IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v82y2024icp784-802.html
   My bibliography  Save this article

The impact of trans-provincial watershed eco-compensation policy on carbon emissions: Evidence from China

Author

Listed:
  • Yang, Qiuyue
  • Yang, Zhen
  • Chen, Yumin

Abstract

To manage transboundary pollution, China has promoted trans-provincial watershed eco-compensation (WEC), which is a market-oriented policy that adjusts ecological and economic interests between upstream and downstream areas and promotes regional green and low-carbon transformation. Hence, a reasonable evaluation of the carbon emission reduction effect of WEC is of great value for achieving green transformation. Using data from Chinese counties between 2003 and 2020, we consider 11 trans-provincial WEC agreements and evaluate their influence on carbon emissions. We find that trans-provincial WEC policies reduce water pollution emissions and significantly lower carbon emission levels. Mechanism tests show that the policy reduces carbon emissions by limiting polluting industrial development and stimulating low-carbon technological innovations. Moreover, this policy improves regional low-carbon economic development, and there are significant heterogeneity effects of the WEC in different regions and compensation modes. This research provides new insights for transitional countries to design green transformation policies.

Suggested Citation

  • Yang, Qiuyue & Yang, Zhen & Chen, Yumin, 2024. "The impact of trans-provincial watershed eco-compensation policy on carbon emissions: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 784-802.
    • Handle: RePEc:eee:ecanpo:v:82:y:2024:i:c:p:784-802
    DOI: 10.1016/j.eap.2024.04.019
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592624001000
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eap.2024.04.019?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Bennett, Drew E. & Gosnell, Hannah & Lurie, Susan & Duncan, Sally, 2014. "Utility engagement with payments for watershed services in the United States," Ecosystem Services, Elsevier, vol. 8(C), pages 56-64.
    2. Thorsten Beck & Ross Levine & Alexey Levkov, 2010. "Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States," Journal of Finance, American Finance Association, vol. 65(5), pages 1637-1667, October.
    3. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    4. Kwayu, Emmanuel J. & Paavola, Jouni & Sallu, Susannah M., 2017. "The livelihood impacts of the Equitable Payments for Watershed Services (EPWS) Program in Morogoro, Tanzania," Environment and Development Economics, Cambridge University Press, vol. 22(3), pages 328-349, June.
    5. Hering, Laura & Poncet, Sandra, 2014. "Environmental policy and exports: Evidence from Chinese cities," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 296-318.
    6. Saad, Sandra I. & Mota da Silva, Jonathan & Ponette-González, Alexandra G. & Silva, Marx Leandro Naves & da Rocha, Humberto R., 2021. "Modeling the on-site and off-site benefits of Atlantic forest conservation in a Brazilian watershed," Ecosystem Services, Elsevier, vol. 48(C).
    7. Pagiola, Stefano & Arcenas, Agustin & Platais, Gunars, 2005. "Can Payments for Environmental Services Help Reduce Poverty? An Exploration of the Issues and the Evidence to Date from Latin America," World Development, Elsevier, vol. 33(2), pages 237-253, February.
    8. Cheng, Qiongwen & Zhao, Xiaoge & Zhong, Shihu & Xing, Yudan, 2024. "Digital financial inclusion, resident consumption, and urban carbon emissions in China: A transaction cost perspective," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 1336-1352.
    9. Bösch, Matthias & Elsasser, Peter & Wunder, Sven, 2019. "Why do payments for watershed services emerge? A cross-country analysis of adoption contexts," World Development, Elsevier, vol. 119(C), pages 111-119.
    10. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    11. Junran Dong & Desheng Wu, 2020. "An Evaluation of the Impact of Ecological Compensation on the Cross-Section Efficiency Using SFA and DEA: A Case Study of Xin’an River Basin," Sustainability, MDPI, vol. 12(19), pages 1-18, September.
    12. Engel, Stefanie & Pagiola, Stefano & Wunder, Sven, 2008. "Designing payments for environmental services in theory and practice: An overview of the issues," Ecological Economics, Elsevier, vol. 65(4), pages 663-674, May.
    13. J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, vol. 102(2), pages 994-1028, April.
    14. Gao, Yajuan & Zhang, Congqing & Wang, Yilin & Wang, Shuaihao & Zou, Yunjin & Gao, Junhong & Wang, Zeyu, 2023. "Fiscal decentralization and rural resource utilization efficiency: Evidence from quasi-natural experiment in China," Resources Policy, Elsevier, vol. 87(PB).
    15. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    16. Yang, Qiuyue, 2023. "Do vertical ecological compensation policies promote green economic development: A case study of the transfer payments policy for China’s National Key Ecological Function Zones," Economic Systems, Elsevier, vol. 47(4).
