Three-dimensional heterogeneity analysis of climate aid's carbon reduction effect

Abstract

Exploring the effectiveness of climate aid is crucial to distribute funds scientifically and maximize its impact. A body of related literature has estimated the impact of international climate aid on carbon emissions. However, these studies did not adequately consider the multi-dimensional heterogeneity of climate aid's carbon reduction effect. Based on national panel data of 77 recipients from 1980 to 2016, this study is the first to analyze the heterogeneous characteristics of climate aid's carbon reduction effect from three dimensions of emission level, aid level, and income level. Results show that, totally speaking, climate aid has a significant negative effect on carbon emissions in recipient countries. From the perspective of heterogeneity, climate aid has significant reduction effects for the recipient countries with middle-emission level. Meanwhile, climate aid also has significant negative effects on carbon emissions in recipient countries with high-aid level, i.e., only when the amount of aid reaches relatively high levels can climate aid play its role in reducing emissions. Furthermore, climate aid only conducts a significant reduction effect for middle-income recipients. This study recommends proposing a new collective quantified financial target, pursuing low-carbon economic development, optimizing the aid distribution, and enhancing capacity building to maximize the effectiveness of climate aid.

Keywords: Bilateral aid for mitigation; Carbon emissions; Climate change; Quantile regression; Recipient countries.