Undisclosed Pollution: Environmental Information Disclosure and Transboundary Pollution

This paper examines the impact of China’s environmental information disclosure (EID) on transboundary pollution using a panel dataset covering 180 counties along 20 major rivers. The results show that EID exacerbates transboundary pollution. After its implementation, downstream counties experience a significant increase in water-polluting firms, as well as higher emissions of industrial wastewater and chemical oxygen demand, while non-downstream counties see a notable reduction in water pollution. Mechanism analysis shows that EID enhances environmental information exposure and prompts a strategic enforcement response by local governments. This is evidenced by an increase in environmental enforcement intensity in non-downstream counties, while enforcement in downstream counties either remains statistically unchanged or even weakens. We also find that the observed rise in downstream pollution is primarily driven by the relocation of water-polluting firms from upstream to downstream counties and an increase in newly established firms, rather than by more pollution emissions from incumbent firms. This paper highlights an unintended consequence of EID: it reshapes the spatial distribution of pollution by promoting the relocation of polluting activities to geographically and institutionally vulnerable downstream regions.