Real Estate & Planning Research Seminar, in person Presentation by Professor Pinghan Liang from the Sun Yat-sen University and University of Oxford "The Art of Not Being Chocked: Environmental Awareness, Vote with Feet, and Land Finance in China"

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Abstract

The Art of Not Being Chocked: Environmental Awareness, Vote with Feet, and Land Finance in China

Professor Pinghan Liang, Sun Yat-sen University and University of Oxford.

This paper investigates the impact of environmental awareness on local government fiscal revenue in China. The classical Tiebout theory suggests that local residents preference for clean air would affect local public finance. We exploit a natural experiment, the unexpectedly release of the environmental documentary Under the Dome in early 2015. We show that the public environmental awareness exogenously increases immediately after the release of this film. We use the popularity of the filmmaker in 2011, measured by the internet search volume of her in a city, to proxy for the city-level exposure to the film. The continuous difference-in-difference analysis shows that after the release of the film, a city with 10% higher exposure to the film has a 0.08% decrease in land leasing revenue for the government. The size and number of land parcels leased also reduces. We also use the minimal distance from the city to the birthplace and first workplace of the filmmaker as the Instrumental variable for the exposure to the film. Furthermore, consistent with the “vote with feet” mechanism, we show that the local internet search volume for house prices in cleaner cities significantly increase as the release of film, and local government also raises environmental investment.