Win-win of carbon and pollution co-mitigation in origin and destination regions: evidence from industrial enterprise relocation in China

Abstract

The production of industrial enterprises is accompanied by pollution and carbon emissions, while the environmental consequences of their relocation remain unclear. Using the Annual Surveys of Industrial Firms from 2003 to 2015, we identify the enterprises that relocated and construct theoretical and two-way fixed effect models to analyze the effects of industrial enterprise relocation (IER). We find that IER significantly improved the performance of carbon mitigation and pollution reduction in both origin and destination cities. The positive outcomes stem from technological innovation and economic structure adjustment triggered by relocation. Moreover, the benefits are more pronounced in western regions and in areas with lower industrial development. Resource endowment weakens the environmental improvement in destination cities and enhances it in origin cities, validating the effectiveness of industrial gradient transfer in improving the environment. Stricter environmental regulations are one of the reasons driving IER. This research provides new insights into how industrial spatial reallocation can contribute to win-win outcomes in carbon mitigation and air pollution reduction, advancing the goal of low-carbon and sustainable regional development.

Keywords

Industrial enterprise relocation / carbon emissions / air pollution / regional gradient transference

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