Environmental regulation and green total factor productivity: Evidence from china's marine economy

Abstract

This study investigates the effect of environmental regulation on green total factor productivity (GTFP) of marine economy in China. Environmental regulation can reduce environmental pollution, and it is the key to sustainable development, but we scarcely know its effects on marine economy. Although environmental regulation increases the cost of economic operation and reduces profits, it also can improve the productivity through stimulating more innovation activities. Therefore, the net effect of environmental regulation on productivity depends on the relative size of the two competitive effects. We present the following evidence on the basis of marine economy in China’s coastal provinces. (1) The GTFP of marine economy shows an upward trend. (2) Environmental regulation from investment and cost perspectives has a positive effect on GTFP of marine economy in the long term but not the short term, which supports the Porter hypothesis. (3) Environmental regulation has a single threshold effect on GTFP with environmental regulation, economic development level, and technological level as the threshold variable, respectively. The influence on GTFP can be significantly positively after crossing the threshold value. This study provides timely evidence and important policy implications for achieving a win-win situation between environmental protection and economic development through environmental regulation.