Does Industrial Waste Reuse Bring Dual Benefits of Economic Growth and Carbon Emission Reduction? Evidence of Incorporating the Indirect Effect of Economic Growth in China

This article employs panel data from 28 Chinese provinces over the period 1999–2011 to analyze the effects of industrial waste reuse (IWR) on carbon emissions. The extant studies mainly consider the direct effects that individual firms garner from IWR while ignoring other possible indirect effects in a more macroscopic context. Considering this research void, this article examines the potential indirect effects of IWR on carbon emissions through economic growth as the mediator. The results show that the direct effect of IWR on carbon emissions is negative and significant, but the positive indirect effect, through economic growth, is present. From the perspective of total effect, IWR is beneficial for both economic growth and carbon emission reduction (CER). However, the benefits for CER are mitigated when the economy is less developed, because the emission reduction could be compromised through the indirect effect of economic growth. Nevertheless, the indirect effect on compensating carbon emission is decreased with an increase in the economic growth. When the growth reaches a higher level, the indirect effect of IWR will alter to contribute to CER. The turning point in China is around 7,000 to 9,000 renminbi gross domestic product (GDP) per capita in 1999 constant price.