Limited Level but Non‐Efficiency: The Impact of Climate Mitigation on Sustainable Development in the Yangtze River Delta Region of China

ABSTRACT Trading off development levels and efficiency are key to avoiding the trap of “more development, more waste”, and align with the concepts of sustainable development. However, when assessing the linkages between climate mitigation and sustainable development, efficiency impacts are often overlooked. Taking the Shanghai emissions trading market (ETS) pilot in the Yangtze River Delta region as an example, we first integrated multiple data sources and assessed SDL and SDE at county level employing entropy weighting and SBM‐DEA. Subsequently, using synthetic control method, we conducted a detailed investigation into the impact of the Shanghai ETS on county SDL and SDE from 2000 to 2023. We found that during the sample period, SDL gradually increased while SDE declined. The Shanghai ETS shock produced limited level but inefficient impacts. This manifested as increased SDL in pilot regions (0.036 on average), with gains in the economic‐social dimensions of SDL, while the environmental dimension was less affected. SDE in pilot regions did not have significant changes. These findings hold across multiple alternative methods. Compared to relying on national (or sub‐national) data and focusing solely on SDL, we provide detailed county‐level empirical evidence linking climate mitigation and sustainable development by using an SDL–SDE comprehensive framework. Here, strengthening environmental impact and improving development efficiency are priorities for policy optimization.