Land marketization, fiscal decentralization and carbon emissions

Abstract

During China’s period of economic transition, its policy of fiscal decentralization (FD) has vigorously promoted China’s economic development, but it has brought about a mass of carbon emissions (CE) from its urban and industrial development. To solve environmental problems, the Chinese government has promoted land marketization(LM), hoping to reduce the contradiction between economic development and environment protection. The present study aimed to investigate whether LM has helped alleviate CE in China in the context of FD. A sample data set comprising the land transactions and socioeconomic panel data of 30 provinces in China from 1997 to 2020 was constructed and analyzed to investigate how LM and FD have effects on CE during that period. The results show that (1) LM has indeed helped to reduce CE to a certain extent, whereas FD has increased CE; (2) both LM and FD have spatial spillover effects on CE, which have regional heterogeneity; (3) LM has a single threshold of carbon reduction impact on FD, and under the influence of FD, the emission reduction effect of LM presents an inverted U-shaped nonlinear relationship with CE. We suggest the Chinese government should keep on deepening LM reform and implementing FD reasonably to improve the assessment mechanism of local governments and to help guide socioeconomic transformation and give impetus to industrial transformation. The findings not only offer meaningful insights into China’s future environmental governance, but also give a functional guide to environmental governance for other countries in the process of economic transition.