Testing the Effectiveness of Government Investments in Environmental Governance: Evidence from China

Yiguo Chen, Peng Luo () and Tsangyao Chang
Additional contact information
Peng Luo: School of Finance, Hubei University of Economics, No. 8 Yangqiaohu Road, Jiang-Xia District, Wuhan 430205, China
Tsangyao Chang: Department of Finance, Feng Chia University, Taichung 40724, Taiwan

Sustainability, 2024, vol. 16, issue 14, 1-18

Abstract: The Chinese government has taken many measures to improve the environment, such as directly investing in pollution control infrastructure, but the effectiveness remains to be tested. This paper employs the Toda–Yamamoto test and the Fourier Toda–Yamamoto test to examine the link between environmental governance investment and environmental quality in China from 2003 to 2020. PM2.5, which measures air quality, is used here as an indicator of the environment. The results reveal that environmental governance investment has notably lessened the average concentration of PM2.5 in certain regions, indicating a positive effect on environmental quality, albeit with regional variations. Taking structural breaks into consideration, the relationship between environmental governance investment and environmental amelioration is significant in a smaller number of regions. Additionally, the cross-sectional correlation is further scrutinized to assess the essential robustness of the causality between the two variables. The findings lend support to the aforementioned conclusion. These conclusions provide valuable guidance for China’s policymakers in optimizing environmental governance investments to curb pollution and achieve sustainable development.

Keywords: environmental governance investment; environmental quality; structural shifts; regional heterogeneity; panel Fourier Toda–Yamamoto causality (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/16/14/5828/pdf (application/pdf)
https://www.mdpi.com/2071-1050/16/14/5828/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:16:y:2024:i:14:p:5828-:d:1431384

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().