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How Does Green Investment Affect Environmental Pollution? Evidence from China

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Abstract

China is currently undergoing an important stage wherein it is adjusting its development mode and upgrading its industrial structure. Green investment has become a major driving force through which China can achieve green and sustainable development. Based on the panel data of 30 Chinese provinces for the 2006–2017 period, this paper uses a spatial Durbin model and a dynamic threshold model to empirically analyze the impact of green investment and institutional quality on environmental pollution. The research results show that China’s environmental pollution is significantly characterized by spatial dependence. Local environmental pollution is negatively impacted by green investment, but it is not affected by green investment in neighboring areas; this conclusion remains valid after a series of robustness tests. Green investment can reduce environmental pollution by improving efficiency of energy conservation and emission reduction, expanding technological innovation capabilities and upgrading the industrial structure. The regression results of the dynamic threshold model show that green investment has a nonlinear impact on environmental pollution that is dependent on institutional quality. A higher degree of regional corruption can lead to a gradual decrease in the role of green investment in reducing environmental pollution. However, improvements in marketization and intellectual property protection can increase the positive influence of green investment in reducing environmental pollution. Significant regional heterogeneity is also found in the impact of green investment on environmental pollution, and this impact gradually decreases from the eastern coast to the western region.

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Fig. 1

Source The data are from the National Bureau of Statistics (http://www.stats.gov.cn/ztjc/ztsj/hjtjzl/2014/201609/t20160913_1399641.html)

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Notes

  1. More details can be found at https://epi.yale.edu/downloads/epi2018policymakerssummaryv01.pdf.

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Acknowledgements

The authors acknowledge financial support from the National Natural Science Foundation of China (72073010, 71761137001, 71521002), the National Social Science Fund of China (21ZDA086), the key research program of the Beijing Social Science Foundation (17JDYJA009), the Joint Development Program of the Beijing Municipal Commission of Education. The authors are also very grateful to the anonymous reviewers, Co-Editor Prof. Dr. Robert Elliott and Editor-in-Chief Prof. Dr. Ian J. Bateman for their insightful comments that helped us sufficiently improve the quality of this paper. The usual disclaimer applies.

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Author notes

  1. Yu Hao

    Present address: School of Management and Economics, Beijing Institute of Technology, Zhongguancun South Street, Haidian District, Beijing, 100081, China

Authors and Affiliations

  1. School of Economics, Nankai University, Tianjin, 300071, China

    Siyu Ren

  2. School of Management and Economics, Beijing Institute of Technology, Zhongguancun South Street, Haidian District, Beijing, 100081, China

    Haitao Wu

  3. Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing, 100081, China

    Yu Hao & Haitao Wu

  4. Sustainable Development Research Institute for Economy and Society of Beijing, Beijing, 100081, China

    Yu Hao

  5. Yangtze Delta Region Academy of Beijing Institute of Technology, Jiaxing, 314001, China

    Yu Hao

  6. Beijing Key Lab of Energy Economics and Environmental Management, Beijing, 100081, China

    Yu Hao

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  1. Siyu Ren
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Ren, S., Hao, Y. & Wu, H. How Does Green Investment Affect Environmental Pollution? Evidence from China. Environ Resource Econ 81, 25–51 (2022). https://doi.org/10.1007/s10640-021-00615-4

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