The mechanism and effects of national smart city pilots in China on environmental pollution: empirical evidence based on a DID model

The policy of the national smart city (NSC) pilots, a new type of urbanization for future development, has been implemented in China in batches. This paper investigates the mechanism and effects of the NSC pilots on the environment. Using the prefecture-level panel data during 2004–2018 period, our multi-period difference-in-differences (DID) estimation shows that the NSC pilots causally mitigate SO2 (wastewater) pollution by 13.76% (14.36%), which is supported by a series of robustness tests. The mediating effect model indicates that green total factor productivity (GTFP) plays a partial mediating role in mitigating both SO2 and wastewater emissions, while technological innovation plays a partial mediating role in mitigating wastewater emissions. After introducing the two mediating channels into the multi-period DID model, the reduction effect for SO2 and wastewater emissions drops to 11.04% (1-e− 0.117) and 12.1% (1-e− 0.129), respectively. Comparatively, the NSC pilots contribute to the improvement of GTFP and GTFP takes the major mediating role in reducing SO2 and wastewater pollution. The heterogeneous effects of the NSC pilots show that the mitigation effect is more pronounced in cities with strong fiscal support, cities with abundant human capital, and cities with high R&D expenditure. Based on these novel findings, this study provides some policy implications for achieving better mitigation effects.