Does environmental infrastructure investment contribute to emissions reduction? A case of China

Abstract

Environmental infrastructure investment (EII) is an important environmental policy instrument on responding to greenhouse gas (GHG) emission and air pollution. This paper employs an improved stochastic impact by regression on population, affluence and technology (STRIPAT) model by using panel data from 30 Chinese provinces and municipalities for the period of 2003–2015 to investigate the effect of EII on CO₂ emissions, SO₂ emissions, and PM_2.5 pollution. The results indicate that EII has a positive and significant effect on mitigating CO₂ emission. However, the effect of EII on SO₂ emission fluctuated although it still contributes to the reduction of PM_2.5 pollution through technology innovations. Energy intensity has the largest impact on GHG emissions and air pollution, followed by GDP per capita and industrial structure. In addition, the effect of EII on environmental issues varies in different regions. Such findings suggest that policies on EII should be region-specific so that more appropriate mitigation policies can be raised by considering the local realities.

Keywords

environmental infrastructure investment (EII) / CO₂ emission / SO₂ emission / PM_2.5 pollution / stochastic impact by regression on population / affluence and technology (STIRPAT) model / governance

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