IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i5p4021-d1077064.html

Do Green Transfer Payments Contribute to Carbon Emission Reduction?

Author

Listed:
  • Mingxia Shi

    (Department of Public Finance, School of Economics, Beijing Technology and Business University, Beijing 100048, China)

  • Yibo Wang

    (Department of Public Finance, School of Economics, Beijing Technology and Business University, Beijing 100048, China)

Abstract

Reducing carbon emissions is the top priority for mankind for dealing with climate issues. The Chinese government selected 30 demonstration cities in three batches and provided these cities green special transfer payment funds for three years to build green projects and achieve energy saving and emission reduction (ESER). This policy provides a great opportunity to study whether green transfer payments play an important role in carbon reduction, which has received little attention before. Additionally, the central government set a series of fiscal performance assessment indicators, including the ESER effect, the completion of green projects, and long-term mechanism construction in order to evaluate the effectiveness of the use of funds. This article creatively conducts theoretical analysis from the perspective of performance assessment, takes ESER special transfer payment policy as a quasi-natural experiment, and uses the panel data of 284 cities in China from 2007 to 2017 and 2019 to verify the impact of the green transfer payment on carbon emissions in and after demonstration periods and its mechanisms with the staggered DID method and the new DID Multiplegt (DIDM) model. This article found that green transfer payments could reduce carbon emissions in demonstration cities, and this effect still existed even after policy withdrawal. Mechanism analysis further corroborates that the carbon-reduction effect of green transfer payments could be achieved by increasing the urban green area and improving energy efficiency. Heterogeneity analysis reveals that green transfers have a greater carbon reduction effect on demonstration cities, which receives more green transfer payment funds and has a higher level of financial development. Recommendations related to setting proper performance assessment ESER indicators include improving the management of ESER transfer funds and maximizing the cost–benefit ratio of fiscal funds, which are proposed according to the research conclusions.

