Dividends Beneath the Canopy: National Forest City Designation and Urban Inclusive Green Growth—Evidence from China

Abstract

Amid China’s pursuit of ecological civilization and high-quality development, a central policy challenge lies in designing environmental governance instruments that can simultaneously deliver ecological improvement and socially inclusive outcomes. Using the National Forest City (NFC) program as a representative urban ecological governance initiative, this study examines the relationship between place-based environmental certification and urban inclusive green growth (IGG) in China. Drawing on panel data from 290 prefecture-level cities over the 2000–2023 period, this study exploits the staggered rollout of the NFC program and estimates its relationship with urban inclusive green growth using a multi-period difference-in-differences framework. The results show that NFC designation is associated with a statistically significant increase in cities’ IGG performance, and this relationship remains robust across a series of alternative specifications and placebo tests. Dimension-specific estimates further show significant positive associations with economic performance, social equity, and environmental quality. Further analyses reveal pronounced heterogeneity in the estimated relationship. The positive association between NFC designation and inclusive green growth is stronger in non-resource-based cities, cities located in southern China, and core urban areas, suggesting that local development conditions and structural constraints play an important role in shaping the observed relationship. Employment-related analysis provides evidence consistent with broader city-level employment expansion as one potential pathway associated with the NFC–IGG relationship. Moreover, the positive association between NFC designation and IGG is stronger in cities with greater population mobility and where local governments place greater emphasis on innovation, underscoring the importance of complementary institutional and demographic conditions. By explicitly linking ecological governance, labor-market outcomes, and inclusive growth, this study contributes to the policy-oriented literature on urban sustainability. The findings suggest that environmental certification programs such as the NFC may provide a governance framework for connecting ecological objectives with inclusive development goals. Beyond the Chinese context, the results offer transferable insights for cities seeking to design environmental governance strategies that move beyond symbolic greening toward more integrated and socially inclusive sustainability transitions.