Estimate on spillover effect of environmental pollution between peripheral areas

ABSTRACT

Interaction of environmental pollution between peripheral areas has become a central topic in the field of resources and environment but little is known about the actual impact on peripheral areas in the current literature. This paper sets out a simultaneous equation model to investigate the spillover effect of environmental pollution between China’s peripheral areas utilizing the panel data of 218 cities in China. Making use of indicators for measuring the impact on environmental pollution, it identifies that environmental pollution between cities of China has a significant two-way spillover effect. After standardization of variables, it is found that the spillover effect of peripheral areas on urban environmental pollution cannot be neglected. Nearly, a third of the environmental pollution level in a city is induced by the environmental pollution in peripheral areas. If the indicator of environmental pollution in peripheral areas is missing, wrong conclusions will be drawn. Therefore, government should shift the emphasis of environmental regulation from local to global, and improve the overall environmental quality through coordinated management of regional environment.