Transportation infrastructure and carbon emissions: New evidence with spatial spillover and endogeneity

Abstract

Over the past two decades, China’s transportation infrastructure has expanded and emerged as a vital pillar of the national economy. In the context of commitments to carbon neutrality, it is imperative to assess how developing transportation infrastructure affects overall environmental goals. However, to the best of our knowledge, existing literature offers conflicting evidence about the overall impact of transportation infrastructure on carbon emissions. Using a novel spatial stochastic frontier model that accounts for spatial spillover and endogeneity, we find that previous research paradigms underestimated the contribution of transportation infrastructure to decarbonization: Instead of being a hindrance, the corrected effect substantially enhances decarbonization. These results remain robust in different weight matrices, instrumental variables, and distance function specifications. Furthermore, this study identifies economic agglomeration and technological innovation as key mechanisms of the decarbonization effect. From a regional perspective, we observe that western China shows the most pronounced emission reduction effect, followed by central China. In contrast, in eastern China, the transportation infrastructure does not support carbon emission reduction effectively. Therefore, policymakers should carefully consider the regional disparities in decarbonization and formulate distinct investment plans on transportation tailored to each region.