Achieving low-carbon production: Impacts of land misallocation and industrial structure in urban China

This study provides a comprehensive examination of the influence of land misallocation on carbon emissions in urban China, focusing on the relationship between land misallocation, industrial structure, and environmental outcomes from a macroeconomic perspective. Using a cross-regional panel database, the paper calculates the land misallocation index and carbon emissions of construction land, revealing distinct spatial-temporal patterns across regions. To establish a causal relationship, the study employs a two-way fixed-effects model and a two-stage least squares (2SLS) approach, using the 2007 industrial land marketization reform as an instrumental variable. The findings demonstrate that a 1 % increase in the land misallocation index leads to an average increase in carbon emissions of 0.502 %, highlighting the substantial environmental impact of over-allocated industrial land. Through a mediation effect model, the study shows that approximately 16.28 % of the total impact on regional carbon emissions is mediated by changes in industrial structure due to land misallocation. Further analysis reveals that regions with higher levels of land misallocation are more severely affected, and quantile regression results identify a non-linear, inverted U-shaped relationship between land misallocation and carbon emissions across different emission levels. These findings have significant implications for land management policies, industrial development strategies, and environmental governance in China and potentially other developing economies, providing valuable insights for policymakers aiming to balance economic growth with environmental sustainability. •Quantifies land misallocation via TFP loss.•Employs 2007 industrial land reform as an IV for land misallocation to identify causal effects.•Finds a 1 % rise in land misallocation raises carbon emissions by 0.502 %.•Shows 16.28 % of emissions impact is mediated by industrial structure changes.•Identifies an inverted U-shaped relationship between land misallocation and emissions.