Water Ecological Civilization Pilots and Corporate Water Pollution in China: Evidence from Listed Firms

This study examines the causal effect of China's Water Ecological Civilization Pilot Program (WECPP) on corporate water pollutant emissions. Ecological civilization, as formally embedded in China's national governance framework, represents a systematic strategy integrating environmental protection into economic and social development through institutional design, regulatory enforcement, and resource stewardship. Exploiting the staggered rollout of pilot city designations as a quasi-natural experiment and employing a difference-in-differences estimator on a sample of listed firms over the period 2007 to 2022, we document that pilot designation induces a significant and robust reduction in corporate water pollutant emissions. This finding survives an extensive battery of robustness and validity checks. Mediation analyses provide evidence consistent with three potential pathways: enhanced environmental enforcement, increased public environmental attention, and improved internal green management practices. Heterogeneity analyses reveal that the emission-reducing effect is more pronounced in regions subject to greater governance pressure, among firms with weaker ex ante environmental awareness, and in firms with greater climate-risk exposure. Furthermore, the program induces unintended spatial responses, as some firms react to heightened regulatory oversight through geographic relocation, which is consistent with possible geographic reallocation of pollution-intensive activities across regions. These findings offer actionable implications for advancing ecological civilization, optimizing environmental governance arrangements, and designing cooperative regulatory frameworks to mitigate pollution displacement across jurisdictions.