China’s supply chain digitalization reduces urban pollutants and carbon dioxide emissions locally

The digital transformation of supply chains presents a promising option to reduce urban pollutants and carbon dioxide emissions. Here, we utilize China’s Supply Chain Innovation and Application Pilot Policy as a quasi-natural experiment. We assess its impact on urban pollutants and carbon dioxide emissions. We compile a city-year panel dataset by merging high-resolution emissions inventories with socioeconomic data across 279 prefecture-level cities from 2005 to 2021. We found that supply chain digitalization reduces urban pollutants and carbon dioxide emissions by 7.1%-9.9% locally; however, these emissions increase by 4.4% in neighboring jurisdictions. Medium-small-sized and non-industrial cities benefit the most from supply chain digitalization, while megacities and entrenched industrial hubs see modest benefits. Our findings show that while digital supply chain innovations can advance urban sustainability, integrated regional instruments, such as linked city-level emissions trading schemes and shared digital monitoring, reporting, and verification infrastructure, are needed to reduce emissions spillover. Supply chain digitalization reduces urban air pollutants and carbon dioxide emissions by up to 9 percent locally but increases them by 4 percent in nearby areas, according to an analysis that uses a quasi-natural experiment and a difference-in-differences method