Optimal Incentives for Eco-Environment-Oriented Development of Disused Mines Based on Differential Games: Ecological Rehabilitation Compensation or Carbon Quota Exchange

Ning Wang () and Deqing Tan ()
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Ning Wang: Southwest Jiaotong University
Deqing Tan: Southwest Jiaotong University

Computational Economics, 2025, vol. 66, issue 5, No 30, 4492 pages

Abstract: Abstract Ecological rehabilitation of disused mines can enhance terrestrial carbon sinks and sequestration, accelerating progress toward global carbon neutrality. A differential game model between government and firm players involved in such a rehabilitation project is developed in this study based on the Eco-environment-oriented Development (EOD) paradigm. The model examines decision-making dynamics under grandfathering and benchmarking rules. The effects of various government policies (e.g., ecological rehabilitation compensation, carbon quota exchange policies) on multiple factors (including investment levels in mine rehabilitation and greener industries, the size of ecological rehabilitation, the quality of greener industries, and the revenues of both sides) are investigated comprehensively. The findings reveal several insights, (1) To incentivize firms with high carbon emissions to participate in EOD projects for disused mines, the government must differentiate land appreciation income distribution ratios and tax rates for greener industries. (2) Extended concession periods could motivate firms to invest more in ecological rehabilitation and greener-industry development. (3) The benchmarking rule consistently yields optimal outcomes, regardless of whether the government implements an ecological rehabilitation compensation or a carbon quota exchange policy. (4) Setting a higher carbon quota exchange factor can lead to Pareto improvements in both environmental and economic outcomes for the ecological rehabilitation compensation policy.

Keywords: Carbon trading; Disused mines; Eco-environment-oriented development; Ecological rehabilitation; Greener industry (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10614-025-10846-y

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