Environmental regulations and carbon intensity: assessing the impact of command-and-control, market-incentive, and public-participation approaches

In the face of climate change, it is imperative to mitigate carbon emissions. This study investigated the impact of various environmental regulatory approaches, namely command-and-control, market-incentive, and public-participation regulations, on carbon intensity in China. Employing an innovative text analysis approach, we manually collected 4465 policy documents from 278 prefecture-level cities from 2011 to 2020 to quantify the stringency associated with each of the three regulatory approaches. The results reveal that public-participation in environmental regulations significantly reduces carbon intensity, whereas command-and-control and market-incentive regulations exhibit an inverted U-shaped relationship with carbon intensity. Heterogeneity analysis revealed that official characteristics, such as official age, origin, tenure, and education level, influence the relationship between environmental regulation and carbon intensity. Furthermore, spatial analysis indicates that command-and-control regulations in local regions have a U-shaped impact on carbon intensity in neighboring areas, whereas market-incentive and public-participation regulations do not show significant spatial spillover effects.