Abstract
Combining water monitoring station-level administrative data and transaction-level housing price data from Shanghai, China, we investigate the impact of China’s 2015 water pollution reduction policy on water pollution and housing prices. We first find that the policy significantly improved the water quality of the treated monitoring stations by 0.352 standard deviations. Furthermore, we find that the policy led to a 5.4% increase in the housing prices of apartments located within a 500-meter distance to the nearest treated river, but the effect disappeared for apartments located more than 500 m away. A heterogeneity analysis shows that the effects on housing prices are stronger in areas with higher total housing value, larger apartment sizes, greater nighttime light intensity, higher density of nearby amenities, and closer proximity to the city center.