Can Carbon Offset Policies Be Effectively Implemented in All Regions of China? An Evolutionary Game Analysis of Decision-Making Dynamics of Local Governments

Qiao Peng, Wanting Xu and Yao Xiao
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Qiao Peng: School of Statistics, Tianjin University of Finance and Economics, Tianjin 300222, China
Wanting Xu: Center for Innovation and Development Studies, Beijing Normal University, Zhuhai 519085, China
Yao Xiao: Center for Innovation and Development Studies, Beijing Normal University, Zhuhai 519085, China

Sustainability, 2022, vol. 14, issue 3, 1-18

Abstract: Carbon offset policies are an effective means of coordinating regional ecological conservation, promoting environmentally friendly economic development, and achieving carbon neutrality; they are being gradually implemented in all regions of China. This study analyzed the decision-making behavior of local governments before and after the introduction of incentive and restraint mechanisms. To this end, it constructed a dynamic evolutionary game model for local governments with a carbon surplus and those with a carbon deficit. The results indicate that it is difficult to implement carbon offset policies between regions without the intervention of the central government. They also show that the effects of different incentive and restraint mechanisms vary significantly. Specifically, a mechanism that targets both carbon surplus and carbon deficit local governments and a unilateral mechanism that targets only carbon deficit local governments are shown to be effective. Finally, the results indicate that the implementation costs of incentive and restraint mechanisms differ, and their implementation intensity affects the time required for carbon offset policies to be rolled out in all regions. Based on these findings, we propose policy recommendations for promoting the implementation of carbon offset policies in all regions of China and alleviating carbon emission pressure.

Keywords: carbon offset; local government; evolutionary game theory; incentives and restraints (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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