Waste Import and Air Pollution - Evidence From China's Waste Import Ban - 2023

Journal of Environmental Economics and Management 120 (2023) 102837
Contents lists available at ScienceDirect
Journal of Environmental Economics

and Management
journal homepage: www.elsevier.com/locate/jeem
Waste import and air pollution: Evidence from China’s waste

import ban
Xinzheng Shi a, Ming-ang Zhang b, *
a
School of Economics and Management, Tsinghua University, China
b
School of Public Finance and Taxation, Central University of Finance and Economics, China
A R T I C L E I N F O A B S T R A C T
JEL classification: In this paper, we investigate the impact on air pollution of China’s 2017 policy banning waste
Q56 imports. We exploit a difference-in-differences strategy combining the time variation and cross-
Q58 prefecture variation in waste imports before the policy change. We find that prefectures that
F18
imported waste in the prepolicy period experienced greater air quality improvements after the
Keywords: policy shock. This effect is stronger in regions with loose environmental regulations and poor
Waste import
waste utilization capacity. Further investigation shows that reductions in both the burning of
Air pollution
unrecyclable waste and the level of industrial production are channels through which the waste
China’s waste import ban
import ban reduced air pollution.
1. Introduction
The pollution haven literature has documented that pollution-intensive industries are more likely to be located in countries with lax
environmental regulations.1 A more recent study (Kellenberg, 2012) notes that another channel of the pollution haven effect is direct
export of physical waste byproducts to countries without stringent environmental regulations, with such waste usually traveling from
developed to developing countries. Between 2011 and 2020, the world traded approximately 212 million tons of waste each year.2
Although some anecdotal evidence reveals the negative environmental consequence of importing wastes,3 systematic analysis is
lacking. In this paper, we shed light on this question by investigating the effect on air pollution of China’s recent 2017 policy that
aimed to ban waste imports.
China used to be the largest waste importer in the world. For example, it accounted for 56% of global imports of waste plastic in
2016 (Brooks et al., 2018). However, concerns have been raised about environmental consequences due to improper waste processing.
Faced with the challenge of a deteriorating environment, the Chinese government has taken several measures, including the banning of
waste imports in 2017. This policy led to a dramatic drop in waste imports (additional details are provided in Section 2). This scenario
enables us to exploit the difference-in-differences (DID) strategy for identification. Utilizing a unique administrative dataset on waste
imports in 2015 and 2016 (enabling us to compute the import quantity for each prefecture before the policy change) and air quality
monitoring data, we find that the waste import ban significantly reduced local air pollution levels as measured by the air quality index
* Corresponding author.
E-mail addresses: shixzh@sem.tsinghua.edu.cn (X. Shi), zma_econ@126.com (M.-a. Zhang).
1
Examples include Becker and Henderson (2000), Copeland and Taylor (2004), Levinson and Taylor (2008), and Hanna (2010).
2
The data are from the UN COMTRADE database.
3
As seen in the following news article: https://www.bbc.com/news/world-48444874.
https://doi.org/10.1016/j.jeem.2023.102837
Received 30 March 2022; Received in revised form 24 May 2023; Accepted 3 June 2023
Available online 5 June 2023
0095-0696/© 2023 Elsevier Inc. All rights reserved.
X. Shi and M.-a. Zhang Journal of Environmental Economics and Management 120 (2023) 102837
(AQI), the concentration of suspended particulates smaller than 2.5 μm in aerodynamic diameter (PM2.5 ), and the concentration of
suspended particulates smaller than 10 μm in aerodynamic diameter (PM10 ). Specifically, for prefectures with preban waste imports,
the waste import ban policy led to a 4.4% greater decrease in the AQI, a 6.5% greater decrease in the PM2.5 concentration and a 5.6%
greater decrease in the PM10 concentration. This effect is stronger in prefectures with less stringent environmental regulations and
lower waste processing capacity.
We conduct several tests to check the validity of our DID identification strategy. First, we perform an event study–style test to show
that prefectures in the treatment and control groups experienced a similar evolution in air pollution before the policy, providing
evidence that the parallel trend assumption holds in our paper. Second, we show that our main results are not driven by other con
current policies and omitted heterogeneity across cities. Third, to address the potential concern that the observed effects may be
attributable purely to chance, we adopt a randomization inference approach analogous to Fisher permutation tests (Rosenbaum,
2002); the results show that our estimated effects are not due to chance. We also show that our main results are robust across different
samples.
We then explore the underlying channels through which reducing waste imports improves local air quality. Imported waste can be
divided into an unrecyclable portion that cannot be used as industrial material and is ultimately discarded and a recyclable portion that
can be put into industrial production. The unrecyclable portion is usually poorly sorted in the home countries and contains large
amounts of garbage. Anecdotal evidence shows that garbage is often burned into the air without proper treatment.4 To proxy open
waste burning, we resort to the satellite fire data collected by NASA’s Visible Infrared Imaging Radiometer Suite (VIIRS) and show that
the waste import ban has indeed resulted in fewer fire points detected by the satellite. This finding suggests that reducing the
occurrence of the open burning of imported garbage is a channel through which waste import bans improve air quality. Second, given
that a portion of the imported waste can be recycled and used as inputs for industrial production, the imported waste can cause more
pollution by the scale effect (whereby more production leads to more pollution). We find that the waste import ban reduced the value
added of the secondary industry. Furthermore, using matched data on waste imports, industrial firms’ production activities, and firms’
emissions from the prepolicy period, we find that firms that import more waste have higher production levels and firms with higher
production levels emit more waste gas. This finding suggests that the waste import ban could reduce pollution by making firms produce
less overall. One caveat is that this production channel is likely to be short term because firms could replace inputs from recycled
wastes with others in the long term and thus return to their initial level of output.
Finally, we provide a back-of-envelope estimation of the monetized health benefits of the air quality improvements due to the waste
import ban policy. Our calculation shows that the monetized benefits brought about by the waste import ban policy to the treated
prefectures total at least $6.67 billion.
Our paper contributes to the literature in the following ways. First, it contributes to the growing literature linking the fields of
environmental and international economics. Past studies have focused on how domestic environmental policies affect international
trade or foreign direct investment (FDI) (see, for example, Cai et al. (2016) and Shi and Xu (2018)). A small but growing number of
studies pay attention to how trade policy affects the environment (Fowlie et al., 2016; Duan et al., 2021; Shapiro, 2021). As Copeland
(1994) argues, when efficient environmental policies are unavailable, the environmental pollution stemming from trade cannot be
effectively adjusted by domestic environmental regulation; in such a case, trade policy can be used as a second-best environmental
policy to fix the environmental issue. However, most of this research relies on theoretical or simulation analysis.5 By exploiting a
large-scale reform (restricting waste imports) in the largest developing country and showing the effectiveness of such a ban in
improving domestic air quality, our paper provides empirical evidence that trade policy can act as an environmental policy.
Second, our paper enriches the evaluation of environmental policies and their health benefits. The number of studies examining
environmental policies in developing countries has increased in recent years due to the improvement of environmental regulations in
developing countries and better access to pollution data (for example, Davis, 2008; Shi and Xu, 2018; He et al., 2020; Greenstone et al.,
2020, 2021). While a large share of these studies focus exclusively on domestic environmental policies that target environmental issues
themselves, our paper shows that trade policy can play a role as another form of environmental policy. In particular, our calculations of
the health benefits resulting from the waste import ban contribute to the literature on the health effects of environmental policies (see,
for example, He et al. (2020) and Rangel and Vogl (2019)). Our study aids in the evaluation of the health improvement impact of such
policies.
Third, our paper contributes to the literature on the pollution haven hypothesis (PHH). The PHH predicts that countries with lax
environmental regulations have comparative advantages regarding pollution-intensive industries and therefore are more likely to
export products produced by these industries, which are expected to negatively affect the environment. Despite the available analytical
theories on trade’s influence on the environment (for example, Copeland and Taylor, 1994, 1995; Benarroch and Gaisford, 2014;
4
Other ways to process imported garbage is to incinerate it or place it in a landfill. We discuss the roles of these two processing methods in detail
in Section 5.
5
For example, export taxes or restrictions in some cases are used to restrain domestic pollution-intensive or resource-extractive production
(Eisenbarth, 2017; Copeland, 1994). According to Shapiro (2021), the difference in import tariff and nontariff barriers between dirty and clean
industries results in implicit subsidies of CO2 emissions and aggravates global climate change. In addition, Böhringer et al. (2016, 2018) and Larch
and Wanner (2017) discuss the hypothetical carbon tariff on global greenhouse emissions.
2
Kreickemeier and Richter, 2014), the empirical evidence is mixed (Grossman and Krueger, 1993; Antweiler et al., 2001; Frankel and
Rose, 2005; Levinson, 2009; Roy, 2017; Shapiro and Walker, 2018).6 In addition, Kellenberg (2012) documents a novel channel of the
pollution haven effect whereby countries with lax environmental regulations are also more likely to import waste. Our paper differs
from the traditional literature on the PHH by examining the environmental consequences of this channel, thereby enhancing our
understanding of the pollution haven effect.
Fourth, and more specifically, our paper enriches the research on waste trading. Despite the large amount of global waste trading
and the potential related environmental impacts, the available research on this topic is surprisingly minimal (Kellenberg, 2015), except
for the few studies on the determinants of waste imports (Baggs, 2009; Kellenberg, 2012).7 However, how waste trade affects the
environment, particularly for importing countries, remains unclear. Our paper fills this gap by investigating how waste imports affect a
destination country’s air pollution. Moreover, we exploit a policy shock as a natural experiment and therefore offer more reliable
estimates of the plausibly causal relationship between waste imports and air pollution.
The remainder of this paper is divided into the following sections. Section 2 provides background. Section 3 introduces the data and
empirical strategy. Section 4 presents the baseline results, heterogeneity analysis results, and results from several robustness checks.
Section 5 investigates the underlying mechanisms. Section 6 calculates the monetized health benefits brought by the waste import ban
policy, and Section 7 concludes the paper.
2. Background
2.1. Evolution of waste import regulation in China
The history of importing waste in China can be traced back to the 1980s. At that time, lack of production capability and raw
materials in China made importing waste from developed countries both necessary and economical. The imported waste goods were
recycled and sorted by certified facilities to be transformed into industrial raw materials, such as pulp. Alongside its rapid domestic
economic growth, China has become the largest waste importer in the world. From 1995 to 2016, China’s annual quantity of imported
waste rose from 0.45 million tons to 4.85 million tons. For example, 56% of the world’s waste plastic was exported to China in 2016
(Brooks et al., 2018). Imported waste has contributed more than 10% of the growth in China’s total waste (Brooks et al., 2018).
To prevent potential environmental damage from the import of waste, the Chinese government has closely monitored the waste
trade. The Ministry of Ecology and Environment (MEE, formerly the Ministry of Environmental Protection) in China has implemented
strict regulations on waste imports. First, processing firms must apply for an import certificate, with which they can import by
themselves or through a permitted consignee firm. The import certificate specifies the corresponding firm that will process the im
ported waste and the consignee enterprise if any. Second, imported waste is restricted for use by only the listed corresponding
certificated processing firms; any redistribution or reselling across firms is prohibited.
With environmental protection increasingly becoming a focus of the Chinese government, banning waste imports came under
consideration as a policy choice. On July 18, 2017, China’s State Council promulgated the Implementation Plan for Banning the Entry of
Foreign Waste and Promoting the Reform of Management System of the Solid Waste Import (Decree No. 70, 2017) (the plan, hereafter).8
According to this plan, China aimed to ban the import of some pollution-intensive waste plastics, paper, and textiles by the end of 2017.
The catalog of identified prohibited waste imports has also expanded dramatically since 2018 to include more categories of waste. In
addition, the plan stated that China aimed to stop importing waste that could be substituted by domestic goods by the end of 2019. As a
result, the quantity of imported waste has decreased significantly since 2018 (Fig. 1), from approximately 42 million tons in 2017 to
approximately 22 million tons in 2018 and 13 million tons in 2019.
2.2. The composition and distribution of imported waste
China’s imported waste comprises mainly waste paper, waste plastic and rubber, and waste metal. According to the official data,
these three components accounted for 44.1%, 22.5%, and 24.0% of the total quantity of imported waste during 2015 and 2016,
respectively, with the remaining 9.4% comprised of other types of waste.9 The imports of total waste and its components were widely
distributed across prefectures in China during 2015 and 2016 (see Panel A in Appendix Figures A1–A5).
Different prefectures imported different amounts of waste before the policy change. In our sample, there were 148 prefectures that
imported waste and 138 prefectures without any waste imports in the prepolicy period. Among the 148 cities that had waste imports
between 2015 and 2016, 109 had waste plastics and rubber imports, 60 had wastepaper imports, 71 had waste metals imports, and 74
6
This is partly because trade flows affect the environment through not only the composition effect (the composition of different economic ac
tivities) but also the technique effect (emission intensity) (Erdogan, 2014; Copeland, 2018). Copeland and Taylor (2004) provide a comprehensive
review.
7
Baggs (2009) is among the first empirical studies on the economic determinants of cross-country hazardous waste imports, including a country’s
economic size, capital abundance, and GDP per capita. Kellenberg (2012) shows that poor environmental regulations lead to more waste imports; he
calls this effect the “waste haven effect”.
8
A Chinese version can be found at http://www.gov.cn/zhengce/content/2017-07/27/content_5213738.htm.
9
Data source: Transaction-level data from the Center of China Solid Waste and Chemicals Management, aggregated by the authors. The names
and HS codes of products categorized as waste paper, waste plastic and rubber, waste metal, and other wastes are provided in Appendix Table A1.
3
Fig. 1. China’s Imports of Waste between 2014 and 2019

