Can China’s Government-Oriented Environmental Regulation Reduce Water Pollution? Evidence from Water Pollution Intensive Firms

Round 1

Reviewer 1 Report

The article should be edited in accordance with the comments.

1. The article must clearly justify: (1) relevance, (2) novelty and (3) the purpose of the study.
2. Please, show how the presented work differs from well-known publications on this topic.
3. Supplement the article with more recent data, not limited to 2002-2013.
4. 2. Specify:…. " In 2017, government environmental investment reaches 953.9 billion RMB Yuan (136.27 USD) with an average growth rate of 12.68% from 2006 to 2017”.

 

Author Response

We gratefully acknowledge the reviewer’s comments and suggestions which have helped us improve the quality of the paper. Below please find our responses.

Reviewers' comments:

1. The article must clearly justify: (1) relevance, (2) novelty and (3) the purpose of the study.

Response:

Thanks for the hard work of reviewer. We have followed up on the suggestion to add the relevance of this study and rewrite the novelty and the purpose of the study.

After reorganize the manuscript, the relevance, the novelty and the purpose of the study can be seen as follows:

The relevance of this study can be seen on the first paragraph of Introduction (Page 1 Paragraph 1), we emphasize the unresolved problem of water environment pollution across the world. Water environment management remains an important public policy issue not only in developing countries but also in developed countries. Large rivers, such as the Mississippi River in the United States, the Rhine in the European countries, the Ganges River Basin in India, the Amazon in the Brazil have all been facing with water pollution problem.

The novelty of this study can be seen on Page 5 Paragraph 2, after summarize what the existing literature have done, we lists three points of contributions of this study.

The purpose of this study can be seen on Page 2 Paragraph 2, after we briefly introduce the background of China’s current water environmental regulation structure, we propose an interesting question: “Can China’s government-oriented environmental regulation reduce water pollution?”. This study is to answer this question.

2. Please, show how the presented work differs from well-known publications on this topic.

Response:

We have followed up on the suggestion to take a closer look at the recent literature. Particularly, Keiser and Shapiro (2019, The Quarterly Journal of Economics) on Page 13 Paragraph 2, but also several other papers in Empirical result and Conclusion part have been included. From those recent literatures, we can see the result of this study is in line with most of previous work, i.e. that it is the government investment policy contributes most of water environmental improvement, even in developed countries like the U.S.. We gratefully acknowledge this suggestion, as it has improved the analysis.

Reference:

 Cai H., Chen Y. and Gong Q., et al. 2016. Polluting thy neighbor: Unintended consequences of China׳ s pollution reduction mandates[J]. Journal of Environmental Economics and Management, 76: 86-104.

Keiser D A, Shapiro J S. 2019. Consequences of the Clean Water Act and the demand for water quality[J]. The Quarterly Journal of Economics, 134(1): 349-396.

 

3. Supplement the article with more recent data, not limited to 2003-2013.

Response:

Correct. The longer data, especially more recent data can offer more valuable and updata information which every research fellow should pursue. However, the Key National Monitoring Sources of Pollution Firms (KNMSPF) and the Annual Surveys of Industrial Firms (ASIF) are both only available to 2013. There are no more recent data for those two data. Although there are no recent data available in KNMSPF and ASIF, as the two most important data including detailed firm-level data, a hand of works have been done using those data. For example, Wang et al. (2018) in Journal of Environmental Economics Management(JEEM), Fan et al. （2020） in NBER working papers series, which we also mentioned in our paper ( Page 9, Line 24-25, Just under 3.2.1 Firm level data).

  Actually, an important contribution of this paper is the use of firm level data, especially data from KNMSPF which offer COD and NH₃ discharge for every polluted firm. The data on provincial and city level is much more easily available than firm-level data, and can be updated to recent year. However, the macro data can’t grasp the industrial pollution activity. Few studies dealing with this topic based on firm-level data.

Reference:

Wang C, Wu J J, Zhang B. 2018. Environmental regulation, emissions and productivity: Evidence from Chinese COD-emitting manufacturers[J]. Journal of Environmental Economics and Management, 92: 54-73.

Fan, H., Zivin, J. S. G., Kou, Z., Liu, X., & Wang, H. 2019. Going Green in China: Firms’ Responses to Stricter Environmental Regulations (No. w26540). National Bureau of Economic Research.

 

4. Specify:…. “ In 2017, government environmental investment reaches 953.9 billion RMB Yuan (136.27 USD) with an average growth rate of 12.68% from 2006 to 2017”.