Suggested Citation

  • Mingxia Shi & Yibo Wang, 2023. "Do Green Transfer Payments Contribute to Carbon Emission Reduction?," Sustainability, MDPI, vol. 15(5), pages 1-18, February.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:5:p:4021-:d:1077064
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/5/4021/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/5/4021/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ying Liu & Haiying Tang & Aamer Muhammad & Guoqin Huang, 2019. "Emission mechanism and reduction countermeasures of agricultural greenhouse gases – a review," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 9(2), pages 160-174, April.
    2. Pinglin He & Lu Chen & Xiaonan Zou & Shufeng Li & Huayu Shen & Jianhui Jian, 2019. "Energy Taxes, Carbon Dioxide Emissions, Energy Consumption and Economic Consequences: A Comparative Study of Nordic and G7 Countries," Sustainability, MDPI, vol. 11(21), pages 1-17, November.
    3. Clément de Chaisemartin & Xavier D'Haultfœuille, 2020. "Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects," American Economic Review, American Economic Association, vol. 110(9), pages 2964-2996, September.
    4. Rabia Shahid & Shijie Li & Jian Gao & Muhammad Ahsan Altaf & Atif Jahanger & Awais Shakoor, 2022. "The Carbon Emission Trading Policy of China: Does It Really Boost the Environmental Upgrading?," Energies, MDPI, vol. 15(16), pages 1-13, August.
    5. Doğan, Buhari & Chu, Lan Khanh & Ghosh, Sudeshna & Diep Truong, Huong Hoang & Balsalobre-Lorente, Daniel, 2022. "How environmental taxes and carbon emissions are related in the G7 economies?," Renewable Energy, Elsevier, vol. 187(C), pages 645-656.
    6. Adam Dominiak & Artur Rusowicz, 2022. "Change of Fossil-Fuel-Related Carbon Productivity Index of the Main Manufacturing Sectors in Poland," Energies, MDPI, vol. 15(19), pages 1-14, September.
    7. Md. Emran Hossain & Soumen Rej & Sourav Mohan Saha & Joshua Chukwuma Onwe & Nnamdi Nwulu & Festus Victor Bekun & Amjad Taha, 2022. "Can Energy Efficiency Help in Achieving Carbon-Neutrality Pledges? A Developing Country Perspective Using Dynamic ARDL Simulations," Sustainability, MDPI, vol. 14(13), pages 1-18, June.
    8. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    9. Yang Yang & Fan He & Junping Ji & Xin Liu, 2022. "Peaking Carbon Emissions in a Megacity through Economic Restructuring: A Case Study of Shenzhen, China," Energies, MDPI, vol. 15(19), pages 1-24, September.
    10. Yizhang He & Wei Song, 2022. "Analysis of the Impact of Carbon Trading Policies on Carbon Emission and Carbon Emission Efficiency," Sustainability, MDPI, vol. 14(16), pages 1-20, August.
    11. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    12. Dawei Huang & Gang Chen, 2022. "Can the Carbon Emissions Trading System Improve the Green Total Factor Productivity of the Pilot Cities?—A Spatial Difference-in-Differences Econometric Analysis in China," IJERPH, MDPI, vol. 19(3), pages 1-18, January.
    13. Younes Ahmadi & Akio Yamazaki & Philippe Kabore, 2022. "How Do Carbon Taxes Affect Emissions? Plant-Level Evidence from Manufacturing," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(2), pages 285-325, June.
    14. Viscusi, W Kip, 1983. "Frameworks for Analyzing the Effects of Risk and Environmental Regulations on Productivity," American Economic Review, American Economic Association, vol. 73(4), pages 793-801, September.
    15. Junming Zhu & Zhangming Ge & Jiali Wang & Xiao Li & Can Wang, 2022. "Evaluating regional carbon emissions trading in China: effects, pathways, co-benefits, spillovers, and prospects," Climate Policy, Taylor & Francis Journals, vol. 22(7), pages 918-934, August.
    16. Pinglin He & Qiao Ya & Long Chengfeng & Yuan Yuan & Chen Xiao, 2021. "Nexus between Environmental Tax, Economic Growth, Energy Consumption, and Carbon Dioxide Emissions: Evidence from China, Finland, and Malaysia Based on a Panel-ARDL Approach," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(3), pages 698-712, February.
    17. Runsen Zhang & Kakuya Matsushima & Kiyoshi Kobayashi, 2016. "Land Use, Transport, And Carbon Emissions: A Computable Urban Economic Model For Changzhou, China," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 28(3), pages 162-181, November.
    18. Lijie Wei & Zhibao Wang, 2022. "Differentiation Analysis on Carbon Emission Efficiency and Its Factors at Different Industrialization Stages: Evidence from Mainland China," IJERPH, MDPI, vol. 19(24), pages 1-14, December.
    19. 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.
    20. Chia-Nan Wang & Hong-Xuyen Thi Ho & Shih-Hsiung Luo & Tsung-Fu Lin, 2017. "An Integrated Approach to Evaluating and Selecting Green Logistics Providers for Sustainable Development," Sustainability, MDPI, vol. 9(2), pages 1-21, February.
    21. Xiaoqi Li & Dingfei Guo & Chao Feng, 2022. "The Carbon Emissions Trading Policy of China: Does It Really Promote the Enterprises’ Green Technology Innovations?," IJERPH, MDPI, vol. 19(21), pages 1-15, November.
    22. Assaad Ghazouani & Wanjun Xia & Mehdi Ben Jebli & Umer Shahzad, 2020. "Exploring the Role of Carbon Taxation Policies on CO 2 Emissions: Contextual Evidence from Tax Implementation and Non-Implementation European Countries," Sustainability, MDPI, vol. 12(20), pages 1-16, October.
    23. Athey, Susan & Imbens, Guido W., 2022. "Design-based analysis in Difference-In-Differences settings with staggered adoption," Journal of Econometrics, Elsevier, vol. 226(1), pages 62-79.
    24. Susheng Wang & Gang Chen & Dawei Huang, 2021. "Can the New Energy Vehicle Pilot Policy Achieve Green Innovation and Emission Reduction?—A Difference-in-Differences Analysis on the Evaluation of China’s New Energy Fiscal Subsidy Policy," Sustainability, MDPI, vol. 13(15), pages 1-21, August.
    25. Celil Aydin & Ömer Esen, 2018. "Reducing CO2 emissions in the EU member states: Do environmental taxes work?," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 61(13), pages 2396-2420, November.
    26. Xi Chen & Zhigang Chen, 2021. "Can Green Finance Development Reduce Carbon Emissions? Empirical Evidence from 30 Chinese Provinces," Sustainability, MDPI, vol. 13(21), pages 1-18, November.
    27. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    28. Yunchan Zhu & Shuo Han & Yimeng Zhang & Qi Huang, 2021. "Evaluating the Effect of Government Emission Reduction Policy: Evidence from Demonstration Cities in China," IJERPH, MDPI, vol. 18(9), pages 1-16, April.
    29. C. Haque & Ian Burton, 2005. "Adaptation Options Strategies for Hazards and Vulnerability Mitigation: An International Perspective," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 10(3), pages 335-353, July.
    30. Zhang, Yue-Jun, 2011. "The impact of financial development on carbon emissions: An empirical analysis in China," Energy Policy, Elsevier, vol. 39(4), pages 2197-2203, April.
    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. Feng Xiong & Yue Su & Jingyue Wu, 2024. "Research on the Performance Management of Carbon Reduction by Local Governments from a Game Perspective—The Case of the Zhejiang Power Restriction Incident," Sustainability, MDPI, vol. 16(6), pages 1-32, March.
    2. Jinzhi Tong & Youyou Yang & Chunhua Zheng & Minglan Zheng, 2024. "Do Fiscal Incentives Contribute to Pollution Control? Empirical Evidence from China," Sustainability, MDPI, vol. 16(22), pages 1-21, November.

