The cost of ecological protection and restoration: Evidence from the impact of the Shan-shui project on land values

Protecting and restoring ecosystems is a key pathway for reducing biodiversity loss globally. These measures are perceived to conflict with the interests of land resource allocation. This study evaluated the economic consequences of the most extensive and stringent ecological space regulation and restoration tool in Chinese history—the Shan-shui project. This study compiled data from 2016 to 2022 on China's ecological protection and restoration efforts and micro-level land transactions, and used a spatial regression discontinuity design to estimate how land use restrictions affect land transfer values. This study found that the Shan-shui project had a significant negative impact on overall land transfer value. The "dual decline" in land demand from both enterprises and residents serves as a key mechanism through which market actors respond to the decline in land transfer prices triggered by government regulatory measures. The price-suppressing effect of the Shan-shui project shows significant variation. Although this effect is not observed in the commercial land sector, it is statistically significant in both residential and industrial land. Moreover, the price impact of water-related projects is substantially stronger than the average effect observed across all project types. In summary, these findings provide new insights into understanding the impact of ecological protection and restoration on resource allocation and alleviating the conflict between development and protection.