The Effect of Subway Expansion on Air Quality: Evidence from Beijing

Major cities in China and many other fast-growing economies are expanding their subway systems in order to address worsening air pollution and traffic congestion. This paper quantifies the impact of subway expansion on air quality by leveraging fine-scale air quality data and the rapid build-out of 14 new subway lines and 252 stations in Beijing from 2008 to 2016. Our main empirical framework examines how the density of the subway network affects air quality across different locations in the city during this period. To address the potential endogenous location of subway stations, we construct an instrument based on historical subway planning, long before air pollution and traffic congestion were of concern. Our analysis shows that an increase in subway density by one standard deviation improves air quality by two percent and the result is robust to a variety of alternative specifications including the distance-based difference-in-differences method. The total discounted health benefit during a 20-year period from reduced mortality and morbidity as a result of 14 new subway lines amounts to $1.0-3.1 billion, or 1.4-4.4 percent of the total construction and operating cost.