Environmental regulation,pollution reduction and green innovation: The case of the Chinese Water Ecological Civilization City Pilot policy

This paper treats the Water Ecological Civilisation City Pilot (WECCP) policy as a quasi-natural experiment, and integrates environmental regulation, pollution reduction and green innovation into a unified analytical framework. Based on the pollution emission index and green patent data for 283 Chinese cities from 2010 to 2018, we examine the impact of WECCP policy on urban pollution emissions and green innovation by using a difference-in-differences model. The results show that the WECCP policy has significant regional pollution reduction effects, that is, the policy significantly reduces water pollution in the pilot cities, while it has a weak impact on air quality improvement. Also, we find that the WECCP policy significantly promotes the growth of the number of green patent applications in the pilot cities, indicating that the policy can significantly improve urban green innovation capacity. The mediating effect analysis shows that the WECCP policy can improve regional environmental quality by enhancing urban green innovation ability. Furthermore, the heterogeneity analysis demonstrates that the WECCP policy has more significant effects on pollution reduction and green innovation in small cities.