Revealing stylized empirical interactions among construction sector, urbanization, energy consumption, economic growth and CO2 emissions in China

Abstract

Since the construction sector, interacting with urbanization and economic growth, boosts energy consumption and CO2 emissions, and so challenges environmental sustainability. This work systematically analyzes empirical interactions among construction sector, urbanization, energy consumption, economic growth and CO2 emissions in a modified version of ‘Stochastic Impacts by Regression on Population, Affluence, and Technology’ model. An aggregate panel of China along with its three disaggregated regional panels is estimated through augmented mean group and dynamic common correlated effects mean group estimators. The core empirics are as follows. First, energy consumption, gross regional product (GRP), urbanization, construction sector, and CO2 emissions established a long-run equilibrium relationship. Second, energy consumption growth, GRP growth, urbanization, and construction sector growth exerted significant positive impacts on CO2 emissions labeled as; energy, growth, urbanization, and construction driven emissions push impacts, respectively. Third, urbanization revealed negative, neutral, and positive contributions to GRP growth for western zone, intermediate zone, and eastern zone termed as; urbanization-driven growth deceleration, neutrality, and acceleration impacts, respectively. Likewise, GRP growth positively influenced urbanization. Fourth, energy consumption growth and construction sector growth exhibited significant positive impacts on GRP growth characterized as; energy and construction driven growth acceleration impacts, respectively. Also, GRP growth imparted a significant positive influence on energy consumption growth and construction sector growth. Fifth, CO2 emissions growth induced a significant negative influence in GRP growth entitled as, emissions-driven growth deceleration impact. Sixth, construction sector growth imparted a significant positive contribution to urbanization named as construction-driven urban migration impact. Whereas, urbanization revealed positive contribution to construction sector growth called as urbanization-driven construction expansion impact. Seventh, urbanization and construction sector growth presented significant positive contributions to energy consumption growth, namely, urbanization and construction abundance driven energy utilization impacts, respectively. Finally, construction sector-augmented Environmental Kuznets Curve hypothesis is found valid. Based on empirics, policy relevance is proposed.