Co-benefits of regionally-differentiated carbon pricing policies across China
Creators: name: Zhang, Wen-Wen
name: Zhao, Bin
name: Jiang, Yue-Qi
name: Nie, Yong-You
name: Sharp, Basil
name: Gu, Yu
name: Xu, Shi-Chun
name: Zhu, Yun
name: Xing, Jia
name: Wang, Shu-Xiao
name: He, He
Publisher: name: Taylor & Francis
Year: 2022
Subjects: subject: Medicine
subject: Biotechnology
subject: Sociology
subject: FOS: Sociology
subject: Environmental Sciences not elsewhere classified
subject: Ecology
subject: FOS: Biological sciences
subject: Developmental Biology
subject: Science Policy

description: Regional carbon pricing policies focused on specific regions can be used to address local environmental problems. Using China as an example, we extend the spatial coverage of regionally designed policies to cover the entire nation and estimate the costs and benefits of these policies. Based on spatial correlation analysis, a multi-regional dynamic computable general equilibrium, and an extended response surface model with polynomial functions, we explore the co-benefits of regionally-differentiated carbon pricing policies in terms of their impacts on environmental justice and income (in)equality in China by 2060. One national and three regionally-differentiated carbon pricing policies are developed and explored based on 2005–2019 data, including spatial-cluster-level data on PM<sub>2.5</sub> concentrations and CO<sub>2</sub> emissions and data on average per capita GDP. Results show that the carbon pricing policies achieve China’s 2030 carbon mitigation targets and contribute to the 2060 targets of carbon neutrality. However, regionally-differentiated carbon pricing policies result in greater CO<sub>2</sub> and air pollutant reductions in their targeted regions compared with the national policy, as CO<sub>2</sub> emissions in these regions are priced at higher levels. Regionally-differentiated carbon pricing policy, based on the historical spatial cluster level of PM<sub>2.5</sub> concentrations, results in larger reductions in average PM<sub>2.5</sub> concentrations in 30 provinces in 2060 compared with other policy scenarios. This policy also promotes improvements in environmental quality and justice across China, which generates additional human health benefits. Furthermore, regional carbon pricing policy has the potential to significantly narrow the income gap between regions. Regionally-differentiated carbon pricing policy designed based on the historical spatial cluster level of PM<sub>2.5</sub> concentrations, compared with national policy, generates significant environmental and socio-economic co-benefits in the form of improved environmental justice and reduced income inequality.Regionally-differentiated carbon pricing policy also results in greater reductions in air pollution at a lower cost relative to a national policy and this will generate human health benefits.Results provide insights for other developing countries, especially those that have large disparities in regional economic development, regional income inequality, and air pollution problems. Regionally-differentiated carbon pricing policy designed based on the historical spatial cluster level of PM<sub>2.5</sub> concentrations, compared with national policy, generates significant environmental and socio-economic co-benefits in the form of improved environmental justice and reduced income inequality. Regionally-differentiated carbon pricing policy also results in greater reductions in air pollution at a lower cost relative to a national policy and this will generate human health benefits. Results provide insights for other developing countries, especially those that have large disparities in regional economic development, regional income inequality, and air pollution problems.