Unexpected good news: the impacts of land decentralization reform on energy development in China

Purpose The purpose of this paper is to investigate the impact of land approval decentralization on energy efficiency and then analyze the mechanisms that land decentralization improves energy efficiency. Design/methodology/approach This paper has been based on the dynamic slack based measure (DSBM) method to measure energy efficiency using input-output data at the city level in China. In the empirical analysis, this paper employed difference in differences (DID), instrumental variable (IV), propensity score matching–difference in differences (PSM–DID) and triple differences (DDD) to examine the research hypotheses. Findings Firstly, this paper finds unexpected good news and shows that decentralizing land approvals significantly improves regional energy efficiency. Secondly, this paper explores two mechanisms for this effect, one is the mitigation of land misallocation and the other one is the cleaner allocation of land resources across industries. Thirdly, this paper provides micro-evidence from Chinese listed firms and finds that the decentralization of land approvals similarly improve firms’ energy efficiency. Originality/value Existing studies have mainly explored the environmental impacts of land marketization reforms, with limited attention to decentralization of land approval. As a result, the promotion effect of decentralization of land approval on energy efficiency is still unclear, and the mechanism need to be further refined. Based on empirical analysis, this paper not only helps to clarify the relationship between land decentralization reform and energy efficiency, but also explores the mechanisms of transmission.