Shaping the relationship between economic development and carbon dioxide emissions at the local level: evidence from spatial econometric models
Lina Meng, Bo Huang
Environmental and Resource Economics
#002518 20190611 () Views:1101
The debate over the correlation between economic growth and environmental pollution has attracted a great deal of attention from academic researchers and policy makers in recent years. There has been excessive use of spatial econometric models and too much emphasis on statistical procedures in empirical studies. In this study, we contribute to the existing literature by conducting a more rigorous analysis of the relationship between economic growth and CO2 emissions in Chinese cities using spatial Durbin models. Our results show that CO2 emissions increase monotonically in relation to economic growth at the city level and that the driving effects of economic growth are slightly smaller in central China than in eastern and western China. In addition to economic growth, industry’s share of the economy is a major driver of CO2 emissions, while technological improvement, measured by energy intensity per unit of gross domestic product (GDP), and the effectiveness of environmental governance flatten the shape of the environmental Kuznets curve. We provide evidence of local spillover effects of explanatory variables on CO2 emissions. Economic competition as well as technological diffusion are found to exist in Chinese cities in relation to CO2 emissions. We also find carbon leakage between cities only if the per capita GDP of a given city is less than $493 (in 2010 constant dollars). Results hold when robustness checks are performed. Policy makers should carefully consider regional differences and the inherent spatial interactions between factors when formulating carbon reduction policies.
Keywords: Environmental Kuznets curve; Spatial econometric model; Carbon emissions; Chinese cities