Does the SO2 emissions trading scheme encourage green total factor productivity? An empirical assessment on China’s cities

As a market-based environmental regulation tool, emissions trading scheme for SO 2 (SO 2 ETS) has been carried out in China for decades, so impacts of SO 2 ETS have become a vital issue to the society. Based on the SO 2 ETS of China in 2007, this paper attempts to test and verify impacts of the sche...

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Bibliographic Details
Published in:Environmental science and pollution research international 2020-02, Vol.27 (6), p.6375-6388
Main Authors: Hou, Bingqing, Wang, Bing, Du, Minzhe, Zhang, Ning
Format: Article
Language:English
Subjects:
Aquatic Pollution
Atmospheric Protection/Air Quality Control/Air Pollution
Earth and Environmental Science
Ecotoxicology
Emission analysis
Emissions control
Emissions trading
Environment
Environmental Chemistry
Environmental Health
Environmental regulations
Environmental science
Productivity
Research Article
Sulfur dioxide
Waste Water Technology
Water Management
Water Pollution Control
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Summary:As a market-based environmental regulation tool, emissions trading scheme for SO 2 (SO 2 ETS) has been carried out in China for decades, so impacts of SO 2 ETS have become a vital issue to the society. Based on the SO 2 ETS of China in 2007, this paper attempts to test and verify impacts of the scheme on environment and economy, especially on green total factor productivity (TFP). We firstly combine biennial weight-modified non-radial direction distance function and Luenberger productivity indicator to measure and decompose the green TFP of 280 cities in China over the period 2003 to 2016, and apply a difference-in-differences method (DID) with fixed effect models to investigate whether SO 2 ETS achieves a win–win scenario of “emission reducing” and “efficiency increasing.” The results show that the scheme significantly may decrease SO 2 emissions and SO 2 intensity by 12.3% and 11.0%, respectively, in ETS regions while no obvious impact on GDP. In terms of green TFP, we find SO 2 ETS inhibits the growth of green TFP, and the negative impact mainly caused by the deterioration in efficiency change. Therefore, we hold that SO 2 ETS is effective for improving environment, but it is still difficult to achieve the promotion of green TFP simultaneously.
ISSN:0944-1344
1614-7499
DOI:10.1007/s11356-019-07273-6