Two birds with one stone: Do poverty alleviation policies reduce carbon emissions in poverty-stricken counties?

Poverty eradication and climate mitigation are two central challenges facing developing countries in the process of rural development. Targeted poverty alleviation policy (TPAP) is aimed at ending extreme poverty and may deliver carbon emission reductions beyond its primary policy objective. Hence, we treat China's TPAP as a quasi-natural experiment and employ a Difference-in-Differences (DID) framework to examine the impact of poverty alleviation policies on carbon emissions in poverty-stricken counties. We further examine heterogeneity in the effects of poverty alleviation policies across income levels and targeted renewable energy policies. The empirical findings reveal that the TPAP significantly reduced carbon emissions in poverty-stricken counties relative to the control group, with an average reduction of 0.36%. However, some industry-specific policies, such as the Photovoltaic Poverty Alleviation program, led to an increase in carbon emissions in pilot counties, with a net effect of 0.102. Mechanism analysis demonstrates that industrial poverty alleviation promotes the development of non-agricultural industries. Additional heterogeneity analysis reveals that counties with lower baseline income experienced larger emission reductions, consistent with greater scope for energy structure adjustment and marginal substitution away from traditional energy sources. Overall, this study highlights the heterogeneous climate impacts of poverty alleviation policies and provides evidence-based insights for designing poverty reduction strategies. • Policy Context & Innovation . We examines the dual impacts of China's Targeted Poverty Alleviation Policy (TPAP) on poverty reduction and carbon emissions, addressing a critical gap in understanding how poverty alleviation policies intersect with climate goals in developing countries. Then we utilizes a quasi-natural experiment (Difference-in-Differences, DID) and DID-IV models to causally identify the effects of TPAP and photovoltaic poverty alleviation (PPAP) on emissions in 832 nationally designated poverty counties. • Key Empirical Findings 1 TPAP reduced carbon emissions by 0.36% in treated counties compared to controls, demonstrating that poverty alleviation can foster climate-friendly development through economic restructuring and clean energy adoption. 2 Policy Heterogeneity: Photovoltaic poverty alleviation (PPAP) surprisingly increased emissions by 0.102 units in pilot counties, driven by industrial agglomeration (e.g., high-energy-consuming photovoltaic component production) and non-agricultural sector growth. • Mechanisms We identify industrial structure transformation (shift from agriculture to energy-intensive industries) as a key pathway through which PPAP influences emissions, highlighting trade-offs between short-term economic gains and long-term sustainability. • Policy Implications This paper provides empirical support for the "double dividend" potential of poverty alleviation policies when paired with low-carbon strategies, offering lessons for countries aiming to achieve SDGs and climate targets simultaneously. • Data & Methodology We analyzes county-level data from over 2000 units (2010–2020), combining economic indicators (GDP, employment) with emissions estimates to ensure comprehensive causal inference. Addresses endogeneity through instrumental variables (IV) and placebo tests, enhancing the credibility of causal claims.