Dynamic Relationship Between China’s Environmental Protection Investment and Regional, Environmental Pollution

Abstract

The carrying capacity of China’s resources and environment has reached a limit. The economic development of different regions has been forced to abandon the original economic development mode manifesting high pollution, high energy consumption, and high emission and to step forward to the new economic development model promoting low energy consumption, low emission, and low pollution. Environmental issues are typical manifestations of market mechanism failure. Government investment in environmental protection, which effectively improves environmental quality, is necessary to achieve sustainable economic development. An index system of the influencing factors that affect regional environmental pollutant emissions was established first in this study to measure accurately the relationship between environmental protection investment in different provinces in China and regional environmental pollution. System GMM (Generalized Method of Moment) method was used to analyze the impact of environmental protection investment on pollutant emissions in 30 provinces in China from 2007 to 2016. Results show that the system GMM method can effectively solve variable endogeneity. Environmental protection investment of explanatory variables has a significant negative effect on pollutant emissions. Among the control variables, per capita GDP (Gross Domestic Product), industrial structure, resident consumption level, and technology market turnover have a significant inhibitory effect on pollutant emissions. Among the control variables, investment in fixed assets and import and export trade is vital in promoting pollutant emission growth. Conclusions provide a reference for improving the governance level of environmental protection investment in China’s provinces, controlling environmental pollution and ecological damage, and realizing a green economic development method.