Notes: The data are drawn from reports of the Ministry of Ecology and Environment and the General Administration of Customs.
had other waste imports, which means that imported waste plastics and rubber are the most widely distributed among cities with waste
imports.
After the policy change, the 148 prefectures previously importing waste reduced their waste imports.10 Panel B in
Appendix Figures A1–A5 shows the distribution of the total waste imports and the four components of these waste imports across China
during 2018 and 2019, from which we can see that the overall amount of waste imports has been dramatically reduced. Among them,
the imported quantity of waste plastics and rubber decreased the most, i.e., by approximately 99.8% (from 1.5 × 107 tons in the
prereform period (2015–2016) to 3.5 × 104 tons in the postreform period (2018–2019)). Imports of waste metals, waste paper and
other wastes decreased by 94.1%, 50%, and 91.9%, respectively.
Despite the general decrease in waste imports, the extent of the reduction differed for different prefectures. The more waste that
they imported before the policy, the larger was the reduction that they experienced after the policy implementation (see
Appendix Figure A6). In contrast, the 138 prefectures without any waste imports in the prepolicy period were not affected by the policy
change. Indeed, these prefectures did not import waste after the policy change. Therefore, they serve as the control group in our
empirical specification.
2.3. How imported waste pollutes the air
The process of recycling imported wastes generates air pollution. First, the imported wastes consist of some sundries and garbage
that cannot be recycled and reused, that is, the unrecyclable portion. These sundries and unrecyclable parts are often burned in the
open without the use of any abatement equipment (Nkwachukwu et al., 2013).11 For example, the unrecyclable portion of waste
plastics and rubber can be directly related to open burning. Although imported waste paper is mainly recycled by paper mills, it in
cludes sundries (according to customs regulations, the sundries should equal no more than 1.5%), which may contain open bur
ning–related items such as plastic bottles and bags. This process emits large amounts of air pollutants. Second, turning the recyclable
portion into raw industrial materials that can be used as production input is also polluting. For example, in the process of converting
waste paper into pulp and melting waste plastics into particles, pollutants containing many harmful substances will be emitted without
any treatment (Huang et al., 2013). In addition, normal industrial production, which uses disassembled waste as a raw material to
produce paper, plastic, or metal products, emits air pollutants.
Notably, the waste import ban policy itself did not change how wastes (whether domestically produced or imported) were pro
cessed. However, during the same period, the Chinese government promoted the construction and upgrading of waste incineration
facilities to better protect air quality. This approach could provide an alternative way to process wastes. Since the amount of imported
waste was reduced dramatically after the policy change in 2017, this new approach is expected to affect mainly domestically produced
wastes.12
10
There were also five prefectures, including Dongying, Jiaxing, Shenyang, Huangshan, and Chengdu, that experienced an increase in their waste
import amounts after the policy. This could be because the plan, which was issued in 2017, did not ban all waste imports immediately. Given that
these five prefectures engaged in only a very small amount of waste importation before the policy change, they might occasionally have imported
more waste after the policy.
11
For example, https://www.reuters.com/article/us-China-environment-waste-insight-idUSKBN1FD043.
12
Section 5.1 provides a robustness check to investigate the impact of this alternative waste processing method on our main findings; we do not
find a significant impact.
4
3. Data and empirical strategy
3.1. Data
3.1.1. Air pollution data