Response:

Thanks for the hard work of reviewer. We have rewritten this sentence as  “ After 2006, China’s government environmental investment soars with an average growth rate of 12.68% from 2006 to 2017 and it reaches 953.9 billion RMB.

Author Response File: Author Response.pdf

Reviewer 2 Report

the manuscript should be improved. please see the following

1) there is a strong regional focus (China) on the whole of the manuscript. I understand that this translates to millions of customers however the focus of an international paper should be on its global use, so please rewrite explaining why this is important for an international audience

2) the paper is not written as a scietific paper but more as a  book chapter or a case stucy. It is very difficult to dustinghuish materials and methods from results. the comparison with other similra studies and the discussion on the practicability, the reliability and the application to other cases is inexistent

 

 

 

Author Response

We gratefully acknowledge the reviewer’s comments and suggestions which have helped us improve the quality of the paper. Below please find our responses.

Reviewer 2' comments:

1. There is a strong regional focus (China) on the whole of the manuscript. I understand that this translates to millions of customers however the focus of an international paper should be on its global use, so please rewrite explaining why this is important for an international audience

Response:

Correct. We have added one paragraph to generalize this China’s case (Paragraph 1). In fact, Water environment management remains an important public policy issue to all countries, especially in large river basin, the Mississippi River in the United States, the Rhine in the European countries, the Ganges River Basin in India, the Amazon in the Brazil have all faced or are facing with serious water pollution . Governments of the U.S., the E.U., India and Brazil have implemented different types of water environmental regulations, like Clean Water Act (CWA) in the U.S., the Water Framework Directive (WFD) in the EU., the National River Conservation Plan in India, we compare all the above policies and give a detailed discussion in literature reviews (Paragraph 3 ).

In addition, we also compare our results with those of previous literatures and find that the result of this study is in line with most of previous work, i.e. that it is the government investment policy contributes most of water environmental improvement, even in developed countries like the U.S.. We gratefully acknowledge this suggestion, as it has improved the analysis.

 

2. The paper is not written as a scietific paper but more as a book chapter or a case stucy. It is very difficult to dustinghuish materials and methods from results. the comparison with other similra studies and the discussion on the practicability, the reliability and the application to other cases is inexistent

   We rewrite part of this paper. At Introduction section, we emphasize water pollution is important and remains unsolved across the world. In the literature part, we point out that empirical studies have found that none of existing water environmental regulations could completely solve the problem of water pollution. After given a brief introduction of China’s water environmental regulation background, the study has proposed an interesting question “Can China’s government-oriented environmental regulations reduce water pollution?” In order to address this question, this paper improved a classical trade-environmental model, and use firm-level data to empirically test it. At the empirical result part and discussion part, we also compare our results with those of other previous literature.

Author Response File: Author Response.pdf

Reviewer 3 Report

The paper is a nice example of influencing water protection by the type of environmental regulation regime in China during 10 years. The introduction is somewhat too long, but I’m not pressing to shorten this due to important content. However, please consider to reduce some paragraphs a bit. On the other hand the description of the study area is insufficient, at least some location map of Yangtze River Economic Belt with main cities, urban/industrialization groups and subregions is necessary.

The methods seem to be adequate and properly used in this type of research, but I'm not prepared enough in economics for a thorough evaluation of the model being used. The collected data meets the requirements, and which is of value, different variations of heterogeneity (industry, firm size and ownership) are shown. But the number of firms N should be checked in tab. 4 as there is the same quantity for water pollution and other firms (?) In Line 404 we have information that Table 2 presents all samples, so why the same quantity N is included like in tab. 4?

The only one figure seem to be important and valuable, however having in mind that one picture would give more than a thousand words, some additional maps like acceleration of industrialization or increase in sewage treatment plants over the last 10 years in the Yangtze Economic Zone (2002-2012?) should be considered for better understanding of spatial heterogeneity and conditions of water pollution.

The references fulfill the requirements, the list is quite enough (37 items), however some pretty recent ones should be included like e.g. Environmental regulation, green technological innovation, and eco-efficiency: The case of Yangtze river economic belt in China. Technological Forecasting and Social Change Volume 155, June 2020.

The paper is clearly written, in pretty good language, with sufficient explanation of the methods. The problem was solved and the convincing conclusions are presented, however highlighting obvious impact on small firms, private firms, domestic joint venture and ignoring SOE and COE why? -as this is described in the page 16 or tab. 6 it should be emphasized in conclusions as well.  SOE/COE are responsible for an immensely large proportion of pollutions. All the references are sufficient and cited in the paper.

Should be space before a text in the titles of sub-sections like 2.1. Fundamental….

