental regulation and highlight the importance of adopting differentiated governance. Moreover, the need to enhance the effectiveness of environmental regulation requires driving the change of local government's priority to the environment and strengthening the institutional capacity of environmental protection agencies.

The influence of trade openness on the level of human capital in China: on the basis of environmental regulation

In this paper, it is found that environmental regulation is an important mechanism that trade openness affects the level of human capital. The author established a theoretical framework to analyze the influence of trade openness on the level of human capital and adopted the system GMM to test it, using Chinese provincial data over the period 1995–2015. The empirical results show that environmental regulation has a long-term U-shaped effect on the level of human capital, while the current environmental regulation in China is conducive to improving the level of human capital. Furthermore, the promotion of human capital level can also increase the possibility of improving environmental regulation, which is conducive to the internal formation and positive interaction between human capital and environmental regulation. The research further enriches the theory of sustainable development of environment and economy. It provides theoretical support for China and developing countries with similar economic and technological levels to actively implement more stringent environmental policies in the context of trade openness.

Carbon emissions and optimal scale of China's manufacturing agglomeration under heterogeneous environmental regulation

This article has studied the optimal scale of manufacturing agglomeration aiming at controlling industrial CO2 emissions and the role of environmental regulation in China using the main function of panel cointegration and Full Modified Ordinary Least Square(FMOLS) based on the Dynamic Comprehensive Measure (DCM) of intensities of environmental regulation for 28 China's manufacturing subsectors and classification of the manufacturing subsectors according to their intensities of environmental regulations. The empirical results show that: (i) Higher intensity of environmental regulation can spur manufacturing subsectors get more agglomerative economies with less CO2 emissions. (ii) The relationship between the agglomerative manufacturing subsectors with high and medium intensity of environmental regulation and CO2 emissions shows inverted U-shaped changing trend. (iii) By contrast, the relationship between the agglomerative manufacturing subsectors with low intensity of environmental regulation and CO2 emissions more likely presents U-shaped changing trend. (iv) High intensity of environmental regulation aiming at high polluting manufacturing subsectors can make them reach the inflection of CO2 emissions under high scale of industrial agglomeration. Consequently, the government should take the policy with a general increase in the intensity of environment regulation, and use heterogeneous regulatory instruments according to different manufacturing subsectors so as to increase the emission reduction effect of manufacturing agglomeration.

The “APEC blue” endeavor: Causal effects of air pollution regulation on air quality in China

AbstractEstimating the causal effects of China's environmental regulation on air quality is of great importance for developing effective and efficient policies. Our study first compared the evaluation approaches used in applied econometrics, and environmental science and engineering. It then assessed the environmental effectiveness of the recently strengthened air pollution regulation in China, by developing quasi-experimental designs based on the pollution control programs for the APEC Meeting and the Victory-day Parade. We empirically confirmed that the regulation brought a short-term, substantial improvement in air quality in Beijing. Compared with the hypothetical situation in the absence of the programs, the Victory-day Parade regulation reduced AQI by 37.4%, and the daily average concentrations of PM2.5, PM10, O3, SO2, NO2, and CO by 55.8%, 50.1%, 27.2%, 35.9%, 39.9%, and 28.8%, respectively; the APEC regulation brought down the AQI by 35.9%, and the concentrations of PM2.5, PM10, SO2, NO2, and CO by 41.3%, 48.2%, 56.5%, 38.9%, and 35.5%, respectively. Further analyses of 70 cities in North China found that the effects in the assigned key control areas were greater than those in the ordinary control areas. Our study enriches the assessments of the regulatory experimentations for the two important events, and demonstrates the strengths of using the quasi-experimental approach to execute quick and reliable ex post evaluation of environmental regulation in China. It also summarizes our first-step, exploratory progress in the challenging communication among the policy-evaluation perspectives and methodologies of different disciplines.

The impact of environmental regulation on fossil energy consumption in China: Direct and indirect effects

Strengthening the implementation of environmental regulation is one of the key measures to prevent further energy depletion and environmental deterioration. This paper focuses on complicated relation between environmental regulation and fossil energy consumption. We theoretically identified the direct and indirect paths of environmental regulation that affect fossil energy consumption and analyzed the relationship between the two. To identify the indirect impact of environmental regulation on fossil energy consumption, we incorporated three types of technology (e.g., production technology, pollution abatement technology, and backstop technology) into our model. On the theoretical basis, we then evaluated the impact of environmental regulation on fossil energy consumption in China by applying both non-spatial models and spatial econometric models. In the direct path, energy-saving effect of environmental regulation in China is dynamic and yields complex results from the “Green Paradox” and “compliance cost”. As for indirect effects, we find that current environmental regulations have promoted technological progress in production to induce energy savings but failed to drive technological advancements in pollution abatement and backstop to guarantee a sustainable energy development. Based on the findings, some corresponding policy implications are provided.