    17. Wunder, Sven & Engel, Stefanie & Pagiola, Stefano, 2008. "Taking stock: A comparative analysis of payments for environmental services programs in developed and developing countries," Ecological Economics, Elsevier, vol. 65(4), pages 834-852, May.
    18. Duan, Yuwan & Jiang, Xuemei, 2021. "Pollution haven or pollution halo? A Re-evaluation on the role of multinational enterprises in global CO2 emissions," Energy Economics, Elsevier, vol. 97(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liu, Yang & Zhang, Jintao & Zhu, Le, 2025. "Pay for air pollution: Ecological compensation policy and corporate investment," International Review of Financial Analysis, Elsevier, vol. 97(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huang, Dayan & Liu, Chengyi & Yan, Zehao & Kou, Aiju, 2023. "Payments for Watershed Services and corporate green innovation," International Review of Economics & Finance, Elsevier, vol. 87(C), pages 541-556.
    2. He, Weimin & Wang, Bin, 2024. "Environmental jurisdiction and energy efficiency: Evidence from China's establishment of environmental courts," Energy Economics, Elsevier, vol. 131(C).
    3. Hao Wang & Sander Meijerink & Erwin van der Krabben, 2020. "Institutional Design and Performance of Markets for Watershed Ecosystem Services: A Systematic Literature Review," Sustainability, MDPI, vol. 12(16), pages 1-26, August.
    4. Liu, Zhaoyang & Kontoleon, Andreas, 2018. "Meta-Analysis of Livelihood Impacts of Payments for Environmental Services Programmes in Developing Countries," Ecological Economics, Elsevier, vol. 149(C), pages 48-61.
    5. Teo Dang Do & Anchana NaRanong, 2019. "Livelihood and Environmental Impacts of Payments for Forest Environmental Services: A Case Study in Vietnam," Sustainability, MDPI, vol. 11(15), pages 1-22, August.
    6. Dongbin Hu & Mei Lin & Yang Chen, 2022. "Can Horizontal Ecological Compensation Improve the Water Environment in Cross-Provincial Watersheds?," Sustainability, MDPI, vol. 14(16), pages 1-18, August.
    7. Xie, Tingting & Yuan, Ye, 2023. "Go with the wind: Spatial impacts of environmental regulations on economic activities in China," Journal of Development Economics, Elsevier, vol. 164(C).
    8. Cheng, Zhen & Ding, Chante Jian & Zhao, Kunqian, 2025. "Energy use rights trading and carbon emissions," Energy, Elsevier, vol. 315(C).
    9. Kisaka, Lily & Obi, Ajuruchukwu, 2015. "Farmers’ Preferences for Management Options as Payment for Environmental Services Scheme," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 18(3), pages 1-22, September.
    10. Kathleen McAfee, 2012. "The Contradictory Logic of Global Ecosystem Services Markets," Development and Change, International Institute of Social Studies, vol. 43(1), pages 105-131, January.
    11. Su, Xuewei & Wang, Kaike, 2025. "Carbon dioxide emission reduction effects of non-economic sector tournaments: Evidence from the national civilized city selection," Journal of Asian Economics, Elsevier, vol. 98(C).
    12. Li, Jianjun & Wu, Zhouyi & Feng, Lingbing, 2024. "How does environmental regulation affect corporate tax burdens? Evidence from China's environmental courts," Economic Modelling, Elsevier, vol. 130(C).
    13. Sophie Hatte & Jordan Loper & Thomas Taylor, 2023. "Connecting the Unconnected: Facebook Access and Female Political Representation in Sub-Saharan Africa," Post-Print hal-04310234, HAL.
    14. Zhong, Shen & Zhou, Zhicheng & Gao, Wei, 2025. "Impact of regional finance reform and innovation policies on green innovation in pilot cities: A quasi-natural experiment," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 888-911.
    15. Chen, Lifeng & Wang, Kaifeng, 2022. "The spatial spillover effect of low-carbon city pilot scheme on green efficiency in China's cities: Evidence from a quasi-natural experiment," Energy Economics, Elsevier, vol. 110(C).
    16. Isabelle Chort & Berk Öktem, 2024. "Agricultural shocks, coping policies and deforestation: Evidence from the coffee leaf rust epidemic in Mexico," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(3), pages 1020-1057, May.
    17. Hong-Zhen Zhang & Ling-Yun He & ZhongXiang Zhang, 2023. "Can Transverse Eco-compensation Mechanism Correct Resource Misallocation in Watershed Environmental Governance? A Cost-benefit Analysis of the Pilot Project of Xin’an River in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(4), pages 947-973, April.
    18. Ricardo Dahis & Christiane Szerman, 2023. "Decentralizing Development: Evidence from Government Splits," Monash Economics Working Papers 2023-18, Monash University, Department of Economics.
    19. Valentin Lindlacher & Gustav Pirich, 2024. "The Impact of China’s “Stadium Diplomacy” on Local Economic Development in Sub-Saharan Africa," CESifo Working Paper Series 10893, CESifo.
    20. Corbera, Esteve & Soberanis, Carmen González & Brown, Katrina, 2009. "Institutional dimensions of Payments for Ecosystem Services: An analysis of Mexico's carbon forestry programme," Ecological Economics, Elsevier, vol. 68(3), pages 743-761, January.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:82:y:2024:i:c:p:784-802. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.