On the afternoon of June 21, Prof. Zhang Bing, Director of the Center for Environmental Management and Policy Research at the School of Environmental Sciences, Nanjing University, held a seminar entitled "Relationship between Environmental Regulations and Firm-level Productivity in China", several teachers of Economic and Financial Research Institute of Social and Economic Research and Economic and Trade College attending it.
Professor Zhang Bing pointed out that through the model environmental regulations will have both positive and negative effects on productivity, and in the short term, the negative impact will be the dominant position, and in the long run, the positive impact will go beyond the negative impact. In the empirical study, Professor Zhang estimated the impact of environmental regulations on the productivity of enterprises through a regression discontinuity. The study focused on the water quality monitoring system, and if the government wants the water quality of the monitoring stations to meet national standards, they will impose stricter environmental controls on the river upstream firms, as the results of the monitoring stations depend largely on these firms. By comparing the TFP (Total Factor Productivity) level between the upstream and downstream enterprises adjacent to the water quality monitoring station, the study found that the TFP of the upstream polluting enterprises was 26.7% lower than that of the downstream enterprises. Private enterprises and older businesses are more affected by more stringent environmental controls. At the same time, the upstream enterprise's chemical oxygen demand (COD) emissions are also significantly reduced. By calculation, when the environmental pollution reduces by 10%, the enterprise TFP loss is about 1.73% -2.42%. The results will be extended to the whole country, Professor Zhang calculated the country's gross domestic product would be reduced by 200 billion yuan due to more stringent environmental regulation. As a result of this study, Professor Zhang suggested that the Government must take into account the possible socio-economic costs when formulating environmental policies.