We use PM2.5 , PM10 , and the AQI to measure air pollution in our paper. The AQI issued in China is a comprehensive index calculated
based on six air pollutants13. Higher PM2.5 , PM10 , and AQI values represent poorer air quality. Air pollution information is collected by
1436 ground monitoring stations in China every hour and then released by the National Urban Air Quality Real-Time Releasing
Platform, operated by the MEE. Using air pollution information collected by monitoring stations has advantages because the air
pollution readings at each station are automatically sent to the central government (Greenstone et al., 2020; Li et al., 2020). The use of
such data avoids, to a large extent if not completely, the possibility of manipulation of the air pollution data by local governments due
to promotion incentives (Chen et al., 2013b; Ghanem and Zhang, 2014).
The air pollution monitoring stations were set up by the central government in a staggered manner starting in 2013. By the end of
2014, the monitoring systems covered all prefectures across China. Therefore, our data begin in January 2015 and include as many
prefectures as possible. Although the waste import ban took effect starting in January 2018, a campaign to crack down on illegal waste
imports was carried out immediately after the announcement of the waste import ban in July 2017. As a result, the period between July
and December 2017 might be contaminated and does not constitute a pure control period. To alleviate this concern, the observations
between July and December 2017 are excluded from the main analysis; however, we return them to the sample for a robustness check.
Given that one prefecture usually has several monitoring stations, we construct the prefecture-level PM2.5 , PM10 , and AQI variables
using the mean of the values from the monitoring stations. Given that the data that we obtain represent daily frequencies, to alleviate
the noise of high-frequency data, we then use another average to obtain monthly-level data, following He et al. (2020).
Ultimately, the air pollution data are collapsed into values averaged over the prefecture–year–month level from January 2015 to
December 2019, with the data from between July and December 2017 excluded.
3.1.2. Waste import data

We obtain data regarding the import of waste from the Center of China Solid Waste and Chemicals Management (SCC), a branch of
MEE. The SCC is responsible for issuing certificates for waste importation to China.14 The data record detailed information on each
approved import of waste, including the processing firm’s name and location and the name, HS code, and approved quantity of each
waste import transaction. We obtain data covering all of the waste imports in China ranging from 2015 to 2019. Before the imple
mentation of the waste import ban policy, there were 1967 and 1817 firms importing waste in 2015 and 2016, respectively. These
firms were distributed widely across the country (see Appendix Figure A7). One advantage of this dataset is that it enables us to obtain
the location of each waste processing firm (including its province and prefecture information).15 Therefore, we can produce a more
accurate measurement of the amount of imported waste being processed in each prefecture. However, other information on these firms
is unfortunately unavailable.
We focus on the quantity of imported waste in this paper because waste generally has a low value–quantity ratio (Lee et al., 2018),
and air pollution is determined mostly by the amount rather than the value of the waste being processed. Thus, we construct a measure
of waste imports at the year–prefecture level by summing the quantity processed by firms located within the prefecture in each year.
In the main analysis, we use only data from 2015 to 2016 to calculate each prefecture’s average waste import quantity in the preban
period to define the treatment status of the waste import ban faced by the prefectures. We exclude from the baseline specification the
five prefectures (Dongying, Jiaxing, Shenyang, Huangshan, and Chengdu) that experienced an increase in their waste imports after the
ban was implemented.
3.1.3. Other prefecture-level data

