How do carbon trading platform participation and government subsidy motivate blue carbon trading of marine ranching? A study based on evolutionary equilibrium strategy method

Abstract

Amidst the efforts to develop a low-carbon economy, blue carbon sequestration provides new approaches and opportunities for economic growth. Not only will blue carbon sequestration trading increase the value added for marine ranching firms, but it will also be conducive to conserving the ocean ecology and safeguarding sustainable marine development. From the supply chain perspective, this paper develops an evolutionary game model with three players: the marine ranching firm, the carbon trading platform, and the government. The model is then employed to examine the impacts of the carbon trading price, the government subsidy, and consumers’ willingness to pay for blue carbon on the participants’ choice of strategy in a blue carbon trading regime. The MATLABR2016b application is employed to perform numerical simulations and analyses. The following conclusions can be drawn from the research findings: The strategies chosen by the marine ranching firm, the carbon trading platform, and the government affect each other. Both the marine ranching firm and the carbon trading platform are affected by the choices of the other two players, while the government’s choice of strategy is only affected by the platform’s strategy. Reductions in carbon emitted by the marine ranching’s aquaculture activity, increases in the blue carbon trading price, improvements in consumers’ willingness to pay for blue carbon, and deceases in transaction costs to the marine ranching firm and the trading platform all motivate the marine ranching firm and the platform to choose a cooperative strategy. Government subsidies can encourage the marine ranching firm to improve its carbon sequestration capacity and incentivize the platform to cooperate. However, when the subsidy to the platform is too high, the system does not have an evolutionarily stable strategy. If the marine ranching firm reasonably uses the government subsidy to sequester carbon and improve the environmental friendliness of its products, the government’s willingness to subsidize will increase. Our findings will contribute to the theory on managing marine ranching blue carbon sequestration. This paper can provide evidence to improve the utilization of blue carbon sequestration, the development of the blue carbon sequestration trading market, and the design of the government subsidy mechanism.