Heterogeneous Effects of Environmental Vertical Management Reform on Six Major Air Pollutants in China

This study employs a difference-in-differences (DID) design to evaluate the impact of China’s Environmental Vertical Management Reform (EVMR) on urban concentrations of six major air pollutants. The findings reveal a pronounced efficacy hierarchy: the EVMR significantly reduces PM2.5, PM10, and SO2, but its effects on the remaining pollutants are heterogeneous. We find no statistically significant impact on NO2 or O3, while CO exhibits a counterintuitive pattern—remaining unaffected in the immediate term but showing a significant lagged increase in the second and third years post-reform. In the year of implementation, the reform reduced PM2.5, PM10, and SO2 concentrations by 15.4%, 15.5%, and 9.7%, respectively. While reductions for particulate matter persisted over the following two years, the effect on SO2 was largely confined to the implementation year. Treatment effects exhibit selective heterogeneity: the SO2 reduction was significantly stronger in less developed cities, while a far more pronounced amplification emerged for cities located in key national air pollution governance areas. Mediation analysis confirms that strengthened environmental enforcement—measured by increased imposition of penalties—operates as a significant channel for pollution reduction, with the indirect effect notably strongest for SO2 in the reform year. In conclusion, this study provides comprehensive evidence on the differential impacts of EVMR. Our findings validate the efficacy of this centralized governance model in curbing particulate and sulfur pollution, but also highlight its limitations in addressing secondary pollutants like O3. More alarmingly, the unintended lagged increase in CO reveals a critical pollution-shifting effect: the very measures that achieve deep SO2 reduction may inadvertently elevate CO through interconnected engineering pathways. These insights are crucial for designing more targeted, multi-pollutant control policies in China and other transitioning economies.