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Incentives, penalties, and rural air pollution: Evidence from satellite data

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  • Nian, Yongwei

Abstract

I test the role of economic incentives and command and control in reducing agricultural fires, a major source of air pollution in most rural regions across the world caused by burning crop residues after harvest. To tackle data shortage, I use high-resolution satellite data to construct a fine measure of agricultural fires as well as other geographic characteristics at 1 km × 1 km resolution for China. Using the staggered arrival of biomass power plants, which purchase crop residues as production inputs from nearby areas, as a shock to economic incentives, I find a more than 30% drop in agricultural fires in the vicinity of a plant after its opening relative to areas farther away. Such drop cannot be explained by structural transformation, migration, or enhanced regulation near the plant, and is consistent with an incentive-based explanation. I then examine the effectiveness of a command and control policy that bans agricultural fires within 15 km of airports. Using a spatial regression discontinuity design, I find no evidence that such policy works.

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  • Nian, Yongwei, 2023. "Incentives, penalties, and rural air pollution: Evidence from satellite data," Journal of Development Economics, Elsevier, vol. 161(C).
  • Handle: RePEc:eee:deveco:v:161:y:2023:i:c:s0304387823000044
    DOI: 10.1016/j.jdeveco.2023.103049
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    Cited by:

    1. Cao, Jing & Ma, Rong, 2023. "Mitigating agricultural fires with carrot or stick? Evidence from China," Journal of Development Economics, Elsevier, vol. 165(C).
    2. B. Kelsey Jack & Seema Jayachandran & Namrata Kala & Rohini Pande, 2022. "Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning," NBER Working Papers 30690, National Bureau of Economic Research, Inc.
    3. Jia, Wentao & Xie, Rui & Ma, Chunbo & Gong, Zezhong & Wang, Hui, 2024. "Environmental regulation and firms' emission reduction – The policy of eliminating backward production capacity as a quasi-natural experiment," Energy Economics, Elsevier, vol. 130(C).

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    More about this item

    Keywords

    Agricultural fires; Environmental policies; China;
    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
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights

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