Cost-sharing and horizontal compensation scheme of regional sulfur dioxide treatment: Evidence from China

Establishing a reasonable cost-sharing and compensation mechanism for air pollution control is a prerequisite for realizing inter-regional cooperative treatment. Taking inter-provincial sulfur dioxide (SO₂) emissions in China from 2005 to 2019 as the research object, this paper proposes a data-driven approach to establish a cost-sharing index system of regional SO₂ treatment in four dimensions and construct a cost-sharing and compensation scheme using the entropy-TOPSIS method. The results revealed that there are significant spatial and temporal differences in the treatment cost of SO₂ emission, and the total SO₂ treatment costs at the national level increased first and then decreased during the study period, meanwhile, the regional SO₂ treatment costs are much higher in the less economically developed regions such as the central and western regions than in economically developed eastern coastal regions. The design of the cost-sharing and compensation mechanism of SO₂ treatment should consider the regional differences in abatement capacity, abatement potential, abatement responsibility, and development demands. The economically developed regions should share higher treatment costs according to their historical cumulative abatement responsibilities, and provide economic compensation and technical support to the less economically developed regions. Specifically, the marginal abatement cost in the more economically developed eastern region is much higher than that in the less economically developed central and western areas due to their large abatement responsibility and strong reduction capacity but insufficient abatement potential, so the eastern regions can transfer part of their abatement responsibility to the central and western regions using economic compensation. Reasonable cost sharing and horizontal compensation can help promote regional cooperation and synergistic management in air pollution abatement. Finally, corresponding policy recommendations are given to provide a decision basis for cross-regional cooperation in air pollution control.