Understanding the Haze Pollution Effects of China's Development Zone Program

Hundreds of billions of dollars have been invested to construct development zones (DZs) in China with the intent of fostering economic growth. Previous studies show that DZs benefit the local economy, but little attention has been paid to the environmental impacts. Based on statistical data and satellite measurements during 2003-2013, we examine the impacts of China’s DZ program on city-level haze pollution by employing a spatial panel method that accounts for potential spatial spillover effects. After distinguishing between province-level and national-level zones, we show that province-level DZs significantly increase haze pollution whereas national DZs have no significant effects. The mediating effect analysis shows that technology innovation plays a critical role in alleviating haze pollution, partially offsetting the negative impacts caused by heavy investments in DZs and the concentrated discharge of pollutants due to industry agglomeration. These findings suggest that the environmental impacts differ quite significantly depending on the types of the DZ and such place-based policies should take into account both economic and environmental objectives by optimizing investment structure, adjusting the industrial layout, and improving technology