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Assessing the mental health implications of carbon trading policies: evidence from urban China

Author

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  • Pengpei Liu

    (Southern University of Science and Technology)

  • Xuelei Yang

    (Northeast Forestry University)

  • Xingrong Liu

    (Lanzhou University)

Abstract

Despite robust evidence demonstrating its efficacy in reducing carbon emissions, the impact of carbon emission trading (CET) policies on mental health remains largely unexplored. Based on a difference-in-differences methodology, this study uses the four waves of 2011, 2013, 2015, and 2018 of the China Health and Retirement Longitudinal Study (CHARLS) dataset to ascertain the causal effect of introducing pilot CET schemes on depression among middle-aged and elderly individuals in urban China. The findings reveal a significant increase in the risk of depression following policy implementation, with varying effects observed across demographic groups and regions, especially among older adults and relatively higher socioeconomic status. Furthermore, a mechanistic analysis suggests that immediate word recall, a measure of memory deficits, serves as a mediator in the relationship between policy implementation and depression, while stressful life events exacerbate the policy’s impact. The study concludes with several recommendations aimed at mitigating the unintended mental health consequences associated with the implementation of similar policies.

Suggested Citation

  • Pengpei Liu & Xuelei Yang & Xingrong Liu, 2025. "Assessing the mental health implications of carbon trading policies: evidence from urban China," Palgrave Communications, Palgrave Macmillan, vol. 12(1), pages 1-13, December.
    • Handle: RePEc:pal:palcom:v:12:y:2025:i:1:d:10.1057_s41599-025-05171-6
    DOI: 10.1057/s41599-025-05171-6
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