Dynamics of Sewage Charge Policies, Environmental Protection Industry and Polluting Enterprises—A Case Study in China

Can the water resources tax policy effectively stimulate the water saving behavior of social water users? A DSGE model embedded in water resources tax

Whether the implementation of the water resources tax policy can stimulate the water-saving behavior of social water users is one of the important criteria for evaluating the implementation effect of the tax reform policy. Taking Hebei Province, the first tax reform pilot in China, as an example. A dynamic stochastic general equilibrium model (DSGE) with embedded water resources tax is constructed to simulate the persistent impact of water resources tax on water-saving objectives. The research shows that: (1) Water resources tax can effectively achieve the goal of water-saving and improve the utilization efficiency of water resources. (2) Levying water resources tax helps to improve the water-saving awareness of enterprises and residents. It can also encourage enterprises to optimize production structures. (3) Rational and efficient use of special water resources protection funds is the basis for ensuring the effective implementation of water resources tax. It can also improve the recycling capacity of water resources. The results show that the government should speed up formulating a reasonable water resources tax rate and accelerate the construction of water resources tax protection measures. To ensure the relatively steady state of water resources utilization and protection, and achieve the dual goals of sustainable economic development and sustainable use of water resources. The research results of this paper reveal the internal logic of the comprehensive impact of water resources tax on the economy and society and provide an important basis for the national promotion of tax reform policy.

Emission reduction effects of vertical environmental regulation: Capacity transfer or energy intensity reduction? Evidence from a quasi-natural experiment in China

There is insufficient research on how to reduce the destructive effects of command-based environmental regulation through institutional design. The implementation of the National Key Monitoring Enterprises provides new evidence to assess the effects of vertical monitoring. This study integrates and matches three types of micro databases in China: industrial, pollution, and patent, and constructs firm-level panel data from 2004 to 2010. The empirical evidence shows that the policy reduces the energy use intensity of monitored enterprises by about 10.4% and sulfur dioxide emission intensity by about 23.9%. The mechanism test shows that this effect is achieved by means of energy structure optimization, process innovation, and end-of-pipe treatment, but the effect on total factor productivity is not significant. Among them, the positive impact is stronger for high-profit and emerging firms. Further, we quantify the policy-induced capacity transfer and technology spillovers from monitored enterprises to non-monitored enterprises. In terms of scale, the policy leads to a simultaneous increase in output and pollution emissions of unmonitored firms in the same industry. However, in terms of efficiency, the policy reduces the energy use intensity and pollution emission intensity of enterprises in the same industry.

Does China's Eco-Province Policy Effectively Reduce the Pollutant Emission Intensities?

Economic development and environmental conservation are two important challenges for China. A series of initiatives including Eco-province (EP) policies have been taken to achieve sustainable development by the Chinese government. Increasing concerns regarding policy implications on sustainable development have increased attention to the topic. However, the research on the relationship between economic development and pollutant (COD, SO₂) emission intensities after the implementation of EP policy remains inadequate. We applied a Time-Varying Difference-in-Differences Model by employing Chinese provincial panel data to quantitatively study the policy effect, and further utilized the Mediating Effect Model to analyze the mechanism. The article generates several findings: (1) The EP policy had overall inhibitory effects on both COD and SO₂ emission intensities, and it would reduce the emission intensity by 4.99% and 6.77% on average, respectively. However, there was a five year lag in the policy effect. (2) The policy effect was significant in the western and central provinces with high pollutant emission intensities, but not in the eastern provinces. (3) The primary inhibiting mediating effects of Eco-province policy to lower pollutant emission intensity were increased GDP per capita and inventions.

Does an Emissions Trading Policy Improve Environmental Efficiency? Evidence from China

An emissions trading system is a market instrument for pollution control that has been used in China for many years. The Ministry of Environmental Protection of China has approved the implementation of emissions trading pilot projects in 11 provinces since 2007, yet the effectiveness of the policy has not been comprehensively estimated. With panel data from 29 provinces and cities in China between 2003 and 2012, this study uses the data envelopment model-slack based measurement (DEA-SBM) method to measure environmental efficiency indicators and a difference in difference (DID) model to examine the impact of the emissions trading system on environmental efficiency. The results indicate that the policy has significantly improved environmental efficiency in the pilot provinces. However, the effects are heterogeneous with different efficiency levels across the diverse regions. Higher impacts were found in the central and western regions. Some suggestions for the optimization of the emissions trading system are suggested in this study.

Is a Regional Coordination Approach to Air Pollution Management Helpful? Evidence from China

In February 2017 China began to require the regional coordination of four ministries and 28 cities surrounding Beijing to manage air pollution. The Coordination attempts to unify air pollution standards and implements various new methods to monitor air pollution. Leveraging the natural experiment and using a difference-in-differences research design, we note that firms located in the treatment cities invest more in the environment than those in the control cities. In addition, we find that non-state-owned firms (non-SOEs) respond more strongly than SOEs. The findings remain qualitatively the same after accounting for selection bias in the cities included in the Coordination. Most importantly, air quality improves for treatment cities after the implementation of the Coordination. Our findings offer lessons to other emerging markets for implementing their air pollution management programs. Specifically, we sharpen our knowledge of the administrative management needed to improve coordination among government agencies and local officials in the management of air pollution and suggest that the government can play an active role in enhancing air pollution management.