Does the Water Resource Tax Reform Bring Positive Effects to Green Innovation and Productivity in High Water-Consuming Enterprises?

Abstract

Water resources are a fundamental natural and strategic economic resource and are closely related to high-quality economic and societal development. This paper uses the pilot implementation of the water resource tax reform to explore the impact of that reform on the green innovation and total factor productivity of enterprises. The study sample includes data for high water-consuming A-share listed enterprises in Shenzhen and Shanghai, China, from 2007 to 2021; the double-difference method was used for the analysis. Study findings indicate that replacing water resource fees with taxes significantly improves the green innovation level and total factor productivity of enterprises. Green innovation has a significant partial mediating effect between the water resource tax reform and total factor productivity. The water resource tax reform promotes green innovation in enterprises, enhancing total factor productivity. When considering different types of enterprise property rights, the economic effect of the water resource tax reform is more pronounced in non-state-owned enterprises, compared to state-owned enterprises. This paper provides empirical evidence for expanding the pilot scope of the water resource tax reform.

Can the Water Resource Fee-to-Tax Reform Promote the “Three-Wheel Drive” of Corporate Green Energy-Saving Innovations? Quasi-Natural Experimental Evidence from China

“…The fee-to-tax reform for water resources is not only a crucial means of environmental protection but also a key driver for promoting corporate green energy-saving innovation [17]. Based on the theory of resource externalities, the "fee-to-tax" reform raises the cost of water use and production for manufacturing enterprises, forcing companies to proactively engage in green energy-saving innovations and change their production processes [18].…”