THE EFFECT OF REMEDIATING SEVERELY POLLUTED WATER BODIES: EVIDENCE FROM HOUSING SALES IN SHANGHAI

Abstract

Severely polluted water bodies have become a major issue in the urban environment. The Chinese government has made a lot of efforts to remediation black-odorous water bodies (BOWB) in urban areas since 2015. In order to measure the benefits brought by the remediation, I apply three Difference-in-Difference Hedonic Price Model to estimate the impacts of remediation, listing, and completion in Shanghai, combining the BOWB dataset and housing transaction dataset from 2015 to 2018. The findings reveal that the BOWB-affected distance is 0.7km. For housings located within 0.7km from a BOWB, their unit housing prices increase 11.6% on average after remediation, compared with housings located between 0.7 to 3km from a BOWB. Based on a back-of-envelop calculation, the overall benefit of BOWB remediation projects in Shanghai is 36 billion RMB.