Share green growth: Regional evaluation of green output performance in China

Abstract

Reducing carbon emissions is much more difficult than reducing other pollutants through current technology. Promoting the efficiency of energy use and developing clean energy are the only two economically feasible approaches for the future. However, without low-carbon technology, pursuing green growth could negatively affect production activities. In this study, we develop a directional distance function (DDF) model based on the slacks of the output-oriented slack-based measure. Along an endogenously determined directional vector, we can calculate the efficiency scores by reducing the undesirable output and expanding desirable output simultaneously. The global Malmquist index is integrated with the DDF model to capture the dynamic change of output performance. Based on the output performance of green growth, we use counterfactual thinking to evaluate GDP losses caused by limiting carbon emissions. The empirical study using the provincial data of China shows that technological progress, not efficiency change, pushes green growth in China. We also find that pursuing green growth in China would lead to a GDP loss of 7%–8%. Furthermore, a sub-regional analysis shows that the eastern regions were almost immune to the strict carbon-control policy, while the midwestern regions were affected severely. To alleviate the GDP loss, we offer suggestion on setting up a green growth sharing mechanism among regions.