Water Resource Allocation and Environmental Management: An Analysis of the PM2.5 Mitigation Effects of the South-to-North Water Diversion Project

The South-to-North Water Diversion Project (SNWDP), a key strategic initiative in China, facilitates interbasin and interregional water allocation while influencing the environment. However, limited research has explored the environmental impacts of this project. We employed a quasinatural experimental approach and analyzed panel data from 202 counties (treatment group) along the project’s eastern and central routes with 628 other counties (control group) from 2000 to 2020. The generalized synthetic control method was applied to evaluate the impact of the SNWDP on PM2.5 concentrations and explore the underlying mechanisms. The results of a series of robustness tests reveal the following: (1) The project significantly reduces the PM2.5 concentration in areas along its route, with effects increasing gradually over time. (2) The effects vary significantly depending on the economic development level of the counties and their geographic proximity to the project. (3) Industrial optimization, stricter environmental regulations, and improved meteorological conditions amplify the project’s environmental benefits, but only after surpassing specific thresholds. These findings offer robust evidence to guide targeted PM2.5 mitigation along the SNWDP route while fostering high-quality economic development.