The symbol of NH₃ must be with subscript everywhere in the text (e.g. line 367, 341, 332, 504 or fig. 1)

Line 61 – is 136.27 USD??

Line 65 – placement of comma after Sigman,

Line 106 – can be seen

Line 107 – space before [17]

Line 168 – sewage pipe network

Line 304, 306 – space after (14), before (26)

Line 338 – no dot in the end of title

Author Response

Before we answer Reviewers’ comments, we really want to extend my sincere thanks to the hard and careful work of Reviewer. we have to say to the editor that you are the best reviewer we have ever met. Earnest, careful, with a deep insight into environmental economics, those fine characters are worth to be learned by every reviewer including me. After following your kind suggestions, our manuscript has been improved a lot. Hoping you can review more papers and we can meet more reviewers like you. Below please find our responses. Reviewers' comments: 1. The paper is a nice example of influencing water protection by the type of environmental regulation regime in China during 10 years. The introduction is somewhat too long, but I’m not pressing to shorten this due to important content. However, please consider to reduce some paragraphs a bit. On the other hand the description of the study area is insufficient, at least some location map of Yangtze River Economic Belt with main cities, urban/industrialization groups and subregions is necessary. Response: Thanks for kind suggestions. Yes, we agree the introduction is too lengthy and we have followed up on the suggestion to rewrite and shorten the first paragraph. We also add a location map of Yangtze River Economic Belt with main cities, main stream and tributary, as well as national automatic water quality monitoring point. Please find it on Page 3. 2. The methods seem to be adequate and properly used in this type of research, but I'm not prepared enough in economics for a thorough evaluation of the model being used. The collected data meets the requirements, and which is of value, different variations of heterogeneity (industry, firm size and ownership) are shown. But the number of firms N should be checked in tab. 4 as there is the same quantity for water pollution and other firms (?) In Line 404 we have information that Table 2 presents all samples, so why the same quantity N is included like in tab. 4? Response: Thank you for your careful reading. Yes, we correct the observations in Tab. 4 and Tab. 5 after recalculated the model. Please see Page 15-16. 3. The only one figure seem to be important and valuable, however having in mind that one picture would give more than a thousand words, some additional maps like acceleration of industrialization or increase in sewage treatment plants over the last 10 years in the Yangtze Economic Zone (2002-2012?) should be considered for better understanding of spatial heterogeneity and conditions of water pollution. Response: Correct. That would be better for understanding of spatial heterogeneity and conditions of water pollution. In Figure 2., we have illustrated during study period, the industrial output of water polluted firms have increased, while COD and NH3 discharge have not. Therefore, the environmental regulations might play an important role in this phenomenon. Definitely, to add a map would be better, however, this paper mainly aims to explore the effect of environmental regulations. The spatial heterogeneity of water pollution and industrial output does not fall in our research scope in this paper. Actually, we are going to discuss this in our next paper. Thanks for your suggestions which sparkle our research idea. 4. The references fulfill the requirements, the list is quite enough (37 items), however some pretty recent ones should be included like e.g. Environmental regulation, green technological innovation, and eco-efficiency: The case of Yangtze river economic belt in China. Technological Forecasting and Social Change Volume 155, June 2020. Response: we have added several more papers as reference to fulfill the requirements. Especially, the recommended one which is related to our study and we learned a lot from it. 5. The paper is clearly written, in pretty good language, with sufficient explanation of the methods. The problem was solved and the convincing conclusions are presented, however highlighting obvious impact on small firms, private firms, domestic joint venture and ignoring SOE and COE why? -as this is described in the page 16 or tab. 6 it should be emphasized in conclusions as well. SOE/COE are responsible for an immensely large proportion of pollutions. All the references are sufficient and cited in the paper. Response: Correct. We add this content on Line 493-497 Page 19. 6. Should be space before a text in the titles of sub-sections like 2.1. Fundamental…. Following the suggestion, we have added space. The symbol of NH3 must be with subscript everywhere in the text (e.g. line 367, 341, 332, 504 or fig. 1) Sorry for these mistakes, we have checked and revised all the mistakes both in the text and the table. Line 61 – is 136.27 USD?? Sorry. We have corrected this. It should be 136.27 billion USD Line 65 – placement of comma after Sigman, Line 106 – can be seen Line 107 – space before [17] Line 168 – sewage pipe network Line 304, 306 – space after (14), before (26) Line 338 – no dot in the end of title We have corrected all the above mistakes.

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Dear authors, the corrections have improved your article.

Author Response

Thanks for your hard work, suggestion and encouragement.