How does horizontal ecological compensation promote the coupled development of ecological environment protection and high-quality economy growth? Evidence from China's circular economy practices

The horizontal ecological compensation system is a concrete practical arrangement for the development of a circular economy and an important driving force for promoting the win-win situation of protection and development. We used the Yellow River Basin (Henan–Shandong section) horizontal ecological protection compensation pilot project as a quasi-natural experiment and employed the difference-in-differences method to empirically test the direct impact and mediating effects of horizontal ecological compensation on ecological and environmental protection and high-quality economic development. Results reveal that the implementation of the pilot policy for horizontal ecological compensation can promote the coupled development of ecological environment protection and high-quality economy growth, with a greater impact on ecological environment protection (0.0326) than on high-quality economic growth (0.0171). The three variables of building digital infrastructure, adjusting industrial structure, and improving land resource utilization have a significant positive mediating effect, while the mediating effect of improving water resource utilization has not yet become apparent. The effect of the pilot policy is mainly reflected in the upstream Henan section (0.0291) and has an insignificant negative impact on the downstream Shandong section (−0.0060). The conclusion provides theoretical support for exploring the path to green and high-quality development from the perspective of horizontal ecological compensation and offers an important practical approach for governments worldwide to develop a circular economy.