Low carbon city pilot policy achieves green mountains and gold mountains in China

Striking a balance between green mountains and mountains of gold is a central issue of widespread concern. This paper constructs a simple theoretical model to propose the logical conditions under which a win–win outcome between environmental protection and economic development can be achieved, and uses the low-carbon pilot city policy as a quasi-natural experiment, tested with a difference-in-differences approach. The results show that the low-carbon pilot city policy significantly improves urban per capita GDP and air quality. Mechanism analysis indicates that advances in emission-reduction technologies, industrial restructuring, and fiscal transfers are key pathways through which low-carbon pilot cities realize synergy between environmental protection and economic development. The policy effects are heterogeneous, largely determined by the opportunity costs of ecological protection, the transformation costs of development patterns, and the compensatory effects of ecological fiscal transfers. In sum, the analysis in this paper helps cities identify the intersection between environmental protection and economic development and explore pathways toward green, high-quality growth.