Environmental constraint and house price: Evidence from China

With the increasingly serious environmental pollution problem, how to effectively curb environmental pollution and reduce corporate emissions has become an important issue that urgently needs to be addressed. A large number of studies evaluating environmental protection policies have overlooked the additional social costs incurred during the environmental governance. Therefore, we systematically analyze the impact of environmental regulation on real estate prices, taking the pilot policy of Sulfur Dioxide Emissions Trading (SDET) in China as an opportunity. The results show that the SDET has led to a significant increase in house prices in the pilot cities, and the magnitude of the increase expands with the increase in the number of participating enterprises and the turnover of emissions trading. The mechanistic tests show that the emissions trading pilot policy has produced a population agglomeration effect while achieving environmental benefits, improved residents' willingness to pay for local housing, and promoted house prices by increasing housing demand. The research conclusions of this paper provide a decision-making reference for the government to consider the environmental effects and social effects as a whole when formulating environmental policies.