Unintended environmental consequences of place‐based economic policies

Maoyong FAN; Qu TANG; Jianxin WU; Junji XIAO

doi:10.1111/ajae.12313

Unintended environmental consequences of place‐based economic policies

Maoyong FAN, Qu TANG, Jianxin WU, Junji XIAO^*

^*Corresponding author for this work

Department of Economics

Research output: Journal Publications › Journal Article (refereed) › peer-review

8 Citations (Scopus)

Abstract

We examine the environmental consequences of two regional economic development (RED) policies that aimed to develop the economy of the relatively underdeveloped upper Pearl River (UPR) regions in Guangdong Province, China. Applying the triple-difference analysis to annual county-industry-level data, we find that the two RED policies caused higher growth in industries with high water pollution than in industries with less water pollution in the UPR regions. The second RED policy with environmental regulations was effective in restraining the new entry of firms in high-pollution industries into the UPR regions but failed to drive existing high-pollution firms out of the UPR regions. Firms' location decisions were driven by the more favorable tax regimes and less stringent pollution regulations in the UPR regions.

Original language	English
Pages (from-to)	291-315
Number of pages	25
Journal	American Journal of Agricultural Economics
Volume	105
Issue number	1
Early online date	22 Mar 2022
DOIs	https://doi.org/10.1111/ajae.12313
Publication status	Published - Jan 2023

Bibliographical note

Funding Information:
Xiao acknowledges financial support from the China National Social Science Foundation (No. 18ZDA042). Wu acknowledges financial support from the China National Social Science Foundation (No. 15ZDA054) and National Natural Science Foundation (No. 71873057). The authors have equally contributed to the article as co‐first coauthors.

Publisher Copyright:
© 2022 Agricultural & Applied Economics Association.

Keywords

difference-in-difference-in-differences
environmental effect
regional economic development policy

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1111/ajae.12313Licence: Other

https://onlinelibrary.wiley.com/doi/10.1111/ajae.12313

Cite this

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title = "Unintended environmental consequences of place‐based economic policies",

abstract = "We examine the environmental consequences of two regional economic development (RED) policies that aimed to develop the economy of the relatively underdeveloped upper Pearl River (UPR) regions in Guangdong Province, China. Applying the triple-difference analysis to annual county-industry-level data, we find that the two RED policies caused higher growth in industries with high water pollution than in industries with less water pollution in the UPR regions. The second RED policy with environmental regulations was effective in restraining the new entry of firms in high-pollution industries into the UPR regions but failed to drive existing high-pollution firms out of the UPR regions. Firms' location decisions were driven by the more favorable tax regimes and less stringent pollution regulations in the UPR regions.",

keywords = "difference-in-difference-in-differences, environmental effect, regional economic development policy",

author = "Maoyong FAN and Qu TANG and Jianxin WU and Junji XIAO",

note = "Funding Information: Xiao acknowledges financial support from the China National Social Science Foundation (No. 18ZDA042). Wu acknowledges financial support from the China National Social Science Foundation (No. 15ZDA054) and National Natural Science Foundation (No. 71873057). The authors have equally contributed to the article as co‐first coauthors. Publisher Copyright: {\textcopyright} 2022 Agricultural & Applied Economics Association.",

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doi = "10.1111/ajae.12313",

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AU - TANG, Qu

AU - WU, Jianxin

AU - XIAO, Junji

N1 - Funding Information: Xiao acknowledges financial support from the China National Social Science Foundation (No. 18ZDA042). Wu acknowledges financial support from the China National Social Science Foundation (No. 15ZDA054) and National Natural Science Foundation (No. 71873057). The authors have equally contributed to the article as co‐first coauthors. Publisher Copyright: © 2022 Agricultural & Applied Economics Association.

PY - 2023/1

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N2 - We examine the environmental consequences of two regional economic development (RED) policies that aimed to develop the economy of the relatively underdeveloped upper Pearl River (UPR) regions in Guangdong Province, China. Applying the triple-difference analysis to annual county-industry-level data, we find that the two RED policies caused higher growth in industries with high water pollution than in industries with less water pollution in the UPR regions. The second RED policy with environmental regulations was effective in restraining the new entry of firms in high-pollution industries into the UPR regions but failed to drive existing high-pollution firms out of the UPR regions. Firms' location decisions were driven by the more favorable tax regimes and less stringent pollution regulations in the UPR regions.

AB - We examine the environmental consequences of two regional economic development (RED) policies that aimed to develop the economy of the relatively underdeveloped upper Pearl River (UPR) regions in Guangdong Province, China. Applying the triple-difference analysis to annual county-industry-level data, we find that the two RED policies caused higher growth in industries with high water pollution than in industries with less water pollution in the UPR regions. The second RED policy with environmental regulations was effective in restraining the new entry of firms in high-pollution industries into the UPR regions but failed to drive existing high-pollution firms out of the UPR regions. Firms' location decisions were driven by the more favorable tax regimes and less stringent pollution regulations in the UPR regions.

KW - difference-in-difference-in-differences

KW - environmental effect

KW - regional economic development policy

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DO - 10.1111/ajae.12313

M3 - Journal Article (refereed)

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SP - 291

EP - 315

JO - American Journal of Agricultural Economics

JF - American Journal of Agricultural Economics

IS - 1

ER -

Unintended environmental consequences of place‐based economic policies

Abstract

Bibliographical note

Keywords

UN SDGs

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