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The Consequences of Spatially Differentiated Water Pollution Regulation in China

Author

Listed:
  • Zhao Chen
  • Matthew E. Kahn
  • Yu Liu
  • Zhi Wang

Abstract

China’s environmental regulators have sought to reduce the Yangtze River’s water pollution. We document that this regulatory effort has had two unintended consequences. First, the regulation’s spatial differential stringency has displaced economic activity upstream. As polluting activity agglomerates upstream, more Pigouvian damage is caused downstream. Second, the regulation has focused on reducing one dimension of water pollution called chemical oxygen demand (COD). Thus, local officials face weak incentives to engage in costly effort to reduce other non-targeted but more harmful water pollutants such as petroleum, lead, mercury, and phenol.

Suggested Citation

  • Zhao Chen & Matthew E. Kahn & Yu Liu & Zhi Wang, 2016. "The Consequences of Spatially Differentiated Water Pollution Regulation in China," NBER Working Papers 22507, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22507
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    References listed on IDEAS

    as
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    1. China's Water Pollution Regulation
      by Matthew Kahn in Environmental and Urban Economics on 2016-08-30 08:54:00

    More about this item

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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