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Beyond case studies: A city-level quantitative analysis of payments for ecosystem services system and atmospheric environmental quality

Author

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  • Li, Jun
  • Fang, Lan

Abstract

China's economic growth model has posed challenges to quantifying ecosystem services, which are often overlooked in development planning. Payments for ecosystem services system (PESS) convert ecosystem value into economic value through various methods. A key question is whether PESS significantly enhances atmospheric environmental quality (AEQ), thereby improving air quality and reducing carbon emissions—critical steps toward mitigating climate change and promoting sustainable economic development. This study uses panel data from 280 Chinese prefecture-level cities (2004–2020) to assess the progress of PESS implementation. The econometric model evaluates the impact of PESS on AEQ and explores the underlying causal mechanisms. Empirical results show that PESS contributes to lower air pollution levels and enhanced atmospheric quality, particularly in regions with stronger fiscal decentralization and market-oriented institutions. Improvements in PESS implementation significantly reduce air pollution in China's eastern and central regions relative to the western region. Further investigation reveals that PESS enhances AEQ by promoting green innovation, facilitating industrial transformation, and influencing enterprise market entry behaviors. This study quantifies PESS implementation by incorporating all payment methods and examines its role in environmental governance.

Suggested Citation

  • Li, Jun & Fang, Lan, 2026. "Beyond case studies: A city-level quantitative analysis of payments for ecosystem services system and atmospheric environmental quality," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 21, pages 1-25.
    • Handle: RePEc:zbw:espost:338034
    DOI: 10.1016/j.cesys.2026.100417
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    Keywords

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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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