Does high-speed rail reduce environmental pollution? Establishment-level evidence from China

We estimate the impact of transportation on environmental pollution in China by using a comprehensive establishment-level pollution-discharge dataset between 2002 and 2012. Our empirical strategy explores China's high-speed rail (HSR) rollouts as a plausibly exogenous shock on transportation improvements. An event study shows that the parallel trends assumption is violated, which suggests the need to control for city-specific trends. The difference-in-differences framework then reveals that HSR has some positive but statistically insignificant effects on both air and water pollution discharge intensities. Nevertheless, we observe several salient heterogeneity effects. HSR reduces both types of pollution from heavily polluting industries, and also alleviates air pollution in central cities, the central areas of a city, and cities with a larger proportion of secondary industry. We interpret these heterogeneity effects according to the industrial and spatial restructuring of economies due to HSR.