Can Circular Economy Legislation Promote Pollution Reduction? Evidence from Urban Mining Pilot Cities in China

Abstract

Major economies, such as the United States, European Union (EU), Japan, and China have enacted Circular Economy Promotion Laws (CEPLs) to promote the development of the recycling industry. The Urban Mining Pilot Policy (UMPP) is an essential provision of the CEPL in China, which promotes a circular economy and environmentally friendly industries and society. In China, the Urban Mining Pilot City (UMPC) program facilitates the addressing of the negative environmental impacts of industrial and urban waste, and conservation of scarce primary resources, which are necessary for sustainable industrialization and urban sustainability in developing countries. In the present study, a time-varying difference-in-difference analysis of city-level panel data was conducted to investigate the impact of the UMPC program on pollution reduction in China. The results indicated that the UMPC program has improved municipal waste management efficiency and environmental quality significantly, with robust results across various models and datasets. Additionally, the mediation test showed the positive impacts of the UMPC program are mainly associated with the economy-of-scale effects. Finally, the UMPP had geographical and social-economic heterogeneous effects. To the best of our knowledge, this is the first study to quantify the impact of the UMPC program on recyclable solid waste management and pollution reduction in urban China, with potential contributions to resource and environmental economics.