Greening the economy: How territorial spatial planning policy promotes ecological and economic integration

Abstract

Based on a comprehensive county-level dataset covering 405 counties during 2007 to 2019, this paper investigates the impact of the Major Function-Oriented Zone Planning on environmental protection and economic development. By employing a time-varying difference-in-differences strategy, we utilize ecology-related development-restricted counties as the treatment group, whereas counties that do not fall within any specific functional category as the control group. Different from previous studies emphasizing that environmental protection and economic development are incompatible, we find that there is not only a notable improvement in ecological environment quality, but also the regional economic developed, as measured by the GDP per capita, in ecology-related development-restricted areas. To figure out how to achieve this balance, we first focus on the underlying mechanism of environmental enhancement. Our results indicate that improvement is primarily attributed to the withdrawal of polluting enterprises, the reduction in the supply of industrial land and the receipt of ecological transfer from the central government. Subsequently, the internal mechanisms analysis of economic growth reveals that the primary and tertiary industry have achieved significant growth, due to the enhancement of agricultural and livestock production and the expansion of local tourist attractions. Our findings provide valuable insights into the potential for achieving a win-win situation between environmental protection and economic development in the context of territorial space planning.