Summary:
Pollution prevention and control are one of the “Three Tough Battles” China faces during this decisive period, in which it is aiming to build a moderately prosperous society in all respects. A good environment improves the livelihoods of all its citizens. Achieving both emission reduction and social welfare in the process of coordinated regional development has become a major practical problem in China's strategy of green and high-quality development. We build a spatial economic model that includes two sectors, two regions, and a single element. We discuss the environmental and social welfare effects of regional integration, and attempt to identify the related theoretical mechanisms. Based on data on 30 provincial administrative regions in China from 1995 to 2016, we use the dynamic spatial dubin model and the generalized spatial two-stage least squares model to verify the impact of regional integration on pollution and social welfare. Our findings are as follows. (1) Regional integration has different effects on different types of pollutants. It significantly reduces the emission of local pollutants, but increases global pollutant emissions. (2) We identify an inverted U shaped relationship between regional integration and social welfare. Regional integration is conducive to improving social welfare up to a specific level, and currently the level of provincial integration in China is at the stage of promoting social welfare. (3) The impact of regional integration on environmental pollution and social welfare has regional variations. (4) The impact of regional integration on pollution and social welfare has significant spatial boundaries. The contributions of this paper are as follows. First, we address the lack of theoretical research by constructing a spatial economic theory model, identifying the relationship between regional integration, environmental pollution, and social welfare through normative theoretical derivation. Second, by dividing environmental pollution into the two types of local and global pollutants, our research conclusions are more focused. Third, we confirm the differences in the impact of regional integration on different types of pollutants and identify an inverted U shaped relationship between regional integration and social welfare. Finally, we consider the spatial spillover effects of pollution and social welfare and the regional interactions, and identify the spatial boundaries within which regional integration affects environmental pollution and social welfare. This provides a quantitative basis for a more complete appreciation of the dual dividends of emission reduction and social welfare enhancement, which can be achieved through regional integration by improving space management. This research also has important policy implications. First, we suggest that environmental policies should be formulated specifically for different types of pollution and should fully consider the dividends that can be gained from both emission reduction and social welfare enhancement through regional integration, by improving space management. In the process of regional integration, environmental protection standards should be gradually unified to reduce the sensitivity of enterprises to regulatory differences and avoid the transfer of pollution across regions. In addition to setting strict environmental protection standards for local pollutants such as industrial dust, policies for global pollutants such as carbon dioxide should also be formulated. An inter-regional source accounting system to clarify the specific responsibilities of region for the treatment of transboundary pollution should be established, to reduce the negative incentives local governments may have in terms of the treatment of transboundary pollution. Second, emission reduction and social welfare enhancement can be synergistically realized in regional integration through improving space management. Both can be improved up to a specific critical level. The spatial scope of regional integration policies should also be planned and managed. The spatial scope of China's domestic regional integration is currently within the critical level. There is a huge potential for China to use regional integration to promote emission reduction and increase social welfare. Finally, the market mechanism should be fully exploited in the process of regional integration, as this can increase the participation of micro-enterprises and further help to achieve emission reduction and social welfare enhancement. Solving pollution problems through market mechanisms within regional integration can also promote energy conservation and thus further emission reduction. Marketization should therefore be the main strategy for pollution control in the future.
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