The Impact of Land Transfer Marketization on Urban Carbon Emissions: Empirical Evidence from China

Shifting urban land from planned to marketed allocation is an essential aspect of China’s economic market reform. However, its impact on carbon emissions has not been directly examined. Using prefecture-level urban panel data from 1997 to 2017, we empirically test the effect and mechanism of land transfer marketization (LTM) on carbon emissions. The results show that the LTM can significantly reduce urban CO2 emissions. Specifically, a unit increase in the degree of LTM can decrease total urban CO2 emissions by 3% and carbon intensity by 2.4%. The main transmission mechanism is attributed to three effects of land transfer: (1) Structural effect. LTM increases the supply of commercial service land and reduces that of industrial land, thereby reducing the total urban carbon emissions. (2) Resource allocation effect. LMT will screen out efficient enterprises and promote the reduction of carbon emissions. (3) Financing effect. By enhancing the ability of governments and businesses to finance, LTM can facilitate the introduction of green industries and improve the research of low-carbon technologies of enterprises, thus reducing carbon emissions. The above conclusions have passed a series of robustness tests. They also show that the impacts of the LMT are heterogeneous and stronger in the Centre and West in cities with lower economic development levels and larger populations. This study validates the efficacy and underlying mechanism of LTM in significantly reducing urban carbon emissions. Consequently, it offers a framework for the formulation of policies aimed at reducing urban carbon emissions through land market reform.