This study pays attention to a rarely discussed but important issue regarding the influence of the government's environmental protection expenditure on Sulfur Dioxide (SO2) emissions in China under consideration of the potentially spatial dependence of SO2 emissions. A panel dataset of 30 provinces from 2008 to 2013 is utilized to estimate the panel Spatial Durbin models. The main findings of this study are that SO2 emissions can be effectively reduced by government spending on environmental protection and that the relationship between SO2 emissions and gross regional product (GRP) per capita in China is cubic polynomial (N-shaped). In addition, as direct investment from foreign countries toward China increases, SO2 emissions will be reduced. The trade factor also plays an important and negative role in SO2 emissions. Provinces with higher shares of secondary industries to total GRP will have more SO2 emissions. The investment completed in the treatment of industrial pollution in the private sector can effectively reduce SO2 emissions, and a higher population density causes a reduction in SO2 emissions. The coefficient of spatial autocorrelation ρ is statistically positive, confirming a positive spatial correlation (also meaning a spatial competition) of SO2 emissions among provinces in China. All these conclusions are consistent with those in previous works and with our expectations, and remain the same while a two-stage procedure is applied to cope with the potential endogeneity problem of GRP, with the exception of the effect of population density.
Journal of Cleaner Production, Volume 175, Pages 431-441