Toward green development? Impact of the carbon emissions trading system on local governments' land supply in energy-intensive industries in China

Abstract

Whether carbon emissions trading system promotes green development is important, especially from the land supply perspective. This paper investigates the effects of the carbon emissions trading pilot program on the land supply of the energy-intensive industries using the difference-in-difference approach, based on a big land-transaction dataset for the Chinese land market from 2007 to 2017. This paper finds that the carbon emissions trading program decreases the supply of energy-intensive industries' land by 25%, suggesting that it promotes the green development. Local governments' behavior affects the supply of energy-intensive industrial land. Industry structure dependence reinforce the effects of the carbon emissions trading program. The impacts of the carbon emissions trading program on the supply of energy-intensive industrial land would be less in cities with stronger regional competition, higher fiscal pressure or during political cycles. This study implies that the supply of energy-intensive industrial land can be used as an indicator for evaluating the effects of the carbon emissions trading system from the factor input perspective. The incentives of local government should be considered for understanding and assessing the effects of the carbon emissions trading system on land supply for future study.