    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. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
    2. Yu, Yantuan & Zhang, Ning, 2025. "Towards low-carbon development through integration of technology and finance: Quasi-experimental evidence from China," Research in International Business and Finance, Elsevier, vol. 80(C).
    3. Nyborg, Kjell G. & Woschitz, Jiri, 2025. "Robust difference-in-differences analysis when there is a term structure," Journal of Financial Economics, Elsevier, vol. 170(C).
    4. Jihee Ann & Myoung-jae Lee & Hyung Joon Chung, 2026. "Finding Effects of Sequential Housing Price Control Policies Using Various Forms of Difference in Differences," Evaluation Review, , vol. 50(3), pages 482-515, June.
    5. Peter Z. Schochet, 2021. "Statistical Power for Estimating Treatment Effects Using Difference-in-Differences and Comparative Interrupted Time Series Designs with Variation in Treatment Timing," Papers 2102.06770, arXiv.org, revised Oct 2021.
    6. Kayaoglu, Aysegul, 2022. "Do refugees cause crime?," World Development, Elsevier, vol. 154(C).
    7. Baker, Andrew C. & Larcker, David F. & Wang, Charles C.Y., 2022. "How much should we trust staggered difference-in-differences estimates?," Journal of Financial Economics, Elsevier, vol. 144(2), pages 370-395.
    8. Guanyu Lu & Hajime Katayama & Toshi H. Arimura & Shohei Morimura & Tomoichi Ishiwatari & Tetsu Iwasaki, 2026. "Does an Artificial Intelligence Energy Management System Reduce Electricity Consumption in Japan's Retail Sector?," RIEEM Discussion Paper Series 2502, Research Institute for Environmental Economics and Management, Waseda University.
    9. Rösner, Anja & Haucap, Justus & Heimeshoff, Ulrich, 2020. "The impact of consumer protection in the digital age: Evidence from the European Union," International Journal of Industrial Organization, Elsevier, vol. 73(C).
    10. Ulbing, Philipp, 2024. "The Zero Lower Bound on Household Deposit Rates: Not As Binding As We Thought," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302353, Verein für Socialpolitik / German Economic Association.
    11. Ashesh Rambachan & Jonathan Roth, 2026. "Design-Based Uncertainty for Quasi-Experiments," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 121(553), pages 477-491, January.
    12. Bhattacharjee, Arnab & Aravena, Claudia & Castillo, Natalia & Ehrlich, Marco & Taou, Nadia & Wagner, Thomas, 2022. "Agroforestry Programs in the Colombian Amazon: Selection, Treatment and Exposure Effects on Deforestation," National Institute of Economic and Social Research (NIESR) Discussion Papers 537, National Institute of Economic and Social Research.
    13. Coraggio, Luca & Pagano, Marco & Scognamiglio, Annalisa & Tåg, Joacim, 2025. "JAQ of all trades: Job mismatch, firm productivity and managerial quality," Journal of Financial Economics, Elsevier, vol. 164(C).
    14. Alexander Karaivanov & Dongwoo Kim & Shih En Lu & Hitoshi Shigeoka, 2022. "COVID-19 vaccination mandates and vaccine uptake," Nature Human Behaviour, Nature, vol. 6(12), pages 1615-1624, December.
    15. Sho Miyaji, 2024. "Instrumented Difference-in-Differences with Heterogeneous Treatment Effects," Papers 2405.12083, arXiv.org, revised Feb 2026.
    16. Dmitry Arkhangelsky & Guido Imbens, 2023. "Causal Models for Longitudinal and Panel Data: A Survey," Papers 2311.15458, arXiv.org, revised Jun 2024.
    17. Hiroko OKUDAIRA & Miho TAKIZAWA & Kenta YAMANOUCHI, 2022. "Employee Downsizing and Human Capital Accumulation," Discussion papers 22015, Research Institute of Economy, Trade and Industry (RIETI).
    18. Pfeifer, Gregor & Stockburger, Mirjam, 2023. "The morning after: Prescription-free access to emergency contraceptive pills," Journal of Health Economics, Elsevier, vol. 91(C).
    19. Arne Henningsen & Guy Low & David Wuepper & Tobias Dalhaus & Hugo Storm & Dagim Belay & Stefan Hirsch, 2024. "Estimating Causal Effects with Observational Data: Guidelines for Agricultural and Applied Economists," IFRO Working Paper 2024/03, University of Copenhagen, Department of Food and Resource Economics.
    20. Tamara Bischof & Boris Kaiser, 2021. "Who cares when you close down? The effects of primary care practice closures on patients," Health Economics, John Wiley & Sons, Ltd., vol. 30(9), pages 2004-2025, September.

    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:gam:jsusta:v:15:y:2023:i:5:p:4021-:d:1077064. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.