From Ecological Function to Economic Value: Forest Carbon Sinks and Regional Sustainable Growth in China

Abstract

Forest carbon sinks (FCS)—referring specifically to ecosystem-based carbon sequestration provided by forest ecosystems—are being increasingly recognized as a strategic form of natural capital under China’s “dual carbon” goals. While the ecological value of FCS is being translated into economic benefits through carbon markets, eco-compensation, and green finance, the extent to which ecosystem carbon sinks can continuously drive regional economic growth—and how such effects differ across regions—remains insufficiently understood. Using panel data for 294 Chinese prefecture-level cities from 2010 to 2022, this study employs dynamic panel methods to examine the dynamic, nonlinear, and heterogeneous impacts of ecosystem-based FCS on economic growth. The results show that (1) FCS significantly promote economic growth but follow an inverted U-shaped pattern, indicating diminishing marginal returns; (2) notable regional heterogeneity exists, with the strongest effects in central and western regions, while eastern cities exhibit weaker responses due to structural and spatial constraints; and (3) clear threshold effects are present, suggesting that industrial upgrading, urbanization, and moderate government intervention can amplify the economic contribution of FCS. These findings clarify the mechanism through which FCS transitions from ecological assets to economic capital, providing theoretical and empirical support for sustainable forest management, ecological-industrial integration, and carbon market optimization in the pursuit of carbon neutrality.