Does industry upgrade transfer pollution: Evidence from a natural experiment of Guangdong province in China

China pushes industry upgrade by relocating the backward industry from the eastern regions to the middle and western areas, but rare studies examine its environment impact. By using the prefecture level panel data and the Difference in Differences method, we evaluate the environment outcome of the industry upgrade in Guangdong province since 2008. We find that the industry upgrade in Pearl River Delta brings pollution in the less developed regions, representing by more volume and intensity in industrial waste gas and solid wastes, not in industrial waste water as the water polluted industries are prohibited from being transferred. Regional analysis shows that eastern Guangdong sees a faster growth in the three pollutants, and western Guangdong and the three cities adjacent to the core cities in Pearl River Delta witness a faster growth in waste gas; western and northern Guangdong, where the main rivers are polled into the Pearl River, show a decline in industrial waste water. The channel check reveals that the industry upgrade transfers pollution both by more industry production and more polluted industry in the less developed regions. Consequently, the industry upgrade in Pearl River Delta does transfer pollution within Guangdong, depending on the policy option and regional location. (C) 2019 Elsevier Ltd. All rights reserved.