The impacts of community grants on green innovation

Abstract

Community grants have increasingly been recognized for their role in promoting green innovation. The Small Grants Program (SGP) funds communities to get involved in environmental issues, bridging political declarations with tangible actions. We employed a difference-in-differences method to evaluate the impacts of the Small Grants Program on green innovation via panel data from Chinese cities from 2003 to 2020. Our findings revealed that the Small Grants Program significantly contributed to green innovation, as indicated by the increase in the number of green patents. These benefits persisted throughout the study period. Although the SGP did not have spatial spillover effects on green innovation in neighboring cities, it enhanced the environmental actions of the immediate communities. The Small Grants Program fostered civic environmental awareness and facilitated talent aggregation, thereby magnifying the impacts of community grants on green innovation. Heterogeneity emerged across citiy economic statuses, ethnic minority arreas, and project domians of work. These findings suggest that community grants are effective policy instruments for addressing environmental challenges. We recommend a strategic increase in the number of community grants targeted toward ethnic minority communities and low-income communities to promote green innovation and ensure equitable benefits across diverse regions and communities.