Export Liberalisation and Water Pollution: Firm‐Level Evidence From China

ABSTRACT This paper investigates the effect of export liberalisation on water pollution emissions. With data on Chinese firm‐level water pollution emissions around China's accession to the World Trade Organization, we identify a negative causal effect of export liberalisation on firm‐level water pollution intensity using the exogenous shock to trade policy uncertainty. Further analyses reveal a specialisation effect that increases water pollution intensity for exporting firms and an enforcement effect that decreases water pollution intensities for all firms in the liberalised industry.