Economic Effects Assessment of Forest City Construction: Empirical Evidence from the County-Level Areas in China

Forests are both an irreplaceable natural resource and a vital economic asset for all humankind. Based on the data of counties in mainland China from 2007 to 2020, the article explores the direct impact and spatial spillover effects of the policy implementation on the economic growth of counties with the help of the forest city pilot policy and the policy evaluation model. The results reveal that policy implementation can have a positive economic growth effect on the pilot counties, which, in turn, can significantly increase the size of the county’s GDP, the level of GDP per capita, and the total amount of nighttime lighting brightness. The implementation of forest city construction can bring about 2.74% of total GDP size, about 2.63% of per capita GDP development level, and about 7.25% of nighttime light brightness to the county on average. Cost–benefit analysis also indicates that forest city construction can bring about a comprehensive economic benefit of approximately CNY 686.453 million (approximately USD 96.82 million) to the counties. The rapid improvement in labor productivity, significant influx of high-end factors, and continuous expansion of market potential are important mechanisms through which policy implementation promotes economic growth in pilot counties. While promoting economic growth in the pilot counties, forest city construction can also have positive spatial spillover effects on neighboring areas in the pilot counties. Furthermore, when the deficits in atmospheric vapor pressure and annual evapotranspiration are used as instrumental variables for forest city construction, the empirical estimates are not significantly altered. In the process of building forest cities, county governments should be wary of issues such as the high cost of forest maintenance. This study provides a Chinese model and policy reference for other countries and regions in the world to deal with the relationship between forest city construction and county economic growth.