Does Land Resource Misallocation Reduce Energy Efficiency? Empirical Evidence From 243 Prefecture Level Cities in China

Xiongying Li, Shuiren Huang, Yoshihiro Hamaguchi () and Miraj Ahmed Bhuiyan

Review of Development Economics, 2026, vol. 30, issue 2, 716-729

Abstract: The mismatch behavior of local governments in urban construction land allocation may adversely affect regional energy efficiency. Such land resource mismatches can reduce energy efficiency by impeding industrial upgrading, exacerbating urbanization imbalances, and suppressing economic agglomeration, thereby restricting sustainable development. However, existing research lacks sufficient support for the mechanisms linking land resource mismatch and energy efficiency, as well as city‐level data. This study leverages panel data from 243 prefecture‐level cities in China from 2007 to 2019, combining production function and marginal output methods to quantify the degree of industrial land distortion. By constructing TWFE panel models, we empirically test the real impact and mechanisms of regional land resource mismatch on energy efficiency. Our results indicate that: (1) Land resource misallocation significantly hampers the improvement of energy efficiency. (2) The mismatch of land resources primarily reduces urban energy efficiency by hindering industrial structure upgrading, promoting urbanization imbalance, and inhibiting economic agglomeration. (3) The negative impact of mismatched land resources on energy efficiency varies across urban scale and structural effects, and macroeconomic stimuli can exacerbate this negative impact. Therefore, the government needs to refine the management system of land transfer revenue and expenditure, allocate and utilize land resources of the three major industries more rationally, and avoid the phenomenon of low energy efficiency caused by mismatched land resources.

Date: 2026
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