3 Reduce Structural Dependence on Land Revenue Land policy should not be treated as a stand-alone solution for fiscal sustainability. Although stronger land policy intensity affects the amount of land revenue, the study shows that it does not significantly change land revenue’s relative importance in Hong Kong’s overall fiscal structure. This reflects a deeper path dependency in Hong Kong’s land-based fiscal model. To reduce long-term fiscal vulnerability, the government should gradually broaden non-land revenue sources, review expenditure commitments that implicitly rely on land income, and develop a more diversified fiscal framework. This would allow land policy to focus more clearly on housing, social equity, and sustainable development rather than revenue generation. Adopt a Time-Sensitive Approach to Land Governance The study’s dynamic findings suggest that land policy effects vary across time horizons. In the short term, land policy can be used to respond to market overheating, housing affordability pressures, or fiscal fluctuations. In the medium term, stronger coordination among housing, planning, transport, and fiscal authorities becomes more important than simply increasing policy intensity. In the long term, the effects of land policy on revenue gradually weaken, meaning that deeper institutional reforms are needed beyond the land sector. Policymakers should therefore design land policies with clear short, medium, and long-term objectives rather than assuming that one policy instrument can deliver lasting fiscal and social outcomes. Time-Sensitive Policy Effects The Granger causality results further show that the effect of land policy intensity changes over time. In the short term, land policy intensity and land revenue influence each other. This means that stronger land policies can affect land revenue, while changes in land revenue may also push the government to adjust its policy approach. In the medium term, the relationship becomes more one-directional: land policy intensity continues to affect land revenue, but land revenue no longer strongly shapes policy intensity. In the longer term, this relationship gradually weakens and becomes less clear. This suggests that land policy can be useful for short-term fiscal adjustment or market stabilization, but its impact on revenue does not last permanently. Recommendations Build Fiscal Buffering Mechanisms into Welfare-Oriented Land Policies As Hong Kong’s land policies increasingly serve social welfare objectives, such as expanding public housing supply, improving housing affordability, and stabilizing the property market, policymakers should anticipate the fiscal trade-offs of stronger policy intervention. Since the study finds that higher land policy intensity can reduce absolute land revenue in the short term, the government should establish fiscal buffering mechanisms to manage revenue volatility. Counter-cyclical reserves, stabilization funds, and more careful medium-term budget planning can help absorb temporary declines in landrelated income without weakening public service provision or delaying housing and infrastructure projects. Figure 2: Comparison of classification accuracy for ERNIE and Other models Hong Kong land development and policy intensity: strategic embedding in a period of transition Public Policy BULLETIN
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