Winter Heating or Clean Air? Unintended Impacts of China's Huai River Policy

Douglas Almond, Yuyu Chen, Michael Greenstone, and Hongbin Li

American Economic Review, Vol. 99, No. 2, pp. 184

Douglas Almond, Yuyu Chen, Michael Greenstone, and Hongbin Li, American Economic Review, Vol. 99, No. 2, pp. 184-190, 2009

This paper assesses the role of a procrustean Chinese policy in generating stark differences in air quality within China. During the 1950-1980 central planning period, the Chinese government established free winter heating of homes and offices as a basic right via the provision of free coal fuel for boilers. The combustion of coal in boilers is associated with the release of air pollutants, especially TSP. Due to budgetary limitations, however, this right was extended only to areas located in northern China. The line formed by the Huai River and Qinling Mountains denotes the border between northern and southern China. Matching air pollution and weather data for 76 Chinese cities, we find the heating policy led to dramatically higher TSP levels in the north. This result holds both in a cross-sectional regression discontinuity-style estimation approach and in a panel data setting that compares the marginal effect of winter temperature on TSP in northern and southern China, after controlling for all permanent city-level determinants of TSP concentrations and transitory ones common to all Chinese cities. In contrast, we fail to find evidence that the heating policy leads to increases in sulfur dioxide (SO2) and nitrogen oxide (NOx) concentrations.

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