Green growth: The impact of urban forest construction on economic growth in China

Abstract

This paper examines whether and how China's National Forest City (NFC) policy affects economic growth through ecosystem services restoration. Although extensive research has examined the impact of pollutant-oriented environmental regulation, the understanding of how ecosystem services restoration policies affect economic growth remains limited. Using a Chinese county panel from 1999 to 2019, we found that the NFC significantly promotes economic growth. The NFC improves environmental conditions by providing ecosystem services to increase green vegetation, purify air quality, and mitigate heat island effects. The environmental improvement-induced total factor productivity and human capital enhancement are the mechanisms through which the NFC promotes economic growth, which is enhanced with improvements in the urban ecosystem. Furthermore, the economic impact of NFC is heterogeneous in industry departments and regions. The urban ecosystem services restoration policy is a practical approach to achieving simultaneous economic growth and ecological protection.