A smart city is a less polluted city

This study aims to examine the impact of smart city construction on the ecological environment quality (EEQ) of China. Due to the problems arising from urbanisation, local governments construct smart cities as inherent innovative advantages that can improve their level of science and technology, and efficiency in resource allocation, thereby reducing environmental pollution. Through this innovation-driven channel, shocks to the degree of city smartness can have a significant impact on the regional environment. In order to compute the sensitivity of urban pollution to the degree of city smartness in China both conceptually and empirically, we modify a theoretical model of classic land allocation decisions to demonstrate how local officials' responsibilities to protect the ecological environment and promote economic growth can lead to the long-run spatial expansion of smart cities, resulting in the improvement of EEQ. Using a difference-in-differences (DID) analysis, we find that from 2005 to 2017 period, smart city initiatives in China reduced industrial exhaust gas and industrial wastewater by approximately 20.7% and 12.2%, respectively, such that most of the reduction may be attributed to the technology effect and allocation effect of urban innovation.