Can high-speed rail reduce environmental pollution? Evidence from China

Abstract Using balanced panel data of 285 prefecture-level cities in China from 2003 to 2013, this paper studies the impact of High-speed rail (HSR) on environmental pollution. The results by Difference-in-Difference (DID) method show that HSR significantly reduces environmental pollution by 7.35% in China. In addition, we use Propensity Score Matching and DID (PSM-DID) method, as well as the instrumental variable method to deal with the endogenous problem, and we find that the results remain robust. HSR will not automatically reduce environmental pollution, but through the technical effect, allocation effect and substitution effect, which are the main factors to reduce environmental pollution. In addition, we also make further robustness tests for the conclusions of this paper. Further analysis shows that in cities with larger city scale, higher level of economic development, more abundant human capital or stricter environmental supervision, the pollution reduction effect of HSR is more significant. This paper provides some policy implications for improving city environmental quality and building an environment-friendly society.