A Two-Stage Network DEA-Based Carbon Emission Rights Allocation in the Yangtze River Delta: Incorporating Inter-City CO2 Spillover Effects

This study proposes a novel framework for allocating CO2 emission rights within the Yangtze River Delta (YRD) urban agglomeration, tackling the inter-city CO2 transmission dynamics frequently neglected in conventional allocation models. Current emission allocation methods fail to capture the spatial spillover effects of CO2 emissions driven by atmospheric transport, resulting in potential inequities. Leveraging the WRF model to simulate carbon emissions across 27 cities, we develop a two-stage network Data Envelopment Analysis (DEA) model that integrates both emission generation and governance capacities. Our findings highlight significant inter-city CO2 transmission, with the wind direction and speed playing a pivotal role in emissions spread. In contrast to traditional models, our approach considers the regional interdependence of emissions, enhancing both fairness and efficiency in the allocation process. The results indicate that cities with stronger governance systems, including green technology investments and effective air quality management, are rewarded with higher carbon allowances. Moreover, our model demonstrates that policies prioritizing environmental governance over raw emission levels can foster long-term sustainability. This work provides a comprehensive methodology for achieving a balanced allocation of emission rights that integrates economic growth, environmental management, and equity considerations within complex urban agglomerations.