Nonlinear Influence of Chinese Real Estate Development on Environmental Pollution: New Evidence from Spatial Econometric Model

Abstract

Environmental pollution is a problem of universal concern throughout the globe. The development of real estate industry not only consumes huge resources, but also has close ties with high-consumption industries such as the construction industry. However, previous studies have rarely explored the impact of real estate development on environmental pollution. Therefore, this paper employs the entropy method to construct a comprehensive index of environmental pollution based on panel data of 31 provinces in China from 2000 to 2017, and empirically examines the impact of real estate development on environmental pollution. This article uses real estate investment to measure the development of the real estate industry. In view of the high spatial autocorrelation of environmental pollution, this paper selects a spatial econometric model. The empirical study found that: (1) By using the Spatial Durbin Model, real estate development has an inverted U-shaped impact on environmental pollution. Meanwhile, most cities have not yet reached the turning point; that is, with the continuous development of the real estate industry, environmental pollution will continue to increase. (2) Further regional heterogeneity found that the inverted U-shaped relationship still exists in coastal and inland areas. (3) Finally, this article used the Spatial Mediation Model to explain the nonlinear impact of real estate development on environmental pollution, with two important mediating variables: population density and industrial structure. Through the above analysis, it can be observed that real estate development has a significant impact on environmental pollution. Thus, the country and the government can reduce environmental pollution by improving the investment structure, using environmentally friendly building materials, guiding population flow and promoting industrial upgrading.