The spatial impact of carbon trading on harmonious economic and environmental development: evidence from China

This research explores the endogenous influence of carbon trading on economic development, the ecological environment, and the coordinated development of both using panel data from 30 Chinese provinces and cities except Tibet from 2007 to 2017. First, we provide environmental production elements to build an economic model based on the endogenous growth model, and then we employ three-dimensional graphics to conduct theoretical derivation in a more accessible and tangible manner. Secondly, we build a comprehensive index of China's coordinated economic and environmental growth in the context of carbon trading and use the coupled coordination model to determine the coordinated coupling degree of each location. Thirdly, the S-DID model is built to investigate the local and geographical implications of carbon trading. The findings demonstrate that the policy has a local impact that is notably favorable on the economic and environmental levels of each Chinese province and the coordinated growth between them. The degree of environmental optimization and the degree of coordinated development between the economy and the environment are two additional areas where the carbon trading mechanism has a strong positive geographical spillover impact. This study adds to the body of knowledge on China's carbon trading system and advances the endogenous growth hypothesis.