We obtain weather information using China Surface Meteorological Monthly Data released by the China Meteorological Data
Service Center.16 The weather information is collected by 756 ground monitoring stations, including the average temperature, wind
speed, precipitation, humidity, and air pressure. We average the station-level weather readings into prefecture and year–month
levels.17 As with the air pollution data, we restrict the weather information to 2015–2019 (excluding the data from between July and
December 2017).
We obtain variables measuring prefecture-level predetermined social and economic characteristics from the China City Statistics
Yearbook, including GDP, primary industry share in GDP, secondary industry share in GDP, industrial output, industrial wastewater
discharge amount, fixed asset investment, fiscal revenue and expenditure, total population, and land area. As for the waste import data,
we focus on prefecture-level variables in 2015 and 2016 and calculate the average value of each variable for each prefecture.
13
These six pollutants are sulfur dioxide (SO2), nitrogen dioxide (NO2), PM10 , PM2.5 , carbon monoxide (CO), and ozone (O3).
14
For detailed information on SCC, see https://www.meescc.cn/zhxx/zxjj/zyzz/.
15
For firms without location information, we use Baidu Maps to locate the firms by searching their names (Baidu is a Chinese company providing
services similar to Google’s).
16
The website is http://data.cma.cn/en.
17
For 50 cities without basic weather monitoring stations in their administrative division, we use the weather reading of the nearest neighboring
station as a proxy.
5
In the analysis, we also need to exploit the information on nonwaste (normal) goods imported by each prefecture in the preban
period.18 However, 2011 is the most recent year for which the China customs data include information related to the import desti
nations for each transaction; thus, we use information from 2011.19 We aggregate the transaction-level data to obtain prefecture-level
information. To measure public health, we use the mortality rate for each prefecture calculated from the 2010 population census. We
define the rate as 1 minus the ratio of average surviving children to average live births per woman aged 15–64.
The summary statistics for the main variables are reported in Table 1; the details are not described here due to space limitations.
3.2. Empirical strategy
To identify the causal effect of the waste import ban on local air pollution levels, we exploit the fact that prefectures that imported
waste in the initial period (defined as the treatment group) experienced large drops in their waste import levels after the policy shock
while those with zero preban waste imports (defined as the control group) were not affected by the waste import ban. In other words,
we compare the difference in air quality before and after the waste import ban between the treatment and control groups.20
To this end, we construct a DID specification that compares the before–after policy changes in air pollution levels across prefectures
both with and without waste imports before the policy. The estimation equation is as follows:
ln (ycmt ) = γ0 + β × WasteImpDc × Postt + W cmt + μmt + λcm + αc × t + Zc × f (t) + εcmt (1)
In Equation (1), c represents the prefecture, m represents the month, and t denotes the year. The logarithm form of ycmt represents
the outcome variables, including the AQI, PM2.5 , and PM10 . WasteImpDc is a dummy variable indicating whether the prefecture-level
average of imported wastes from 2015 to 2016 is larger than zero. It measures the policy treatment, with 1 representing the treatment
group and 0 representing the control group. Postt is a dummy variable that takes a value of 1 starting in January 2018. The coefficient
of WasteImpDc × Postt , β, is our main coefficient of interest.
Given that weather conditions can influence air pollution (Bharadwaj et al., 2017; Li et al., 2019), we include a set of
prefecture-level time-varying weather variables W cmt , which include the average temperature, wind speed, precipitation, humidity,
and air pressure (He et al., 2020).
μmt is the year–month fixed effect, which controls for any year–month-specific shocks occurring in all prefectures. Air pollution
might have seasonality, and such seasonality could differ for different prefectures; therefore, we follow Li et al. (2020) and include the
prefecture–month fixed effect λcm in the regression, which absorbs any prefecture-specific time-invariant shocks occurring in each
month (we therefore do not need to include prefecture fixed effects). We also allow the outcome variable to follow different
prefecture-specific linear year trends by including αc × t. This approach is motivated by the finding that the treatment and control
groups follow diverging preban trends, as shown in Appendix Figure A8. As Angrist and Pischke (2009) suggest, controlling for specific
time trends helps to remove the inherent diverging evolution trend. As shown in Fig. 2, after the prefecture-specific linear year trend is
included, air quality in the treatment and control groups follows a similar pretrend. In Equation (1), εcmt represents the error term. To
address heteroscedasticity and serial correlation within the prefecture, we calculate the standard error by clustering over the
prefecture.
One concern in estimating Equation (1) lies in whether the criterion for assignment to the treatment group—that is, the fact that a
prefecture had imported waste before 2017—could be correlated with other prefecture-level variables measured before 2017. If these
variables affect the change in air pollution from before to after the policy, our estimates would be biased. To address this concern, we
consider a rich set of prefecture-level predetermined variables (Zc ) that may determine whether prefectures imported waste before
2017. To this end, we closely examined the plan. It states that in the 1980s, China started importing solid waste from other countries to
overcome raw materials shortages. Thus, waste imports were driven by domestic industrial production needs in China. In view of this,
we incorporate a range of economic indicators into our regression analysis, including GDP, percentage of primary and secondary
industries in GDP, industrial output, fixed investment, fiscal revenue and expenditure. We also take into account economic and
geographical scale by including the total population and land area in our analysis. Additionally, we include a coastal city indicator and
the value of nonwaste imports (which may impact air pollution and could be linked to waste imports) to control for the effect of general
international trade. The central government also aims to “effectively improve environmental quality and maintain national ecological
18
We identify nonwaste goods as products not included in China’s Import-Permitted Waste Catalog in the preban period.
19
The China customs data are administrative data from China’s Administration of Customs. They record transaction-level information on each
import, including the quantity, value, HS code, consignee firm, and destination.
20
Considering that prefectures with higher waste import in the prereform period experienced larger drop afterward (meaning that they were
exposed to a larger extent to the policy shock), another empirical strategy is to compare the outcome change across prefectures with different level
of preban waste import, which is termed as the DID with continuous treatment. However, a recent study by Callaway et al. (2021) shows that such a
strategy would result in biased estimate under the case of heterogeneous treatment effect. We therefore do not exploit this empirical strategy. We
thank one referee for pointing it out.
6
Table 1
Summary statistics.
Variable Definition Mean S.D. Observations
Air pollutant
AQI Air quality index 71.814 30.438 15,051
PM2.5 PM2.5 concentration (μg/m3) 45.054 25.311 15,051
PM10 PM10 concentration (μg/m3) 79.201 39.019 15,051
Weather
Temperature Monthly average temperature (1◦ ) 14.687 10.481 15,051
Precipitation Monthly average precipitation amount (mm) 87.550 99.814 15,051
WindSpeed Monthly average wind speed (m/s) 2.214 0.763 15,051
Humidity Monthly average humidity (1%) 69.142 13.844 15,051
AirPressure Monthly average air pressure (hPa) 969.261 59.849 15,051
Prefecture social and economic variables
WasteImpD Whether waste import >0 0.512 0.500 15,051
GDP Gross domestic product (100 million RMB) 2444.549 3256.695 15,051
PrimaryShare Share of primary industry in GDP (1%) 12.487 7.902 15,051
SecondShare Share of secondary industry in GDP (1%) 46.522 9.547 15,051
IndustOutput Industrial output value for the above scale (100 million RMB) 3761.163 4853.434 15,051
FixedInvest Fixed investment (100 million RMB) 1784.044 1774.584 15,051
FiscalRev Fiscal revenue (100 million RMB) 245.775 531.102 15,051
FiscalExpend Fiscal expenditure (100 million RMB) 416.760 622.248 15,051
Population Total population (10 thousand) 448.232 317.624 15,051
Area Land area (km2) 16,665.850 22,026.780 15,051
Coastal Dummy for coastal city 0.154 0.361 15,051
NonWasteImp Nonwaste import value (100 million USD) 1025.738 4019.655 15,051
AQIpre Averaged AQI in the preban period 73.501 20.666 15,051
Wastewater Industrial wastewater discharge amount (10 thousand metric tons) 6610.715 7239.491 15,051
MortalityRate 1 minus the ratio of average surviving children to average live births per woman aged 15–64 0.012 0.007 15,051
and environmental security” and to “effectively protect people’s health” through the plan. These objectives suggest that the nationwide
ban may target waste-importing cities to improve their environment and people’s health. Therefore, we include additional indicators
for air and water pollution and health in the preban period. Specifically, we measure air pollution using the AQI between 2015 and
2016, water pollution using the industrial wastewater discharge amount between 2015 and 2016, and health using the mortality rate
calculated from the 2010 population census as 1 minus the ratio of average surviving children to average live births per woman aged
15–64.21 Following Gentzkow (2006), Chen et al. (2018), and Berkowitz et al. (2019), we interact each of these predetermined control
variables with a third-order polynomial function of time t in the regression (f (t)) to allow them to have a time-varying effect on air
pollution.
Table 2 shows the balancing tests of whether controlling for these predetermined variables improves the comparability of the
treatment and control groups. We have two main findings. First, according to Column 3 of Panel A, the treatment and control groups
differ significantly on most of the 14 variables in Zc (except average air quality and secondary industry share in GDP). For example,
compared with those in the control group, prefectures in the treatment group have significantly higher GDP, population, and nonwaste
goods imports. This pattern suggests that most of these variables play an important role in determining the waste import status.
Second, Panel B shows that the initial differences in social and economic characteristics between the treatment and control groups can
be eliminated by controlling for these predetermined variables.22 Without controls for these variables, prefectures in the treatment and
control groups differ significantly on these social and economic aspects, according to Column 3 in Panel B of Table 2. However, after we
control for the predetermined variables, the differences in the initial social and economic variables between the treatment and control
groups all become small in magnitude and statistically insignificant, as shown in Column 4 in Panel B. Therefore, controlling for these
predetermined variables is a successful way to balance the treatment and control groups.
To further check our identification assumption, we conduct three major tests (among others) in the robustness analysis section.
These include (1) a parallel trend test that examines whether air pollution was parallel across prefectures in the prereform period
conditional on the inclusion of other control variables, (2) a confounding shock test that controls for contemporary policy shocks, and
(3) a permutation test to rule out the possibility that our results are attributable to chance.
21
Except the primary industry share in GDP, secondary industry share in GDP, coastal city indicator, and mortality rate, all the prefecture-level
variables are taken as logarithms before they are included in the regression. Prefectures with waste imports in the preban period may experience
more severe air pollution, leading to an upward bias in the estimated policy effects due to mean reversion. To address this concern, including the
interaction of the prereform AQI and f (t) in the regression can account for the different evolution of air pollution levels and the possibility of mean
reversion.
22
These social and economic variables include retail sales, road passenger traffic, road freight traffic, number of post offices, number of public
libraries, number of primary school students, number of primary school teachers, number of high school students, number of high school teachers,
number of colleges, number of college students, and number of college teachers, all measured in 2015.
7
Table 2
Balancing test.
(1) (2) (3) (4)
Panel A: Predetermined control variables

Treatment group Control group Unconditional difference
Ln(GDP) 7.726 6.923 0.803***

(0.924) (0.706) (0.098)
PrimaryShare 10.214 14.876 − 4.663***
(6.504) (8.569) (0.914)
SecondShare 47.165 45.843 1.322
(7.675) (11.205) (1.155)
Ln(IndustOutput) 8.181 7.036 1.145***
(0.989) (1.019) (0.120)
Ln(FixedInvest) 7.473 6.794 0.679***
(0.805) (0.727) (0.092)
Ln(FiscalRev) 5.276 4.307 0.968***
(1.052) (0.756) (0.109)
Ln(FiscalExpend) 5.960 5.422 0.538***
(0.744) (0.530) (0.077)
Ln(Population) 6.086 5.674 0.413***
(0.632) (0.713) (0.081)
Ln(Area) 9.210 9.516 − 0.306***
(0.727) (0.877) (0.097)
Costal 0.266 0.037 0.229***
(0.443) (0.189) (0.040)
Ln(NonWasteImp) 5.319 1.481 3.838***
(2.838) (4.629) (0.462)
Ln(AQIpre) 4.249 4.266 − 0.018
(0.295) (0.278) (0.034)
Ln(Wastewater) 8.765 7.890 0.875***
(0.830) (1.020) (0.112)
MortalityRate 0.011 0.013 − 0.003***
(0.005) (0.007) (0.001)
Panel B: Other social and economic characteristics

Treatment group Control group Unconditional difference Conditional difference
Ln(Retail sales) 16.040 15.132 0.907*** − 0.059

