Environmental and Economic Sustainability of Urban Agglomeration Under Resource-Conserving and Environmentally Friendly Policy: Evidence from China

Environmental policy helps policymakers and researchers understand the process and expected effects of policy before the policies are fully implemented. This study aims to estimate the effects of resource-conserving and environmentally friendly policy implemented in the Wuhan metropolitan area and Changsha–Zhuzhou–Xiangtan urban agglomeration. The synthetic control method is employed as an estimation method. The results show that policy has positive impacts on economic development and SO2 emission reduction in the pilot regions but cannot improve wastewater treatment. Compared to large cities, medium-sized and small cities are more sensitive to policies since the large cities have transferred a large number of enterprises with high energy consumption and high emissions to the surrounding medium-sized and small cities. The study also finds that the Wuhan metropolitan area reduces pollution emissions through increasing environmental investment and the efficiency of resource allocation. In the Changsha–Zhuzhou–Xiangtan urban agglomeration, policy triggers green technology innovation to improve the environment and boost the economy.