Evaluation of Environmental Governance Effects and Effectiveness of Carbon Emission Trading System Based on RDD-DID Model

A Case Study of Typical Pilot Cities in the First Batch of Carbon Emission Trading Markets

Abstract

This paper takes China's first batch of carbon emission trading pilot cities (Shanghai, Beijing, Tianjin, Chongqing) as the research objects. Based on the carbon emission and nitrogen oxide emission data from 2011 to 2023, it comprehensively uses the Regression Discontinuity Design (RDD) and the Generalized Difference-in-Differences Model (RDD-DID) to systematically evaluate the environmental governance effects and pollutant emission reduction effects of the carbon emission trading system. The study finds that after the implementation of the "Guiding Opinions on Further Promoting the Pilot Work of Paid Use and Trading of Emission Rights" in 2015 in Shanghai, the coefficient of the policy treatment term is significantly negative (estimated value -0.572, p<0.01), indicating that the carbon emission trading system has significantly reduced nitrogen oxide emissions, and control variables such as economic development level (GDP), population density, and foreign direct investment (FDI) have a positive synergistic effect on emission reduction. However, due to the relatively mature carbon trading system in Beijing, the policy incentive effect is not significant. The RDD-DID model extended to the four municipalities directly under the Central Government shows that the overall emission reduction effect of the policy is significant (YPost coefficient -4.45, p<0.01), but the interaction term coefficient between the activity of carbon emission trading and the policy is significantly positive (0.238, p<0.01), revealing that resource crowding, side effects of technical substitution, and market mechanism fragmentation may weaken the synergistic governance effect of multiple pollutants. The study suggests integrating the market rules of carbon emission rights and emission permits, strengthening the local environmental assessment mechanism, and optimizing the differentiated pricing strategy to improve the synergistic efficiency of environmental policies and provide theoretical support for the construction of a national unified environmental rights market.