Does industrial agglomeration facilitate environmental performance: New evidence from urban China?

Area of Science:

• Environmental Economics and Policy
• Urban and Regional Economics
• Industrial Organization

Background:

• Industrial agglomeration is a key feature of China's economic development.
• Understanding its environmental consequences is crucial for sustainable growth.
• Previous studies have yielded mixed results on the agglomeration-environment nexus.

Purpose of the Study:

• To investigate the heterogeneous impacts of industrial agglomeration on environmental performance in Chinese prefectural-cities.
• To examine the relationship between industrial agglomeration and pollution intensity (sulfur dioxide, soot).
• To analyze the effect of industrial agglomeration on environmental efficiency using Data Envelopment Analysis.

Main Methods:

• Empirical analysis using a sample of Chinese prefectural-cities.
• Estimation of non-linear models for pollution intensity (sulfur dioxide, soot).
• Data Envelopment Analysis (DEA) to calculate environmental efficiency.

Main Results:

• A non-linear relationship exists between industrial agglomeration and sulfur dioxide emission intensity.
• The non-linear pattern was not observed for soot emission intensity.
• A U-shaped relationship was found between industrial agglomeration and environmental efficiency, indicating initial deterioration followed by improvement.

Conclusions:

• The impact of industrial agglomeration on environmental performance is complex and depends on the specific pollutant and measurement approach.
• Environmental efficiency initially declines but subsequently rises with increasing industrial agglomeration.
• Policy interventions may be needed to mitigate environmental degradation during early stages of agglomeration.