Environmental regulation and location dynamics of the livestock industry: evidence from 279 Chinese prefecture-level cities

Purpose - This paper examines the impact of livestock environment regulations (LERs) on the location dynamics of the livestock farming industry. Specifically, it tests whether a “pollution haven effect” (PHE) exists in the Chinese livestock industry. Design/methodology/approach - The authors manually collected LERs data based on the frequency of livestock-related vocabulary in government work reports from 279 prefecture-level cities from 2010 to 2017. Using China's implementation of LERs since 2014 as a natural experiment, the authors employed difference-in-difference (DID) to avoid the endogeneity problem. Findings - LERs have led to a decline in livestock production in regulated areas. Moreover, compared with areas with more stringent LERs – southern China and developed areas, areas where LERs are less stringent – northern China and undeveloped areas, attract more livestock industry. As a result, people in northern China and undeveloped areas are exposed to higher livestock pollution. Originality/value - First, most empirical studies on PHE focus on industrial firms. PHE in the livestock industry has received limited attention. This paper aims to fill this gap. Second, this paper regards LERs as an endogenous process and uses the DID method to generate unbiased results. Third, this paper introduces a novel measurement of LERs based on the frequency of livestock-related vocabulary in government work reports from each prefecture city. Fourth, this paper uses prefecture-level data to analyze the PHE of LERs, and thus obtains more reliable results.