Abstract
As an important financial means for governments to improve the quality of economic development, government debt greatly affects the quality of local environmental governance. Based on a theoretical mechanism analysis that uses the pollutant emissions panel data and new caliber urban investment bond data of 273 cities in China, this paper empirically tests the impact of local government debt on urban emission reduction and the mechanism that drives this impact. We find that local government debt significantly promotes urban emissions reduction, and as urban pollution becomes more aggravated, this promoting effect has a dynamic path, first strengthening and then weakening. The role of local government debt in promoting urban emission reduction is characterized by both temporal and spatial heterogeneity. A mechanistic analysis shows that local government debt can promote urban emission reduction by promoting urban environmental innovation, with green invention patents demonstrating a stronger intermediary role than green utility model patents.
Highlights
As an economic power and a highly populous country, China’s environmental protection issues deserve direct attention
Because the ecological environment has the characteristics of an externality and public goods attributes, ecological governance and environmental protection are inherently dependent on government power
Local government debt and urban environmental pollution examine the impact of local government debt on urban emissions reduction and the mechanism through which it operates
Summary
As an economic power and a highly populous country, China’s environmental protection issues deserve direct attention. To investigate whether local government debt will affect urban emission reduction by affecting the level of urban environmental innovation, this paper further establishes the regression model shown in Eqs (4) and (5), which together with Eq (1), form a complete mediation effect model. The results show that the estimation coefficient of the government debt scale is negative at the 1% significance level, which indicates that local government borrowing significantly reduces urban sulfur dioxide emissions. With the increase in quantiles, the absolute regression coefficient of local government debt on urban sulfur dioxide emissions is characterized by dynamic change, first increasing and decreasing overall, which is consistent with the above regression results This may be because local governments of cities with less pollution experience less pressure and lower costs to reduce emissions and do not need to relieve the pressure of environmental expenditure through borrowing or other means. Certain extent, the effect is weakened because the original extensive development model takes some time to change
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