How can environmental intervention work during rapid urbanization? Examining the moderating effect of environmental performance-based accountability in China

For the past three decades, ecological decline associated with rapid urbanization has been a global phenomenon, particularly in developing countries, where economic growth is often financed through off-budget earmarked revenue sources such as land sales. Under this context, governmental intervention to improve the environment may not be effective if such intervention suppresses land sales revenues, because these revenues are also used to finance environmental protection projects. What is the relationship between land revenues and environmental quality? More importantly, how does governmental intervention to improve the environment influence this relationship? Employing panel data of 31 provinces in China from 2000 to 2015, this study empirically answers these questions. We find that land financing strongly influences pollution in an inverted U-shape pattern, where local land revenues increase pollution until a turning point at which a decline in pollution is observed. More importantly, we find that environmental intervention programs can accelerate the decline in pollution. These findings establish the moderating impact of environmental intervention programs within a rapid urbanization context.