Economic and environmental effects of mineral resource exploitation: Evidence from China

Abstract

Though causing environmental contamination, mining helps maintain energy security and fuels economic development in almost all countries globally, especially in emerging market economies. However, few existing studies have sought to provide a nuanced understanding of the overall impacts by examining the economic and environmental effects of mineral resource exploitation based on development levels. Using China's provincial panel data, this paper finds that exploitation contributes to economic development and leads to environmental pollution, as predicted. Nevertheless, the magnitudes of the impacts are different for local governments at different development stages. In underprivileged provinces, mineral resource exploitation is more conducive to reviving economic development but leads to more severe environmental pollution than in developed areas. In addition, industrial structural upgrading serves as the intermediary variable where exploitation promotes industrial structure upgrading, which drives economic development and produces environmental pollution. This paper also finds that the level of pollution control will increase with the environmental pollution caused by mineral resource exploitation. Therefore, apart from stringent environmental regulation, local governments should make cautious trade-offs between economic development and environmental pollution based on their development status when making strategic plans for the mining sector.