Impact of extreme high temperatures on pollution emissions of enterprise: Evidence from China.

ABSTRACT

Frequently occurring extreme weather events can pose a challenge to people and production systems. Coping with extreme high temperatures requires promoting the synergy between pollution reduction and carbon reduction. Accordingly, this study examines the causal relationship between extreme high temperatures and corporate pollution emissions by using the panel data of a Chinese sample from 2000 to 2014. This study uses fixed-effects models for the analysis. Baseline results show that a unit increase in the standardized temperature will result in a 4.6% reduction in corporate pollutant emissions. The heterogeneous analysis shows that extreme high temperatures will have an obvious effect on enterprises with low financing constraints and high policy and public constraints as well as on enterprises in cities with a high level of economic development, in innovative cities, and in the eastern region. We also explore the mechanism through which extreme high temperatures reduce pollutant emissions from the two dimensions of external environmental pressure and internal environmental governance. Extreme high temperatures will prompt enterprises to improve their energy efficiency, engage in innovative production processes, adopt source-and-end governance measures, and curb their pollutant emissions while strengthening government environmental supervision. This study provides new ideas for enterprise pollution reduction and serves as an inspiration to the government in formulating environmental policies.