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Does environmental regulation affect firm exports? Evidence from wastewater discharge standard in China

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  • Zhang, Yan
  • Cui, Jingbo
  • Lu, Chenghao

Abstract

This paper examines the effect of water pollution regulation on polluters' exporting decisions and exporting structure. Using a detailed firm-by-product level dataset, we employ a difference-in-differenceds model to identify the causal relationship between environmental regulation and firms' exporting performance. We find that stringent environmental regulation decreases both export likelihood and export values. Moreover, we examine the channels that the environmental regulation could affect firms' exporting performance through entry-exit of the export market, price transmission, adjustments of exporting destinations, and product switch. The tightening wastewater discharge standard appears to deter the new polluters rather than incumbents to enter the export market. Productive polluters could gain the relative larger export market by lowering down exporting prices and selling more products overseas. In response to this water pollution regulation, polluters would make substantial adjustments in their exporting destinations, exporting products, and exports value via different trade modes.

Suggested Citation

  • Zhang, Yan & Cui, Jingbo & Lu, Chenghao, 2020. "Does environmental regulation affect firm exports? Evidence from wastewater discharge standard in China," China Economic Review, Elsevier, vol. 61(C).
  • Handle: RePEc:eee:chieco:v:61:y:2020:i:c:s1043951x20300481
    DOI: 10.1016/j.chieco.2020.101451
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    Cited by:

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    2. Wang, Huaxing & Li, Tianzi & Zhu, Junfan & Jian, Youting & Wang, Zeyu & Wang, Zengwen, 2023. "China's new environmental protection law: Implications for mineral resource policy, environmental precaution and green finance," Resources Policy, Elsevier, vol. 85(PB).
    3. Xie, Dongchun & Li, Xiaofeng & Zhou, Di, 2022. "Does environmental information disclosure increase firm exports?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 620-638.
    4. Sun, Chuanwang & Zhan, Yanhong & Gao, Xiang, 2023. "Does environmental regulation increase domestic value-added in exports? An empirical study of cleaner production standards in China," World Development, Elsevier, vol. 163(C).
    5. Yanyun Li & Faqin Lin & Wenxiao Wang, 2022. "Environmental regulation and inward foreign direct investment: Evidence from the eleventh Five‐Year Plan in China," Journal of Economic Surveys, Wiley Blackwell, vol. 36(3), pages 684-707, July.
    6. Yang, Zhenbing & Chen, Zhuo & Shao, Shuai & Yang, Lili, 2022. "Can housing price regulation improve R&D performance in universities? Evidence from China," Socio-Economic Planning Sciences, Elsevier, vol. 82(PA).
    7. Jingbo Cui & On Kit Tam & Bei Wang & Yan Zhang, 2020. "The environmental effect of trade liberalization: Evidence from China's manufacturing firms," The World Economy, Wiley Blackwell, vol. 43(12), pages 3357-3383, December.
    8. Zengming Wu & Mengnan Zhu, 2022. "More air pollution control, less industrial land leasing? Empirical evidence from microland transactions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(3), pages 647-658, April.
    9. Hong Chen & Yang Xu, 2021. "Environmental Regulation and Exports: Evidence from the Comprehensive Air Pollution Policy in China," IJERPH, MDPI, vol. 18(3), pages 1-11, February.
    10. Xu Ou & Haiwei Jiang, 2023. "The Impact of Environmental Regulation on Firm Performance: Evidence from the Pulp and Paper Industry in China," IJERPH, MDPI, vol. 20(4), pages 1-18, February.
    11. Xingye Zhou & Helian Xu, 2024. "Emissions Reduction Target Plan and Export Product Quality: Evidence from China’s 11th Five-Year Plan," Sustainability, MDPI, vol. 16(4), pages 1-21, February.
    12. Xin Liu & Zhiyong Kang, 2022. "Environmental Policy and Exports in China: An Analysis Based on the Top 10,000 Energy-Consuming Enterprises Program," Sustainability, MDPI, vol. 14(21), pages 1-16, October.
    13. Xie, Yu & Wu, Desheng & Li, Xiaoyan & Tian, Suhua, 2023. "How does environmental regulation affect productivity? The role of corporate compliance strategies," Economic Modelling, Elsevier, vol. 126(C).
    14. Jingjing Huang & Yuan Zhong & Yabin Zhang, 2023. "Does Environmental Regulation of Cleaner Production Affect the Position of Enterprises in Global Value Chains? A Quasi-Natural Experiment Based on the Implementation of Cleaner Production," Sustainability, MDPI, vol. 15(13), pages 1-29, July.
    15. Gangqiang Yang & Ziyu Ding & Haisen Wang & Lingli Zou, 2023. "Can environmental regulation improve firm total factor productivity? The mediating effects of credit resource allocation," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 6799-6827, July.
    16. Jia, Zhijie & Lin, Boqiang & Wen, Shiyan, 2022. "Electricity market Reform: The perspective of price regulation and carbon neutrality," Applied Energy, Elsevier, vol. 328(C).
    17. Liu, Donghua & Ren, Shenggang & Li, Wenming, 2022. "SO2 emissions trading and firm exports in China," Energy Economics, Elsevier, vol. 109(C).
    18. Li, Hao & Guo, Huanxiu & Huang, Naqun & Ye, Jingjing, 2020. "Health risks of exposure to waste pollution: Evidence from Beijing," China Economic Review, Elsevier, vol. 63(C).

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    More about this item

    Keywords

    Environmental regulation; Water pollution; Export; Pollution haven effect;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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