How does land finance affect carbon emissions? Evidence from 270 Chinese cities
Year: 2025
Type: article
Abstract: China's carbon emissions (CE) are inextricably linked to its rapid and extensive urbanization, a process propelled by a fiscal model known as “land finance” (LF). To examine the relationship between LF and CE, this study employs a fixed effects model to analyze panel data from 270 Chinese cities covering the period 2006 to 2021. We then validate the robustness of the findings through methods such as replacing the dependent variable and address potential endogeneity using an instrumental variable approach. A spatial durbin model (SDM) is employed to investigate spatial spillovers. Additionally, a causal mediation analysis framework is constructed to investigate the underlying mechanisms. The results reveal the following: First, LF has a significant positive impact on CE, with a 1 % increase in LF being associated with an average increase of 0.817 % in CE. Second, this core finding holds when per capita CE or carbon intensity is used as the dependent variable and when endogeneity is addressed using an instrumental variable based on land supply potential and exogenous demand shocks. Third, CE exhibit significant positive spatial autocorrelation, indicating regional clustering and spillover effects. Finally, this study identifies three primary pathways through which LF exacerbates CE: the resource misallocation effect, the technological crowding-out effect, and the energy structure lock-in effect.
Authors: Linfeng Cai, Yixuan Liao, Huanchen Tang
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,930
Award: G6957511837
OpenAlex ID: W4416543128