Does industrial agglomeration affect the regional environment? Evidence from Chinese cities

This study examines the impact of industrial agglomeration on the regional environment using panel data of 13 prefecture-level cities in the Beijing-Tianjin-Hebei region from 1998 to 2018. The empirical results show a strong spatial autocorrelation and a strong spatial lag and spatial error effect on the environmental pollution level in the Beijing-Tianjin-Hebei region. The results further show that the manufacturing agglomeration significantly aggravates the regional pollution; service agglomeration significantly alleviates the regional environmental pollution; the synergistic agglomeration of manufacturing and service industry has a significant inverted "U" type relationship on the regional environmental pollution. More specifically, the development of synergistic agglomeration intensifies regional environmental pollution at the early stage, and after reaching the inflection point, synergistic agglomeration alleviates regional environmental pollution. The inflection point occurs when the level of synergistic agglomeration is around 2.85. At the same time, there is no significant spillover effect of synergistic agglomeration on neighboring regions after calculating the feedback effect. Study findings provide insights for promoting the strategy of "two-wheel-drive development" and alleviating the contradictory relationship between industrial development and environmental pollution.