The Impact of Sustainable Regional Development Policy on Carbon Emissions: Evidence from Yangtze River Delta of China

Urban agglomerations are becoming an increasingly important factor in advancing regional development and reshaping a new pattern of regional competition. However, few studies are focused on the impact of expanding urban agglomerations on reducing carbon emissions and its possible mechanism. Based on 285 city-level panel data from 2006 to 2017, this paper uses a staggered Difference-in-Differences (DID) model to explore the reduction effect and its possible mechanism of sustainable regional development policy, characterized by urban agglomeration expansion policy in the Yangtze River Delta, on carbon emissions with policy shocks in 2010 and 2013. The results are as follows: (1) The urban agglomeration expansion policy shows a significant marginal contribution to the reduction of carbon emissions, especially for the later joined (new) cities, and the reduction effect is particularly significant in the first and third years after the expansion, indicating that there are significant short-term and long-term reduction effects of the expansion policy. (2) The heterogeneities of reduction effect among three provinces are significant. Zhejiang Province enjoys the largest proportion carbon emission reduction effect, followed by Anhui and Jiangsu provinces. To be specific, urban agglomeration expansion in Zhejiang Province reduced carbon emissions and carbon emissions intensity in the overall, incumbent cities and new cities, while it only increased the total carbon emissions of the incumbent cities in Jiangsu province. (3) The heterogeneities of reduction effect brought by 2010 and 2013 are also significant. The urban agglomeration expansion policy in 2010 reduced carbon emissions on the whole cities and the incumbent cities with later joined cities excluded, while it had a significant reduction effect on the total, incumbent cities, and the new cities in 2013. (4) There are two possible mechanisms of this reduction effect. One is the strengthening of economic ties and enhanced environmental synergy between governments, called the market integration mechanism, which only has a significant effect on carbon emission reduction in the incumbent cities. Another is through the upgrade of the structure of regional industries, which has a significant effect in both the incumbent and new cities. These findings suggest that when formulating urban agglomerations polices, governments must take into account the carbon emissions effect, and advance the upgrading of industrial structure in the urban agglomeration.