The Heterogeneous Impact of China's Place-Based Environmental Regulations on its Hog Industry: A Synthetic Difference-in-Differences Approach

Three essays on agri-environmental policy and hazardous materials

“…Furthermore, the downstream prefecture can also transfer more pressure to the upstream prefecture, thus making it abate more. This is consistent with Cheng et al (2022), which finds that the counties located upstream of big cities cleared more hog inventory due to environmental pressure transferred from other big cities downstream.…”

“…Findings from are consistent with the hypothesis that the provincial governments respond to pollution reduction mandates by shifting their enforcement efforts away from the most downstream county. Cheng et al (2022) also provide evidence on heterogeneous environmental protection intensity from different impacts on hog inventory reduction both across and within provinces. Possible mechanisms to explain the heterogeneity include different economic development levels (She et al, 2019) and location differences (Cheng et al, 2022;.…”

“…Cheng et al (2022) also provide evidence on heterogeneous environmental protection intensity from different impacts on hog inventory reduction both across and within provinces. Possible mechanisms to explain the heterogeneity include different economic development levels (She et al, 2019) and location differences (Cheng et al, 2022;. Our paper provides theoretical support for these mechanisms.…”

“…First, environmental protection such as air quality and downstream water quality improvement is mostly conducted by shutting down high-pollution industries or closing livestock farms. Previous literature finds empirical evidence of improved air quality and downstream water quality through firm closure and relocation and livestock production reduction (Li et al, 2020;Wang et al, 2019a,b;Cheng et al, 2022). Though this improves environmental quality, it also slows down economic development, making it unclear why local governments switched their focus.…”

“…For example, in order to improve downstream water quality, Zhejiang Province, which is more economically developed, reduced almost 50% of its hog inventory, while Anhui Province did not significantly decrease its hog inventory. Moreover, Cheng et al (2022) examine heterogeneous responses from upstream and downstream prefectures, yet the mechanisms behind this phenomenon are unexplored. In this paper, we propose a theoretical model that incorporates economic growth and environmental protection behaviors to explain these stylized facts in the context of tournaments for promotion among China's local politicians.…”