Evolutionary game analysis and efficiency test of water pollution control driven by emission trading: Evidence from Zhejiang Province, China

Presently, China is actively endorsing the pilot initiative for the remunerative use and trading of emission. By examining the operation and efficacy of emission trading in the context of water pollution control, one can contribute to the advancement and refinement of this system, thereby facilitating the attainment of regional pollution reduction, carbon reduction, and high-quality development objectives. In pursuit of this objective, we develop a theoretical framework for the local government and sewage enterprises evolutionary game of water pollution control, which includes two scenarios without considering and considering emission trading for studying the influencing factors and evolution trajectory of the game subject's. Through the stability analysis, the game interactive mechanism, the difference in evolutionary trajectory, and the response logic of the decision-making body in different situations become clearly visible. Further, the system sensitivity factors are analyzed by solving the partial derivation of the area formula of the phase diagram. And the efficacy of the sewage trading system in water pollution control in Zhejiang Province is empirically examined at the micro level by adopting the trading data of the first pilot area of sewage trading in the country and the case of pollution control in Jinhua City. The research reveals the following conclusions: Under specific circumstances, emission trading can incentivize businesses and even industries to enhance pollution control measures as a whole. The performance and degree of sensitivity factors vary across gaming systems, with public reputation evaluation and central government inspection serving as positive constraints. The initial cost of paid use of emission permits, as a fixed cost component for firms to address pollution, has no effect on the enterprises' behavioral actions to satisfy emission regulations. The findings can furnish local governments with a theoretical foundation and decision support in order to optimize regulatory strategies and enhance pollution control policies.