Heterogeneous and Interactive Effects of Multi-Governmental Green Investment on Carbon Emission Reduction: Application of Hierarchical Linear Modeling

Yi-Xin Zhang and Yi-Shan Zhang ()
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Yi-Xin Zhang: Center for Quantitative Economics Research, Jilin University, Changchun 130012, China
Yi-Shan Zhang: Center for Quantitative Economics Research, Jilin University, Changchun 130012, China

Sustainability, 2025, vol. 17, issue 3, 1-23

Abstract: Although both prefectural governmental green investment (GGI_city) and provincial governmental green investment (GGI_prov) have potentially diverse impacts on prefectural cities’ carbon emission reduction (CER), previous studies have rarely examined the effects of governmental green investment (GGI) on different indicators of CER such as total carbon dioxide emissions (CE), carbon emissions intensity (CEI) and per capita carbon emissions (PCE) in the context of prefectural cities nested in provinces in China. In our research, six hierarchical linear models are established to investigate the impact of GGI_city and GGI_prov, as well as their interaction, on CER. These models consider eight control factors, including fractional vegetation coverage, nighttime light index (NTL), the proportion of built-up land (P_built), and so on. Furthermore, heterogeneous impacts across different groups based on provincial area, terrain, and economic development level are considered. Our findings reveal the following: (1) The three indicators of CER and GGI exhibit significant spatial and temporal variations. The coefficient of variation for CEI and PCE shows a fluctuating upward characteristic. (2) Both lnGGI_city and lnGGI_prov have promoted CER, but the impact strength of lnGGI_prov on lnCE and lnPCE is more pronounced than that of lnGGI_city. GGI_prov can strengthen the effect of GGI_city significantly for lnCE. Diverse control variables have exerted significant impacts on the three indicators of CER, albeit with considerable variation in their effects. (3) The effect of GGI on CER is significantly heterogeneous upon conducting grouped analysis by provincial area size, terrain complexity, and economic development level. The interaction term lnGGI_city:lnGGI_prov is stronger in the small provincial area group and simple terrain group. Among the control variables, economic Development Level (GDPpc), the logarithm of gross fixed assets investment (lnFAI), NTL, and P_built exhibit particularly pronounced differences across different groups. This study provides a robust understanding of the heterogeneous and interactive effects of GGI on CER, aiding in the promotion of sustainable development.

Keywords: carbon emissions reduction; governmental green investment; heterogeneous impact; interactive effects; hierarchical linear models (HLM); prefectural cities nested in provinces (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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