Estimating the effect of air quality on Bike-Sharing usage in Shanghai, China: An instrumental variable approach

Recent years have seen a surge in shared mobility. Amid various emerging shared mobility services, bike-sharing has received growing popularity for its economic affordability. Meanwhile, the “green” reputation of bike-sharing has also been widely acknowledged by the general public. The two-way causal relationship between environmental quality and bike-sharing posits a virtuous circle that environmental quality improvement leads to increasing bike-sharing demand, and more bike-sharing trips contribute to better environmental quality. While numerous efforts have been made to explore the environmental benefits of bike-sharing systems, relevant studies examining the impacts of environmental quality on bike-sharing behaviors are lacking. Given its importance in transportation and environmental sustainability, this study aims to examine the impacts of air quality on bike-sharing demand in Shanghai, China, in August 2016 through a fixed-effect two-stage least square (FE-2SLS) model, where wind speed and thermal inversion are innovatively adopted as the instrumental variables. The findings show that a unit decrease in PM_2.5 concentrations is associated with a 2,517 increase in daily bike-sharing trips in Shanghai. Alternatively, an additional 0.78 million bike-sharing trips per month could be generated during summer seasons if Shanghai's summer-time PM_2.5 levels could meet WHO's interim target of 10 μg/m³. Due to substantial economic, environmental, and public health benefits arising from bike-sharing trips and air quality improvements, our findings provide compelling evidence for policymakers to devote continued efforts to air pollution control and increased investments in bike-sharing systems.