(0.933) (0.826) (0.105) (0.040)
Ln(Road passenger traffic) 8.490 8.110 0.380*** − 0.011
(0.845) (1.010) (0.112) (0.096)
Ln(Road freight traffic) 9.278 8.725 0.554*** 0.112
(0.738) (0.853) (0.096) (0.088)
Ln(Number of post offices) 5.045 4.796 0.249*** − 0.040
(0.644) (0.642) (0.077) (0.045)
Ln(Number of public libraries) 7.735 6.893 0.842*** 0.033
(1.048) (0.656) (0.104) (0.066)
Ln(Number of primary school students) 3.389 2.876 0.513*** 0.012
(0.695) (0.797) (0.090) (0.040)
Ln(Number of primary school teachers) 9.733 9.331 0.402*** − 0.008
(0.621) (0.685) (0.079) (0.028)
Ln(Number of high school students) 3.005 2.610 0.395*** − 0.026
(0.616) (0.736) (0.082) (0.031)
Ln(Number of high school teachers) 9.702 9.314 0.388*** − 0.025
(0.580) (0.666) (0.075) (0.023)
Ln(Number of colleges) 1.687 1.034 0.652*** 0.022
(1.089) (0.926) (0.122) (0.098)
Ln(Number of college students) 10.913 10.046 0.866*** − 0.046
(1.215) (1.256) (0.150) (0.109)
Ln(Number of college teachers) 7.982 7.187 0.795*** − 0.046
(1.222) (1.181) (0.146) (0.105)
Notes: Panel A shows the comparison of predetermined control variables between the treatment and control groups. Panel B compares other social
and economic characteristics in the initial year (2015) between the treatment and control groups, both before and after the predetermined variables
are controlled for. Columns 1 and 2 show the means and standard deviations in parentheses. Column 3 shows the unconditional difference between
the treatment and control groups, and Column 4 shows the difference in these characteristics conditional on inclusion of the predetermined control
variables. The numbers in parentheses in Columns 3 and 4 are standard errors. *, **, and *** denote statistical significance at the 10%, 5%, and 1%
levels.
8
Table 3
Impacts of waste import ban on air pollution.
Dependent variables (1) (2) (3) (4) (5) (6)
ln(AQI) ln(PM2.5 ) ln(PM10 ) ln(AQI) ln(PM2.5 ) ln(PM10 )
WasteImpD × Post − 0.040*** − 0.057*** − 0.069*** − 0.044*** − 0.065*** − 0.056***

(0.013) (0.018) (0.018) (0.014) (0.019) (0.019)
Observations 15,051 15,051 15,051 15,051 15,051 15,051
R squared 0.921 0.915 0.919 0.922 0.917 0.922
Weather variables Yes Yes Yes Yes Yes Yes
Year–month FE Yes Yes Yes Yes Yes Yes
Prefecture–month FE Yes Yes Yes Yes Yes Yes
Prefecture trend Yes Yes Yes Yes Yes Yes
Prefecture variables Yes Yes Yes
Notes: Weather variables include temperature, precipitation, wind speed, humidity, and air pressure. The prefecture trend refers to the prefecture-
specific linear year trend. Prefecture variables refer to the interaction of third-order year polynomials with predetermined characteristics, namely,
primary industry share in GDP, secondary industry share in GDP, mortality rate, coastal city dummy, and the natural logarithm of preban AQI, GDP,
industrial output, fixed-asset investment, fiscal revenue, fiscal expenditure, total population, land area, nonwaste import value, and wastewater
discharge amount. *, **, and *** denote statistical significance at the 10%, 5%, and 1% levels. Standard errors clustered by prefecture are reported in
parentheses.
4. Results
4.1. Main results
We report the baseline regression results in Table 3. In all regressions, we include controls for prefecture time-varying weather
conditions, year–month fixed effects, prefecture–month fixed effects, and the prefecture-specific linear time trend. The outcome
variables are AQI (Columns 1 and 4), PM2.5 (Columns 2 and 5), and PM10 (Columns 3 and 6). The outcome variables are all presented in
logarithmic form.
In Columns 1–3, we do not control for the interactions of prefecture predetermined variables with the third-order polynomial
function of time t (Zc × f (t)). The coefficient of WasteImpDc × Postt is negative for all outcome variables and equal to − 0.040 (AQI,
Column 1), − 0.057 (PM2.5 , Column 2), and − 0.069 (PM10 , Column 3). These coefficients are statistically significant at the 1% level. We
then add Zc × f (t) to the regression and show the results in Columns 4–6 in Table 3. We can first see that the coefficient of WasteImpDc ×
Postt is still negative for all outcome variables and equal to − 0.044 (AQI, Column 4), − 0.065 (PM2.5 , Column 5), and − 0.056 (PM10 ,
Column 6). These coefficients are significant as well. Importantly, compared with the results shown in Columns 1–3, those shown in
Columns 4–6 are similar, thereby alleviating the concern that whether prefectures imported waste before the policy might be
correlated with other prefecture-level variables that could affect their change in pollution.
Regarding economic magnitude, using results from our preferred specification (Columns 4–6), we can see that for prefectures with
preperiod waste imports, the policy change reduced the AQI by an additional 4.4%, PM2.5 by an additional 6.5%, and PM10 by an
additional 5.6%, which translate into level changes of 3.3, 3.3, and 4.6, respectively (the preban period AQI, PM2.5 and PM10 are 75.6,
50.2, and 83.0, respectively).
Our estimates are comparable to the estimated effects of other policies in China, such as the policy to subsidize straw recycling (He
et al., 2020). He et al. (2020) show that the subsidy policy reduced PM2.5 and PM10 by 4.33 and 9.87 μg/m3 during the straw-burning
seasons (the means of PM2.5 and PM10 are 49.2 and 87.6 μg/m3, respectively). However, we need to be cautious when directly
comparing the magnitudes of their estimates with ours. Note that the policy to subsidize straw recycling affects air pollution only in the
straw-burning season (124 days; He et al., 2020) while the policy to ban waste imports examined in our study applies to the whole year.
Thus, the effects of the subsidy policy should be smaller on an annual basis and closer to our estimates.
4.2. Robustness checks
4.2.1. Testing for parallel trends

The key assumption for our DID strategy is that the outcome variables for prefectures with or without waste imports would have
followed a similar time trend in the absence of the policy change. To test whether this assumption holds, we exploit the event-study
framework to estimate the following equation:
∑
ln (ycmt ) = γ0 + βq WasteImpDc × YearMonthq + W cmt + μmt + λcm + αc × t + Zc × f (t) + εcmt (2)
q
In Equation (2), YearMonthq is a dummy variable for the relative year–month. Other variables take the same definition as those
described in Equation (1). All of the calendar year–months are categorized into the following: ten months before the policy shock and
earlier (q ≤ − 10, corresponding to September 2016 and earlier), nine months before the shock (q = − 9, corresponding to October
2016), …, one month before the shock (q = − 1, corresponding to June 2017), one month after the shock (q = 1, corresponding to
January 2018), …, nine months after the shock (q = 9, corresponding to September 2018), and ten months after the shock and later (q
9
Fig. 2. Parallel Trend Test

Notes: All of the year–months are categorized into ten months before the policy shock and earlier (q ≤ − 10, corresponding to September 2016 and
earlier), nine months before the shock (q = − 9, corresponding to October 2016), …, one month before the shock (q = − 1, corresponding to June
2017), one month after the shock (q = 1, corresponding to January 2018), …, nine months after the shock (q = 9, corresponding to September
2018), and ten months after the shock and later (q ≥ 10, corresponding to October 2018 and later). The period q = − 1 is omitted as the baseline
group. The points represent the estimated coefficients βq from Equation (2), and the vertical dashed bars represent the 95% confidence intervals.
≥ 10, corresponding to October 2018 and later). We set the period q = − 1 as the baseline group. Fig. 2 plots the estimation results for
Equation (2), with points representing the estimated coefficients and vertical dashed bars representing the 95% confidence intervals.
Most (25 out of 27) of the coefficients for the prepolicy period are statistically insignificant and small in magnitude, without a clear
trend. The results provide evidence of parallel trends, thus validating our DID assumption.
4.2.2. Other robustness checks

