Panel Econometric Analysis and Neural Network Forecasting of Economic Impacts From Land Degradation in the Yangtze River Basin Using Remote Sensing Data

ABSTRACT Land degradation poses critical threats to water resources and economic development in China's Yangtze River Basin, affecting agriculture, industry, tourism, and urban water‐supply systems. The basin spans diverse ecological zones from the Qinghai–Tibet Plateau to the East China Sea delta, represents one of Asia's most productive and densely populated river systems. The study area of interest includes 175 cities distributed across the upper, middle, and lower basin regions, enabling analysis of both mountainous upstream landscapes and intensively cultivated downstream plains. This study integrates panel econometric analysis with neural‐network forecasting and remote‐sensing observations to quantify the economic impacts from land degradation during 2018–2024. Sentinel‐2 and Landsat‐8/9 imagery were used to analyze NDVI dynamics and land‐cover transitions. Panel fixed‐effects models show that a 0.1 decline in mean NDVI significantly reduces agricultural output by 8.3% ( p < 0.001), industrial water‐use efficiency by 5.7% ( p < 0.01), and tourism revenue by 12.4% ( p < 0.001). During the study period, urban/built‐up land expanded from 7.4% to 9.6%, while agricultural land decreased by 6.2%, while agricultural land decreased by 6.2%. Water‐quality deterioration, represented by rising total phosphorus concentrations, resulted in an estimated annual economic loss of ¥127.4 billion by 2024. Long short‐term memory (LSTM) neural networks outperformed traditional econometric models in forecasting sector‐specific impacts, achieving R 2 = 0.92 compared with R 2 = 0.78 for panel models. A hybrid modeling approach produced the highest predictive accuracy (RMSE = 0.067, MAE = 0.052). Remote‐sensing analysis further revealed that 127,450 km 2 of the basin experienced moderate to severe vegetation degradation, predominantly in rapidly urbanizing regions. The integrated framework demonstrates that land degradation generates cascading and nonlinear economic impacts across sectors, with cumulative losses exceeding simple additive effects by 34%. These findings highlight the need for integrated land–water–economic governance under China's Yangtze River Protection Law.