Spatial spillovers of pollution via high-speed rail network in China

The advent of the high-speed railway (HSR) has dramatically reduced transportation costs in China and reshaped the economic geography. Provided that the HSR increased the mobility of production factors, industrial firms and their pollution emissions may also be reallocated between cities. This paper collects firm-level microdata and utilizes an adjusted spatial econometric model to study the spatial spillovers of air and water pollution via the HSR network. We find that a firm's pollution level is increased by the decline of pollution from firms located in the HSR-connected neighboring cities. Further investigations suggest that the spillover of Total Factor Productivity (TFP) via the HSR network is a possible mechanism through which the pollution are transmitted between cities. We also show evidence that the magnitude of pollution spillovers is highly correlated with regional economic growth, environmental investment, the number of industrial firms, and per capita rail length in a province.