Water Pollution Progress at Borders: The Role of Changes in China's Political Promotion Incentives

Abstract

R iver pollution represents a classic negative externality that spills across political boundaries. The source region generates emissions that pollute the river, but social costs are borne downstream. In cases ranging from Western Europe to China, empirical studies have documented significant free riding along interjurisdictional river boundaries (Cai, Chen, and Qing 2013;Sigman 2002Sigman , 2005and Sandler 2006). 1 Sigman (2002) compares pollution in domestic and international rivers. She finds that stations immediately upstream of international borders have higher levels of biochemical oxygen demand (BOD) than similar stations elsewhere. Gray and Shadbegian (2004) find that near the Canadian-United States border BOD discharges are higher and that fewer inspections take place. Using Toxic Release Inventory data from 1987to 1996, Helland and Whitford (2003 show that facilities' water emissions are higher in counties that border other states. Sigman (2005) finds that free riding gives rise to a 4 percent degradation of water quality downstream of authorized US states. Lipscomb and Mobarak (2013) exploit a Brazilian natural experiment in which county borders are redrawn frequently and consequently changes strategic polluting behavior around borders. They conclude that solutions to cross-boundary spillovers require active regulatory involvement by upper-level governmental officials.

A New Era of Pollution Progress in Urban China?

“…Kahn, Li, and Zhao (2015) document evidence of higher pollution levels at provincial borders. Polluting industries such as pulp and paper mills cluster in these areas such that the social costs of this type of activity flow downstream.…”

“…The central government recognizes the challenge of free riding at political borders (Sigman 2002) and has introduced regulations to reduce transboundary water pollution levels. Such regulations have helped to reduce pollution for targeted criteria but did not reduce such spillovers for nontargeted pollutants, like heavy metals (Kahn, Li, and Zhao 2015).…”

“…Such a political tournament raises the possibility that the central government can provide strong incentives for local officials, and indeed, this has been a tool for encouraging local officials to promote economic growth in the past. However, the central government has been changing the performance evaluation and promotion criteria for local officials, moving beyond purely output-based criteria to include more environmental goals in the performance metrics (Zheng, Khan, Sun, and Luo 2014b;Kahn, Li, and Zhao 2015).…”

The Water Pollution Policy Regime Shift and Boundary Pollution: Evidence from the Change of Water Pollution Levels in China

“…Binding targets may also cause strategic behavior in pollution reduction because only a few goals are examined. Kahn et al [28] used a difference in difference to study water quality change in key river basins in China from 2004 to 2010 and found that COD emissions fell by 54%, but other pollutants that were not included in the assessment content did not show a significant decline.…”

“…Those upstream may discharge sewage behind the monitoring stations near the border, so that the water quality of the stations is normal, even though the upstream excessively discharges pollutants. Kahn et al [28] proved that the water quality in the border areas is improving faster and that the newly built heavy polluting enterprises are less likely to choose the border area in this period. Downstream may discharge sewage before the monitoring stations near the border, so the water quality of the stations is poor, even though the upstream does not excessively discharge pollutants.…”