To ensure the validity of our results, we conduct several robustness checks as follows. (1) We check whether our main findings are
driven by concurrent events. The events that we investigate include environmental inspections implemented by the Chinese central
government from 2016, the implementation of the air pollution joint control policy in Beijing and its surrounding areas by the MEE of
China from 2018, the straw recycling policy from 2016 to reduce straw burning, the Three-year Action Plan for the Cleaner Air Act
(TAP) implemented in June 2018, the implementation of the Environmental Protection Tax (EPT) Law from 2018, and the potential
confounding effects of other place-based industry policies that may be associated with the initial industrial structures. We find that our
main findings are not driven by these events. (2) We exploit the variation in waste import status within neighboring city pairs and
perform a DID estimation by comparing air pollution changes between cities in the treatment and neighboring control groups. The
results are robust. (3) To address the potential concern that the observed effects may be attributable purely to chance, we adopt a
randomization inference approach analogous to the Fisher permutation test (Rosenbaum, 2002). The results show that our main
10
findings are not due to chance. (4) We exclude port cities from the baseline sample to check whether interprefecture illegal transfers of
import certificates lead to underestimation of our main results. The results show that our main findings are not contaminated by illegal
interprefecture transfers. (5) We check whether the results are robust in a different sample. To do so, we include the observations
corresponding to the period between July and December 2017 and categorize them into a prepolicy period. The results remain robust.
(6) We finally check whether the results are robust under alternative specifications. First, we replace the prefecture-specific linear year
trend with the prefecture-specific linear year–month trend. Second, we replace the third-order polynomial function of year f (t) in
Equation (1) with a set of year dummies. Third, we replace the third-order polynomial function of year f (t) in Equation (1) with the
third-order polynomial function of year–month. The results again remain robust.
The details of the above robustness checks are presented in Appendix Part II.
4.3. Heterogeneity analysis
4.3.1. Strictness of environmental protection

The effect of waste imports on air pollution may vary across prefectures with different levels of pollution control enforcement. For
instance, in prefectures with more stringent pollution regulations, recycling facilities dispose of imported waste with proper abatement
equipment and in a more environmentally friendly manner. In other prefectures where polluting activities are rampant, recycling firms
may not be well prepared with qualified pollution abatement equipment and are therefore more likely to discard unrecyclable waste
and emit pollutants recklessly. Therefore, the impact of the waste import ban policy is expected to be weaker for prefectures with more
stringent pollution control enforcement because the level of pollution produced during the processing of imported waste might have
been low even before the policy change.
To examine the possible heterogeneity in the effect resulting from local environmental enforcement, we divide the cities into two
subsamples according to their official status as Key Cities for Air Pollution Control (KCAPC). The KCAPC designation is an important
target-based policy for controlling air pollution in China. A total of 113 cities were designated KCAPC cities in two waves between
1998 and 2001 to improve their air quality. Liu et al. (2021) find that the KCAPC policy has been successful in reducing air pollution.
Given that KCAPC cities have had much stricter pollution control, we would expect imported waste to have less effect on local air
pollution in these cities than in non-KCAPC cities. The estimation results in Panel A of Table 4 confirm our conjecture, showing that the
pollution-reducing effect of banning waste imports is larger in non-KCAPC than in KCAPC cities.
4.3.2. Waste utilization capacity

Different prefectures have different capacities for utilizing waste goods. In regions with better capacities for recycling and utilizing
industrial waste, a larger proportion of imported waste can be handled properly and recycled as resources and raw material for in
dustrial production. Thus, the impact of the waste import ban is expected to be weaker in these regions because the initial pollution
level produced by unrecycled waste could have already been lower.
To examine this conjecture, we use the ratio of comprehensive utilization of industrial solid waste in 2015 as a measure of local
waste utilization capacity and divide the cities into two subsamples at the sample median.23 The regression results in Panel B of Table 4
show that the negative effect of imported waste is stronger and statistically significant in cities with poor waste utilization capacity but
small and insignificant in cities with good utilization capacity, consistent with our expectations.
5. Mechanism analysis
The waste import ban may have reduced air pollution through two potential channels. First, the banning of waste imports reduces
the amount of open waste burning, which is considered an important source of air pollution. Second, the banning of waste imports
reduces the supply of production inputs obtained from recyclable imported waste, which leads to the shrinking of production. This can
also reduce air pollution. However, the second channel might exist only in the short run because, in the long run, the production inputs
previously obtained from recyclable waste might be substituted by other inputs. In this section, we investigate these two channels.
5.1. Reduced open waste burning
Imported waste is sorted into recyclable and unrecyclable portions after importation. While the recyclable portion is used as raw
material for production, unrecyclable waste is often burned in the open (Cogut, 2016). The open burning of unrecyclable waste can
emit extensive pollutants into the air. According to Wiedinmyer et al. (2014), the estimated PM10 emissions from open waste burning
in China are approximately 22% of China’s total reported PM10 emissions from anthropogenic activities.
We investigate whether the waste import ban reduced open waste burning. We follow Guo (2021), He et al. (2020) and Zivin et al.
(2020) and use satellite fire data to detect fire burnings. On the basis of the remote sensing technique, satellite fire data are collected
from the VIIRS aboard the NASA/NOAA Suomi National Polar-Orbiting Partnership (Suomi NPP) satellite.24 Fires are detected by
23
The ratio of comprehensive utilization of industrial solid waste refers to the ratio of the amount of solid waste that companies extract or convert
from solid waste into useable resources, energy, and other raw materials through recycling, processing and recycling to that of the total amount of
solid waste generated in industrial activities. We obtain this variable from the China City Statistics Yearbook.
24
We obtain the data on each fire point in China from https://firms.modaps.eosdis.nasa.gov/country/.
11
Table 4
Heterogeneous effects of waste import ban on air pollution.
Dependent variables (1) (2) (3) (4) (5) (6)
ln(AQI) ln(PM2.5 ) ln(PM10 ) ln(AQI) ln(PM2.5 ) ln(PM10 )
Panel A Loose environmental enforcement Strict environmental enforcement

