E-commerce and air pollution: Evidence from China

Abstract

E-commerce serves as an important link between the digital economy and the real economy, and contributes positively to income growth. In the face of resource constraints and serious environmental pollution, it is equally relevant to examine the environmental effects of e-commerce. Based on county panel data for China from 2011 to 2018, this study uses a difference in differences (DID) model to investigate the impact of Rural E-Commerce Demonstration County (REDC) policy on air pollution. This study reveals that the demonstration policy exacerbates air pollution in counties and the pollution effect is regionally heterogeneous. Additionally, the increase in temperature and precipitation weakens the pollution effects of the demonstration policy. Mechanism analysis indicates that the demonstration policy can promote the development of the secondary industry and digital financial inclusion at the county level, which subsequently leads to the deterioration of local air quality. Further analysis of costs and benefits reveals that the significant positive economic effects resulting from the demonstration policy far outweigh the indirect economic losses caused by air pollution. Therefore, when local governments actively promote the development of e-commerce in rural areas, they should also attach great importance to its potential negative environmental externalities.