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Environmental Regulation and Economic Development: Evidence from the River Chief System in China

Author

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  • Liwen Liu

    (School of Economics, Anhui University, Hefei, Anhui 230601, P. R. China)

  • Caiquan Bai

    (��The Center for Economic Research, Shandong University, Ji’nan, Shandong 250100, P. R. China)

Abstract

Existing studies have not reached a consensus on whether environmental regulations can drive economic development while strengthening pollution control. Based on the panel data of 226 cities in China from 2004 to 2016, this paper uses the difference-in-differences (DID) estimation to investigate the impact of the River Chief System (RCS) on regional economic development for the first time. The findings are as follows: (1) the RCS significantly increases the regional gross domestic product (GDP) and per capita GDP, and a series of robustness tests also prove this conclusion; (2) the heterogeneity tests indicate that the positive effect of RCS on economic development is more significant in cities with a lower administrative level, eastern cities, small cities and cities with lower water resource endowments; and (3) the mechanism tests show that the RCS promotes urban economic development mainly through the two channels of industrial structure upgrading and technological innovation. These findings are of practical significance for China and other countries to balance economic development and environmental protection when formulating and implementing environmental regulatory policies.

Suggested Citation

  • Liwen Liu & Caiquan Bai, 2022. "Environmental Regulation and Economic Development: Evidence from the River Chief System in China," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(04), pages 1-32, October.
    • Handle: RePEc:wsi:wepxxx:v:08:y:2022:i:04:n:s2382624x22400100
    DOI: 10.1142/S2382624X22400100
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    Cited by:

    1. Zhang, Bingbing & Wang, Ning & Yan, Zhijun & Sun, Chuanwang, 2023. "Does a mandatory cleaner production audit have a synergistic effect on reducing pollution and carbon emissions?," Energy Policy, Elsevier, vol. 182(C).

    More about this item

    Keywords

    Environmental regulation; economic development; difference-in-differences; River Chief System;
    All these keywords.

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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