WasteImpD × Post − 0.063*** − 0.096*** − 0.080*** − 0.019 − 0.023 − 0.027
(0.020) (0.025) (0.025) (0.020) (0.028) (0.026)
Observations 9226 9226 9226 5825 5825 5825
R squared 0.917 0.909 0.915 0.932 0.931 0.934
Panel B Poor utilization capacity Good utilization capacity
WasteImpD × Post − 0.069*** − 0.098*** − 0.092*** − 0.019 − 0.037 − 0.022
(0.020) (0.026) (0.025) (0.023) (0.031) (0.028)
Observations 7715 7715 7715 7336 7336 7336
R squared 0.908 0.902 0.909 0.937 0.933 0.937
Prefecture–month FE Yes Yes Yes Yes Yes Yes
Prefecture variables Yes Yes Yes Yes Yes Yes
Notes: Strict (loose) environmental enforcement means that prefectures are (are not) included in Key Cities for Air Pollution Control. Good (poor)
utilization capacity means that the ratio of comprehensive utilization of industrial solid waste in 2015 is above (below) the median. Weather variables
include temperature, precipitation, wind speed, humidity, and air pressure. The prefecture trend refers to the prefecture-specific linear year trend.
Prefecture variables refer to the interaction of third-order year polynomials with predetermined characteristics, namely, primary industry share in
GDP, secondary industry share in GDP, mortality rate, coastal city dummy, and the natural logarithm of preban AQI, GDP, industrial output, fixed-
asset investment, fiscal revenue, fiscal expenditure, total population, land area, nonwaste import value, and wastewater discharge amount. *, **, and
*** denote statistical significance at the 10%, 5%, and 1% levels. Standard errors clustered by prefecture are reported in parentheses.
means of a contextual algorithm that exploits the strong emission of mid-infrared radiation from fires. Compared with its former
counterpart, the Moderate Resolution Imaging Spectroradiometer (MODIS), with a 1-km resolution, VIIRS, with a 375-m resolution,
boasts improved fire detection in small areas and better nighttime performance.25 Despite the fact that the satellite-detected fires are
produced from different activities (such as forest fires and straw burning), all else equal, we should still observe changes in
satellite-detected fires with large changes in open waste burnings. Therefore, the satellite-detected fire points serve as a proxy for open
waste burning.
We aggregate the detailed data on each fire point to the prefecture-year–month level to calculate the number of fires in each
prefecture and year–month. Using the natural logarithm of the number of fires as a dependent variable, we perform the estimation as
shown in Equation (1) and report the results in Column 1 of Table 5. We find that the waste import ban significantly reduced the
number of fire points, suggesting that open waste burning was also reduced. To exclude any impact of straw burnings on satellite fires,
we conduct the following exercises. First, considering that there are two harvest seasons in China and that straw burning occurs
intensively during the harvest seasons (He et al., 2020), we exclude observations corresponding to the two harvest seasons (May to July
and September to November) in Column 2. We still find a significantly negative effect of the ban on open fire points after excluding
most of the fire points from straw burnings. Second, using straw burning data from before 2017 that were released by the MEE, we
divide the prefectures into two subsamples at the median of the average monthly number of straw burning points in the initial period
(the median value is approximately 2.3). The results in Columns 3 and 4 of Table 5 show that the effect of the waste import ban on open
fire burnings is of similar magnitude and is statistically significant for prefectures with different straw burnings. Third, we include the
straw recycling policy in the regression and find barely changed results, as displayed in Column 5. All the results in Columns 2–5 in
Table 5 provide further evidence that the estimated effects of the waste import ban on open burning are not driven by straw burning.
Furthermore, given that waste burning in relatively small areas may not be detected under VIIRS owing to its limited resolution, these
results provide us with a lower bound of the actual effect of the waste importing ban on open waste burnings.
Alternative ways to process unrecyclable imported waste. In addition to open burnings, incineration and landfills are important ways to
process unrecyclable portions of imported waste. One might be concerned that the observed effect of the waste import ban policy on
open fire burnings could be driven by concurrent changes in incineration and landfills. For example, during our sample period, the
Chinese government promoted the construction and upgrading of waste incineration facilities to better protect air quality. If a larger
share of imported waste began to be processed by incineration, the above estimates could be upwardly biased. To measure waste
incineration capacity, we use the number of active waste incineration power plants in each prefecture in each year–month.26 Further, if
a larger share of the imported waste began to be processed by landfills, our estimates would again be biased. Since data on individual-
25
Although we have no direct data on the minimum area of flaming fire that can be detected by VIIRS (375 m), the official files state that MODIS
(1 km) can detect fire areas as small as 50 square meters. Given that the spatial resolution of VIIRS increased from 1 km to 375 m, VIIRS should
provide much better detection of relatively small areas of flaming fire than MODIS. More information about VIIRS fire data may be found at https://
earthdata.nasa.gov/faq/firms-faq.
26
The data are drawn from the Disclosure Platform of Automatic Monitoring on Waste Incineration Power Plants. See https://ljgk.envsc.cn/for
further information.
12
Table 5
Effects of waste import on open burnings.
Dependent (1) (2) (3) (4) (5) (6)
variable
ln(number of fire points)
Excluding Prefectures with smaller Prefectures with larger Controlling for Controlling for waste
harvest number of straw burnings number of straw burnings straw recycling incineration and
seasons in initial period in initial period policy landfills
WasteImpD × Post − 0.147** − 0.229*** − 0.134* − 0.145* − 0.147** − 0.148**
(0.058) (0.073) (0.073) (0.086) (0.058) (0.058)
Observations 15,051 7797 7551 7500 15,051 15,051
R squared 0.869 0.870 0.894 0.839 0.869 0.869
Prefecture–month Yes Yes Yes Yes Yes Yes
FE
Prefecture Yes Yes Yes Yes Yes Yes
variables
Notes: Weather variables include temperature, precipitation, wind speed, humidity, and air pressure. The prefecture trend refers to the prefecture-
specific linear year trend. Prefecture variables refer to the interaction of third-order year polynomials with predetermined characteristics, namely,
primary industry share in GDP, secondary industry share in GDP, mortality rate, coastal city dummy, and the natural logarithm of preban AQI, GDP,
industrial output, fixed-asset investment, fiscal revenue, fiscal expenditure, total population, land area, nonwaste import value, and wastewater
discharge amount. *, **, and *** denote statistical significance at the 10%, 5%, and 1% levels. Standard errors clustered by prefecture are reported in
parentheses.
level landfills are hard to obtain, we exploit the yearly province-level number of landfills (from the China Statistical Yearbook) as a
proxy measure. We include in the regression the number of waste incineration stations in each prefecture (in each year–month) and the
number of landfills in each province (in each year). The regression results in Column 6 of Table 5 show that the reduction effect of the
waste import ban on open burning barely changes after we take waste incineration and landfills into consideration, suggesting that our
estimated impact of the waste import ban on open burning is not driven by the possible increase in waste incineration and landfill
disposal.
5.2. Reduced industrial production
As discussed, the recyclable portion of imported waste can be put into normal industrial production as raw materials. Thus, the
waste import ban reduces waste goods that can be used as production inputs. Import waste plays an important role in industrial
production. According to matched transaction-level trade data from China’s General Administration of Customs and firm-level pro
duction data of the Annual Survey of Industrial Firms (ASIF) obtained from China’s National Bureau of Statistics,27 the average number
of manufacturing firms in China using imported waste as a production input was 1709 per year during the period from 2007 to 2011,
accounting for 4% of the total number of matched firms each year. However, the output value of those firms accounted for 12% of the
total output value of the merged firms. This outcome reflects the economic importance of firms importing waste. Moreover, as im
ported waste is used to produce plastics, paper, and metals, which can further be used as inputs in industrial production given the
input‒output linkage, the effect of the import ban on local industrial output can be considerable.
As a result, the ban could have led to a reduction in industrial outputs in the short run when inputs normally obtained from
recyclable waste goods could not be replaced. Less industrial production would also contribute to a reduction in air pollution. As
mentioned, this channel might not be operative in the long run when the inputs from recyclable waste goods can be substituted.
Owing to a lack of data on local industrial outputs, we estimate Equation (1) by using the logarithm of value added of the secondary
industry at the county level as the outcome variable.28 We replace the prefecture fixed effects with county fixed effects to account for
the time-invariant characteristics of each county. The results are shown in Column 1 of Table 6, from which we can see that the waste
import ban policy significantly reduces the value added of the secondary industry by 4.5%. This magnitude is reasonable considering
the important role of imported waste in industrial production, as mentioned above. These results suggest that the waste import ban
could reduce the industrial output level.
As supplementary evidence, we investigate whether more imported waste is related to higher industrial output levels and whether
higher industrial outputs are related to higher levels of air pollution. Given that these two exercises rely on data from the period before
the policy change (due to data limitations) and reveal only correlations, the results can be considered only suggestive.
To investigate these two questions, we merge three datasets: the firm-level data from the ASIF, the transaction-level trade data
27
The ASIF is one of the most comprehensive firm-level datasets and has been widely used in studies on Chinese firms (see, for example, Brandt
et al., 2017). It covers all state-owned enterprises (SOEs) and non-SOEs with annual sales above 5 million RMB, and includes detailed information on
firm’s basic characteristics and production.
28
The data are drawn from the China County Statistical Yearbook and are at yearly frequency.
13
Table 6
Association between waste imports, production, and emissions.
Dependent variables (1) (2) (3)
ln(value added of the secondary industry) ln(output value) ln(industrial waste gas emission)
WasteImpD × Post − 0.045*

