Water Pollution and Digestive Cancers in China

Following China’s economic reforms of the late 1970s, rapid industrialization has led to
a deterioration of water quality in the country’s lakes and rivers. China’s cancer rate has
also increased in recent years, and digestive cancers (i.e. stomach, liver, esophageal) now
account for 11 percent of fatalities (WHO 2002) and nearly one million deaths annually. This
paper examines a potential causal link between surface water quality and digestive cancers
by exploiting variation in water quality across China’s river basins. Using a sample of 145
mortality registration points in China, I find using OLS that a deterioration of the water quality
by a single grade (on a six-grade scale) is associated with a 9.3 percent increase in the death rate
due to digestive cancer, controlling for observable characteristics of the Disease Surveillance
Points (DSP). The analysis rules out other potential explanations for the observed correlation,
such as smoking rates, dietary patterns, and air pollution. This link is also robust to estimation
using 2SLS with rainfall and upstream manufacturing as instruments. As a consequence of the
large observed relationship between digestive cancer rates and water pollution, I examine the
benefits and costs of increasing China’s levy rates for firm dumping of untreated wastewater.
My estimates indicate that doubling China’s current levies would save roughly 29,000 lives per
year, but require an additional 500 million dollars in annual spending on wastewater treatment
by firms, implying a cost of roughly 18,000 dollars per averted death.

Avi Ebenstein