Land Misallocation and Urban Air Quality in China

In China, local government's "land for development" strategy has led to a large number of urban construction land allocated to the industrial field, which has promoted the rapid development of industry and economy in the short term, but also brought serious environmental quality losses. This paper systematically sets out how land misallocation works on urban air quality and employs the spatial Durbin model (SDM) to conduct an empirical analysis on the panel data of 283 China's cities at or above the prefecture level. The result shows that, stimulated by financial maximization and political promotion, in order to obtain more fiscal revenue and growth performance, local governments prefer to allocate a large number of urban construction land to industry and related fields, which leads to the underestimation of industrial land price and the misallocation of land resources. Land misallocation has exerted significant inhibiting effects on the air quality of local and their surrounding cities through inhibiting the upgrading of industrial structure. Further analysis reveals that the bigger the city, the less the inhibition effects of land misallocation on upgrading of industrial structure and urban air quality, and vice versa. The conclusions of this paper can provide useful reference for local governments to optimize land allocation, promote economic restructuring and environmental quality upgrading. JEL Classification: R52; E62; P28