The impact of carbon emissions trading on biodiversity: Evidence from China

This paper exploits China’s carbon emissions trading (CET) pilot policy as a quasi-natural experiment to examine its effects on regional biodiversity. Using city-level data from 2010 to 2020 and a staggered difference-in-differences approach, we find that the CET policy significantly improves biodiversity outcomes. Mechanism analysis indicates that CET enhances biodiversity by promoting green finance, increasing public environmental awareness, and generating synergistic effects of pollution reduction and carbon abatement. The positive effects are more pronounced in non-resource-based cities, central cities, and cities with more advanced industrial structures. Moreover, the biodiversity-enhancing effect of CET is strengthened when carbon market design is more comprehensive and emission reduction constraints are more stringent. Overall, this study extends the research perspective on the determinants of biodiversity and enriches the literature on the environmental effects of CET, providing new empirical evidence to support ecological civilization construction and the promotion of harmonious coexistence between humans and nature.