Is it feasible for China to enhance its air quality in terms of the efficiency and the regulatory cost of air pollution?

Northeast Asia is the most dynamic region in the world owing to its steady economic development and resultant air pollution. The Chinese government has expended much effort in addressing environmental issues. An important question for China is how much air pollution it can reduce and at what cost. Using streaming city-level data, this paper examines the feasibility of the Chinese government's policies to regulate its efficiency and promotion using its shadow price for three major urban agglomerations, the Beijing-Tianjin-Hebei (BTH), Yangtze River Delta (YRD), and Pearl River Delta (PRD), from 2013 to 2016. The non-radial direction distance function and its dual model show that the average atmospheric environmental efficiencies of the BTH, YRD and PRD are 0.2673, 0.3312 and 0.4711, respectively. The efficiencies tend to increase over time, which is promising, but the absolute annual growth rate is relatively low, implying the need for stronger regulations. We also find that the three regions achieve improved air quality through different technologies. The BTH takes stronger environmental action at a lower cost for pollutant emission reduction compared to the other districts. The shadow prices of the three main air pollutants, that is, PM2.5, SO2, and NO2, present an upward trend in the BTH, YRD, and PRD agglomerations, but with a large difference, implying the need for customized regulation and/or promotion by region. More specifically, a reduction of PM2.5 by 1 mg/m3 would cost BTH 2.717 million yuan, whereas the cost for PRD would be 7.31 million. Therefore, policymakers must implement different policies depending on the regional heterogeneity when trying to enhance air quality. High-efficiency regions such as PRD should have a smaller emission reduction target, whereas low-efficiency regions such as BTH should gradually increase their emission reduction targets.