Carbon markets promote environmental justice in China

Abstract

Environmental markets may influence environmental justice by disproportionately affecting economically disadvantaged or socially vulnerable communities. We investigate the impact of China’s Certified Emission Reduction (CCER) program on air pollution in disadvantaged and non-disadvantaged counties from 2000 to 2019. We find that the CCER program effectively reduces carbon dioxide (CO2) emissions and fine particulate matter (PM2.5) concentrations. We further examine the distributional impacts and find that the program promotes environmental justice by reducing disparities in air quality between economically disadvantaged and more affluent counties, as well as between ethnic minority and majority (Han) counties. In particular, we observe greater improvements in air quality and more equitable outcomes from renewable energy projects. Our findings offer policy-relevant insights for designing environmental markets that advance sustainable development and social equity in China and other regions.