The Empirical Study Of Impact Of Depreciation On Investment In Infrastructure

As important national energy output areas, central and western regions have biggerproblems in resource consumption and environmental pollution than other regions inthe country. In view of this, the state proposed to build "two-oriented society" reformpilot area in the central and western regions. In this context, investment ofinfrastructure, especially investment of green infrastructure in the central and westernareas is very necessary. In the past, infrastructure industry typically don’t depreciatefixed assets, the gradual loss of value of fixed assets did not receive timelycompensation, there is no provision for adequate funding to prepare for the fixed assetsto update, which is not conducive for fixed assets reconstruction and infrastructureconstruction, reasonable depreciation system of fixed assets of infrastructure isimportant for investment of infrastructure.This paper make use of the user cost of capital to contact depreciation andinvestment of infrastructure, make the theoretical analysis, including the identificationand types of investment of infrastructure and of investment of green infrastructure,drawing the formula that how depreciation of infrastructure impact the user cost ofcapital, and drawing the theoretical model that how the user cost of capital affectinvestment in infrastructure to contact the depreciation and investment of infrastructurein the theory. And analyze other factors that affect the investment of infrastructure.Meanwhile make empirical analysis on panel data of30provinces in East, Mid andwest based on the theoretical analysis, get a model which includes some factors thataffect the investment of infrastructure based on depreciation of infrastructure. Theempirical results show that: the user cost of capital has a significant negative effect onper capita infrastructure investment. According to the formula of user cost of capital,accelerated depreciation will reduce the user cost of capital. The paper suggest centraland western regions should take accelerated depreciation, which will reduce the usercost of capital, thus increasing investment in infrastructure, thus building aresource-saving and environment-friendly society. In particular, two types of greeninfrastructure such as public facilities management industry, resident services and otherservices should take accelerated depreciation.