Resource extraction, environmental pollution and economic development: Evidence from prefecture-level cities in China

Abstract

The environmental pollution caused by resource extraction will crowd out other factors for economic growth, thus undermining the economic growth and sustainable development of resource-based cities. Based on the panel data of 273 cities in China from 2003 to 2016, we analyze the correlation and mechanism between environmental pollution and resource extraction through a mediating effect model. The empirical results show that both resource extraction and environmental pollution have significant inhibitory effects on regional long-term economic development. The negative impact of resource extraction on long-term economic development is partly caused by environmental pollution. Especially for resource-based cities, environmental pollution is the main source of resource curse. We suggest that at the national level, the state should formulate the resources exploitation plan reasonably without breaking through the ecological carrying capacity and accelerate the improvement of the audit system of natural resources and build a resource information sharing platform to make the processes of resources exploitation more specific and transparent. At the city level, environmental improvement should be regarded as an important channel of urban sustainable development to enhance urban economic innovation and competitiveness.