Evaluating the impact of carbon emission trading on urban ecological efficiency in an emerging economy

The carbon emission trading scheme (ETS) serves as a cornerstone for achieving dual carbon objectives helping to decouple economic growth from environmental pollution. While the evaluation scope of ETS has expanded, there remains a gap in understanding its impact on urban ecological efficiency. This research explores the relationship between the ETS and urban ecological efficiency (UEE) in China, using a sample of 31 prefecture-level cities from 2006 to 2019. The novelty of this paper lies in its application of by-production technology, which differentiates inputs based on contribution to pollution, incorporates urban green area as an abatement output, and evaluates UEE from both economic and environmental perspectives. In this study, synthetic control method and difference-in-differences method were used to analyze the effects of ETS on UEE. The results indicate notable regional differences and relatively high implementation effects in the eastern region. Beijing and Guangzhou stand out in advancing UEE among the pilot cities. This study advances productivity analysis by integrating abatement output into the by-production approach, offering policy insights to promote high-quality growth aligned with carbon neutrality goals.