Work

Green or Greenwashing: The Nonlinear Effect of Green Finance on Hydropower Resource Misallocation

Year: 2026

Type: article

Abstract: Enhancing the allocation efficiency of hydropower resources is critical to achieving China’s carbon peaking and carbon neutrality goals. Based on panel data of 29 Chinese regions from 2001 to 2020, this study first measures the degree of hydropower resource misallocation via a counterfactual decomposition approach, and then adopts a threshold model to explore the impact of green finance on hydropower resource misallocation. The results show that: (1) Western and southwestern regions with abundant hydropower resources yet insufficient economic absorption capacity suffer from hydropower oversupply, while eastern coastal and central regions with advanced economies and intensive industries face hydropower undersupply. The inverse spatial distribution pattern of hydropower supply and demand cores reflects prominent hydropower resource misallocation. (2) Green finance has an inverted U-shaped nonlinear relationship with hydropower resource misallocation. Moderate development of green finance can improve hydropower resource allocation efficiency, yet exceeding the optimal threshold may trigger problems including greenwashing and thus exacerbate hydropower resource misallocation.

Source: Energies

DOI: 10.3390/en19061451