Evaluating the Well-Being Effects of a Carbon Emissions Trading System: Evidence from 273 Chinese Cities

Using panel data from 273 prefecture-level cities in China from 2008 to 2020, this study employs the Entropy Weight Method -Technique for Order Performance by Similarity to Ideal Solution (EWM-TOPSIS) model to measure people’s well-being and applies a staggered Difference-in-Differences (DID) model to evaluate the impact of the carbon emissions trading system on people’s well-being. The findings indicate that the carbon emissions trading system generally improves people’s well-being. The mechanism analysis reveals that the primary channel through which the carbon emissions trading system improves people’s well-being is the stimulation of green technology innovation. Additionally, fiscal expenditure decentralization negatively moderates the carbon emissions trading system’s impact on people’s well-being, whereas marketization degree does not exert a moderating effect. Further research reveals that fiscal expenditure decentralization exhibits a double threshold effect, while the degree of marketization displays a single threshold effect. The carbon emissions trading system exhibits heterogeneous impacts on people’s well-being. From a regional perspective, the carbon emissions trading system enhances people’s well-being in non-Yangtze River Economic Belt (YREB) regions, whereas it dampens people’s well-being in YREB cities. Regarding resource endowment, the carbon emissions trading system positively influences people’s well-being in non-resource-based cities, but its impact remains statistically insignificant in resource-based cities.