The Effect of Innovation City Construction on Carbon Emissions in China

Abstract

Innovation, as a driving force to economic growth, has been referred to as an important development strategy by the central government of China. In order to improve the innovative capability of cities, Chinese officials started to construct innovation cities in 2008. Previous studies have investigated the ecological and economic effects of innovation city construction; however, the environmental effect of the project remains unclear. In this study, we constructed an annual panel of 285 cities in China, from 2007 to 2015, to assess the effect of innovation city construction on carbon emissions. Our baseline results are obtained from a difference-in-differences estimator, comparing cities with and without introducing innovation city construction, whose results show that innovation city construction reduces carbon emissions by about 2% on average. We found a similar effect of innovation city construction on carbon emissions when we controlled for the estimated propensity of a city to launch the innovation city construction based on a series of urban characteristics, such as gross regional product and population. We obtained comparable estimates when we used the propensity score as weights to balance urban characteristics between cities with and without launching the innovation city construction. Our results also show that innovation city construction has a larger effect on carbon emissions in western, poorer, and fewer population cities than in those with opposite characteristics. We found suggested the persistence of the effect that innovation city construction had on carbon emissions, implying that the Chinese government should encourage innovation to reduce carbon emissions. Besides, we performed a series of robustness tests, including the leave-one-city-out test, the bootstrapping test, and the permutation test, to illustrate the robustness of our results.