Unveiling the policy intervention effects of natural resource regulation on firm-level pollution emissions: Evidence from China's restrained land supply

Abstract

Land resources are the fundamental substrate upon which human activities are built, and their utilization practices are intimately linked to the sustainable development of both the economy and society. In this study, we take the land supply reduction policies implemented in China since last two decades as a quasi-natural experiment and examine the impact of land resource regulation on firms' pollution emissions using the Generalized Differences-in-Differences (GDID). The results report that land resource regulation has a significant effect in reducing the intensity of firms' pollution emissions. Specifically, this reduction effect is relatively more pronounced in small-scale firms, non-patent-intensive industries, and cities with high levels of economic development. Mechanism analysis confirms that land resource regulation inhibits the transitional investment and production scale of firms, thus decreasing their pollution emissions. Furthermore, it can also reduce the pollution emission intensity of firms by promoting technological innovation. The study provides new micro-level evidence on the economic consequences of resources regulations in terms of supply constraint and provides policy implications for sustainable development.