The cost of biodiversity protection: National Key Ecological Functional Zone and labor demand in China

Protecting biodiversity represents a critical global concern. As one of the most biodiverse countries in the world, China is diligently advancing its commitment to biodiversity protection, with the designation of key ecological functional zones being a pivotal initiative. This policy protects biodiversity, but it may also bring some negative impacts. This paper adopts a staggered difference-in-differences strategy to explore the impact of the National Key Ecological Functional Zone (NKEFZ) policy on the county-level employment. The findings indicate that the policy significantly impedes the employment. Mechanism analysis reveals that the policy diminishes employment through curtailing industrial output and elevating labor costs. Further analysis suggests that the extent of this impediment is more pronounced in areas with higher levels of financial pressure, income, and investment. The result of policy optimization using machine learning indicates how this policy can be implemented in the future and measures the benefits if it is implemented under the optimal rule.