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This paper provides the first quasi-experimental evidence that pesticides adversely affect health outcomes through drinking water by linking provincial pesticide usage reports from several Chinese statistical yearbooks (1998-2011) with the Chinese Longitudinal Healthy Longevity Survey (1998-2011). First, we follow a difference-in-difference-in-differences (DDD) framework to compare health outcomes between people who drink surface water and ground water in regions with high and low intensity of rice pesticide use before and after 2004, when China shifted from taxing agriculture to subsidizing agricultural programs. Second, we measure the downstream effect of pesticide use from upstream provinces. Our results indicate that a 10% increase in rice pesticide use unfavorably alters the index of dependence (ADL) by 2.51% and 0.33% for local and downstream residents (65 and older), respectively. This is equivalent to 168.8 and 55.89 million dollars in medical costs and offspring’s human capital losses, respectively (in total, 1.92% of rice production profits). Our results are robust to a variety of robustness checks and falsification tests.


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