How Effective is the Regional Joint Environmental Policy in China? Evidence from Inverse Difference-in-Differences

Abstract This paper aims to evaluate the effects of the “2+26” policy launched by the Chinese government to improve air quality in Beijing–Tianjin–Hebei and its surrounding region. In order to evaluate such policy interventions, we propose a new inverse difference-in-differences (IDID) framework, which can identify the average quasi-causal effect under the inverse common trend condition. Using a baseline IDID regression model, we find that the “2+26” policy has a significant effect on improving the air quality, since the policy would reduce the value of Air Quality Index by 9.338 on average, if it had been implemented in the pre-treatment period. In the supplementary materials, we also investigate the co-existing spatial–seasonal policy effects by using several heterogeneous IDID regression models and show the remarkable long-run quasi-benefits over the quasi-costs of the “2+26” policy in Beijing and Tianjin through a cost–benefit analysis. Supplementary materials accompanying this paper appear online.