Impact of urbanization and real estate investment on carbon emissions: Evidence from China's provincial regions

Abstract

Despite the impact of urbanization on carbon emission has been extensively studied in recent years, the mechanisms by which urbanization, real estate investment affect carbon emissions are still unclear. Different from previous studies focused on direct effect, this paper investigated the impact of urbanization and real estate investment on China's carbon emissions with considering of the provincial contribution and spatial spillover effect. Using the multiplicative logarithmic mean Divisia index (M- LMDI) model, spatial panel data model and panel data of 30 provinces in China over the period 1997–2015, the results suggested that the contributions to carbon emissions and their driving mechanisms were significantly different across provinces. The top five provinces in China that contributed the most to the growths of carbon emissions in China were Shandong, Guangdong, Hebei, Jiangsu, and Henan, with cumulative effects of 10.28%, 10.28%, 5.44%, 5.19%, and 5.09% respectively. The direct impact of urbanization on carbon emissions was significantly negative, but its spatial spillover effect was significantly positive, which suggested that the effect of urbanization on carbon emissions shows significant “pollution transfer effect” after introducing the spillover effect. Due to the characteristics of non-movability and long investment period, the impact of real estate investment on carbon emissions was fixed in the local region, and there was no spillover effect to the adjacent regions. Because of the existence of mutual promotion mechanism between urbanization and real estate investment, the interaction between the two had significant positive direct and spillover effects on carbon emissions, which indicated that the interaction between the two created a reduction effect on both local and adjacent regions. The research can effectively identified the provinces that contribute a lot to China's carbon emissions, and made the decomposition and implementation of the national carbon emission reduction targets more targeted. At the same time, urbanization policies should be combined with real estate policies in the process of carbon emission reduction.