(0.024)
ln(WasteImp) 0.004**
(0.002)
ln(output value) 0.219***
(0.058)
Observations 7972 25,043 25,043
R squared 0.978 0.972 0.846
County FE Yes
Prefecture trend Yes
Prefecture variables Yes
Firm variables Yes Yes
Firm FE Yes Yes
Year FE Yes Yes Yes
Notes: The prefecture trend refers to the prefecture-specific linear year trend. Prefecture variables refer to the interaction of third-order year poly
nomials with predetermined characteristics, namely, primary industry share in GDP, secondary industry share in GDP, mortality rate, coastal city
dummy, and the natural logarithm of preban AQI, GDP, industrial output, fixed-asset investment, fiscal revenue, fiscal expenditure, total population,
land area, nonwaste import value, and wastewater discharge amount. Firm variables include return on assets, leverage rate, SOE status, and the
natural logarithm of total assets, age, and nonwaste goods imports. *, **, and *** denote statistical significance at the 10%, 5%, and 1% levels.
Standard errors clustered by prefecture (in Column 1 with county-level regression) and by firm (in Columns 2 and 3 with firm-level regression) are
reported in parentheses.
obtained from China’s General Administration of Customs, and firm pollution emission data obtained from China’s Environmental
Statistics (CES).29 The common years when the three datasets are all available are those from 2007 to 2011;30 therefore, we focus on
these years. The regression results are shown in Columns 2 and 3 in Table 6, from which we can see that higher waste import levels are
related to higher output levels and higher output levels are related to higher levels of pollution emissions (measured by the logarithm
of industrial waste gas emissions).
In summary, reduced output is another channel through which the waste import ban reduced air pollution. However, again, we
should note that this channel may not be operative in the long run—a possibility that can be tested when further information becomes
available.
6. A back-of-envelope estimate of health benefits
In this section, we conduct a back-of-envelope calculation to evaluate the monetized health benefits that result from reduced PM
concentrations due to lower waste imports. It is well recognized that exposure to high PM concentrations can result in adverse health
impacts (Chay and Greenstone, 2003; Currie and Neidell, 2005; Chen et al., 2013a; Ebenstein et al., 2017). Therefore, the primary
benefit from better air quality is health improvement, including reductions in mortality and morbidity, as well as reduced expenditures
on defensive equipment (Fan et al., 2020).
First, improved air quality reduces mortality, which can be transformed into monetized benefits. Exploiting a regression discon
tinuity design based on China’s winter heating policy, Ebenstein et al. (2017) find that an additional 10-μg/m3 PM10 concentration
leads to a 0.64-year decrease in life expectancy. Barwick et al. (2018) monetize life expectancy using the value of a statistical life (VSL)
approach. According to their estimates, a 0.64-year decrease in life expectancy of the whole Chinese population in 2015 translates into
a $13.4 billion loss. Our estimates show that the waste import ban caused a 4.6 μg/m3 decrease in the PM10 concentration in the treated
prefectures. Considering that the share of the overall national population in the treated prefectures in our paper was 57.7% in 2015
(China City Statistical Yearbook, 2016), a 4.6-μg/m3 decrease in PM10 therefore leads to a gain of $3.56 billion (4.6
3
μg/m
10 μg/m3
× $13.4 billion
× 57.7%).
Second, improved air quality contributes to morbidity benefits from reduced health care costs for diseases caused by air pollution.
Barwick et al. (2018) provide the first comprehensive analysis of the morbidity cost based on the universe of bank card transactions in
China. They estimate that an additional 10 μg/m3 PM2.5 would cause $9.2 billion nationwide in health spending. Our paper shows that
the waste import ban caused a 3.3 μg/m3 decrease in PM2.5 in treated prefectures (which account for 57.5% of the total population),
3
translating into a gain of $1.75 billion (3.3 μg/m
10 μg/m3
× $9.2 billion × 57.7%).
The third benefit from improved air quality is the reduction in defensive expenditures. Using data on air purifier sales in China, Ito
29
CES is an administrative database run by the MEE recording comprehensive information on firms’ polluting behavior, covering the majority of
China’s polluting industrial firms (Zhang et al., 2018). We match these datasets using the firm’s name and unique identification number.
30
The industrial waste gas information is unavailable in the CES dataset for years since 2012.
14
and Zhang (2020) estimate that the willingness to pay for a 1 μg/m3 reduction in PM10 is $0.38 for each person. According to the China
City Statistical Yearbook (2016), there were approximately 0.78 billion persons in the treated prefectures in 2015. A simple calculation
would lead to the conclusion that the 4.6-μg/m3 reduction in PM10 in the treated prefectures due to the waste import ban should reduce
3
defensive expenditures by approximately $1.36 billion (4.6 μg/m
1 μg/m3
× $0.38 × 0.78 billion).
In total, the improved air quality from the waste import ban could deliver the treated prefectures a total of $6.67 billion in benefits,
namely, $3.56 billion from reduced mortality, $1.75 billion from reduced morbidity costs, and $1.36 billion from reduced defensive
expenditures. Note that improved air quality can also have other benefits (e.g., higher firm productivity and performance (Fu et al.,
2021; Xue et al., 2021)); therefore, our estimates provide only a lower bound.
7. Conclusion
Waste trade is an important phenomenon in global trade. However, how waste trade affects environmental pollution remains
unclear. This issue is important not only for the policy debate but also for our understanding of the relationship between pollution
transfer and international trade. The present paper fills this gap by empirically examining how waste imports affect air pollution. We
exploit the waste import ban in China as a natural experiment to construct a DID estimation to identify the causal effect.
We find that prefectures that engaged in waste import in the initial period experienced a significantly larger decrease in air
pollution after the implementation of the waste import ban than regions that did not previously engage in waste import. This effect is
stronger for prefectures with loose environmental regulation and a lower capacity for waste utilization than for their counterparts.
Regarding the underlying mechanism, we find that the waste import ban resulted in fewer open waste burnings, as reflected in satellite
fire-detection data; additionally, firms that import less waste emit lower levels of waste gas. We also provide a back-of-envelope
estimation of the benefits from improved air quality due to the waste import ban. Our calculation shows that the monetized bene
fits brought about by the waste import ban for the treated prefectures total at least $6.67 billion.
The findings of our paper have policy implications. By demonstrating that waste imports can deteriorate the environment in
destination countries, we show that international trade can result in global pollution transfer not only through the industrial
composition effect or the technique effect, as highlighted by the traditional pollution haven literature, but also through direct
transmission of pollution goods. As a result, developing countries with lower environmental regulations and standards should pri
oritize the pollution caused by waste import and implement effective trade policies to prevent domestic pollution. In recent years, as
China has closed its doors to waste imports, waste from the US and EU has increasingly been diverted to Southeast Asian countries,
such as Malaysia, Vietnam, and Thailand. Despite these countries having tightened their restrictions for importing waste, the potential
related pollution concerns should still be a focus due to their weak policy enforcement.
Financial disclosure statement
We declare that we have no relevant or material financial interests that relate to this paper.
Declaration of competing interest
We declare that we have no conflicts of interest to this paper.
Acknowledgement
We would like to express our gratitude to Guojun He (the editor) and three anonymous reviewers for their valuable feedback. We
would like to thank Jing Cao, Shanjun Li, and Yi Lu for their helpful comments, and Shiqi Guo for generously sharing the straw burning
data. Xinzheng Shi acknowledges financial support from National Natural Science Foundation of China (Project ID: 71673155) and
Tsinghua University Initiative Scientific Research Program (Project 2021THZWJC14). Ming-ang Zhang acknowledges financial sup
port from National Natural Science Foundation of China (Project ID: 72203247) and Major Program of National Fund of Philosophy
and Social Science of China (Project ID: 19ZDA075). All authors contribute equally and are listed in alphabetical order. All remaining
errors are our own.
Appendix A. Supplementary data
Supplementary data to this article can be found online at https://doi.org/10.1016/j.jeem.2023.102837.
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Waste Import and Air Pollution - Evidence From China's Waste Import Ban - 2023

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Journal of Environmental Economics and Management 120 (2023) 102837

Contents lists available at ScienceDirect

Journal of Environmental Economics

Waste import and air pollution: Evidence from China’s waste

2.1. Evolution of waste import regulation in China

2.2. The composition and distribution of imported waste

Fig. 1. China’s Imports of Waste between 2014 and 2019

2.3. How imported waste pollutes the air

3. Data and empirical strategy

3.1.1. Air pollution data

3.1.2. Waste import data

3.1.3. Other prefecture-level data

3.2. Empirical strategy

Panel A: Predetermined control variables

Ln(GDP) 7.726 6.923 0.803***

Panel B: Other social and economic characteristics

Ln(Retail sales) 16.040 15.132 0.907*** − 0.059

ln(AQI) ln(PM2.5 ) ln(PM10 ) ln(AQI) ln(PM2.5 ) ln(PM10 )

WasteImpD × Post − 0.040*** − 0.057*** − 0.069*** − 0.044*** − 0.065*** − 0.056***

4.1. Main results

4.2. Robustness checks

4.2.1. Testing for parallel trends

Fig. 2. Parallel Trend Test

4.2.2. Other robustness checks

4.3. Heterogeneity analysis

4.3.1. Strictness of environmental protection

4.3.2. Waste utilization capacity

5.1. Reduced open waste burning

ln(AQI) ln(PM2.5 ) ln(PM10 ) ln(AQI) ln(PM2.5 ) ln(PM10 )

Panel A Loose environmental enforcement Strict environmental enforcement

5.2. Reduced industrial production

WasteImpD × Post − 0.045*

6. A back-of-envelope estimate of health benefits

Financial disclosure statement

Declaration of competing interest

We declare that we have no conflicts of interest to this paper.

Appendix A. Supplementary data

Supplementary data to this article can be found online at https://doi.org/10.1016/j.jeem.2023.102837.

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WasteImpD × Post − 0.040* − 0.057* − 0.069* − 0.044* − 0.065* − 0.056*