Does "National Civilized City" policy mitigate air pollution in China? A spatial Durbin difference-in-differences analysis

Abstract

"National Civilized City" (NCC) is regarded as China's highest honorary title and most valuable city brand. To win and maintain the "golden city" title, municipal governments must pay close attention to various key appraisal indicators, mainly environmental ones. In this study we verify whether cities with the title are more likely to mitigate SO₂ pollution. We adopt the spatial Durbin difference-in-differences (DID) model and use panel data of 283 Chinese cities from 2003 to 2018 to analyze the local (direct) and spillover effects (indirect) of the NCC policy on SO₂ pollution. We find that SO₂ pollution in Chinese cities is not randomly distributed in geography, suggesting the existence of spatial spillovers and possible biased estimates. Our study treats the NCC policy as a quasi-experiment and incorporates spatial spillovers of NCC policy into a classical DID model to verify this assumption. Our findings show: (1) The spatial distribution of SO₂ pollution represents strong spatial spillovers, with the most highly polluted regions mainly situated in the North China Plain. (2) The Moran's I test results confirms significant spatial autocorrelation. (3) Results of the spatial Durbin DID models reveal that the civilized cities have indeed significantly mitigated SO₂ pollution, indicating that cities with the honorary title are acutely aware of the environment in their bid to maintain the golden city brand. As importantly, we notice that the spatial DID term is also significant and negative, implying that neighboring civilized cities have also mitigated their own SO₂ pollution. Due to demonstration and competition effects, neighboring cities that won the title ostensibly motivates local officials to adopt stringent policies and measures for lowering SO₂ pollution and protecting the environment in competition for the golden title. The spatial autoregressive coefficient was significant and positive, indicating that SO₂ pollution of local cities has been deeply affected by neighbors. A series of robustness check tests also confirms our conclusions. Policy recommendations based on the findings for protecting the environment and promoting sustainable development are proposed.

Keywords: National Civilized City; Robustness check; SO2 pollution; Satellite observed data; Spatial Durbin difference-in-differences model; Spatial spillovers.