Natural gas resource utilization, environmental policy and green economic development: Empirical evidence from China

Abstract

Exploring the relationship between natural gas resource utilization, environmental policy, and green economic growth will help developing countries enact practical environmental and resources policy. China declared a “war on pollution” in 2014 in response to the worsening environmental pollution (called the “Atmosphere Ten Articles (ATA)” policy). Using the ATA policy in a quasi-natural experimental framework and adopting the quasi-difference-in-difference (quasi-DID) method, this paper conducts an empirical study based on hand-collated panel data of prefecture-level cities. The main findings are concluded as follows: (1) The ATA policy has a significant and negative impact on the green economic efficiency in Chinese cities. Essentially, this negative impact is a result of the more significant inhibitory effect over the reduction effect. The estimates are robust to various model specifications. (2) Chinese cities witnessed an increasing reduction in the green economic efficiency over time after implementing the ATA policy. (3) Heterogeneity analysis suggests that the negative effect mainly occurs in regions with relatively low natural gas utilization density, and we did not find such evidence in regions with high natural gas utilization density. These estimates are robust to alternative econometric model specifications, measurement methods, and identification strategies. The findings can provide new insights to understand the relationship between environmental policy, resource utilization, and green economic development.