High-speed rail, resource allocation and haze pollution in China

Abstract

The transport sector is crucial in influencing anthropogenic pollution. By employing Chinese prefecture-level city data from 2003 to 2019 and a sample of 443124 observations of industrial firms from 2003 to 2013, this paper treats the opening of high-speed rail (HSR) as a quasi-natural experiment and uses a multi-period difference-in-differences (DID) method to investigate the impact of HSR on haze pollution. The findings reveal that (1) HSR has a significant negative effect on cities' PM_2.5 concentrations, and the result is held after a series of robustness checks; (2) the analysis based on Chinese industrial firm data also yields significant results in reducing smoke and dust emissions by HSR, providing micro-level understanding for the main conclusion; (3) at the firm level, heterogeneity derives from firm ownership, location, and industry; (4) the reduction in industrial firms' labor and capital distortion and resource misallocation play a crucial role in the HSR's impact on mitigating haze pollution; (5) at the city level, HSR reduces haze pollution by improving overall resource allocation across cities, and promoting the flow of capital to cities that are more developed and have higher returns. These results indicate that recognizing the causal relationship between HSR and haze pollution and the impact mechanism poses policy implications for inter-city transportation infrastructure development and pollution control.