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The environment is the basis for the living and development of the human, and eco-innovation is the key driver of new economic growth. However, for some underdeveloped regions in China, it is still a challenge for the local government to get a balance between the goals of economic and environment. The paper selects the pulp and paper industry, which creates tremendous pollution to the environment and is closely related to the daily life. According to the particular characteristics of pulp and paper industry in Sichuan Province, the industry of pulp and paper of bamboo is redesigned to improve the local ecosystem, while increasing the income of local farmers. From the perspective of game theory, the relationships between the government, the enterprise, and the farmers are analyzed. The result shows that government increases the subsidy and penalty to the enterprise, which can increase the investment in eco-innovation, enhancing the competitiveness of enterprises and raising the income of farmers. Moreover, it can also improve the ecologically fragile areas by the utilization of bamboo park. In addition, in this paper, a system dynamics model is proposed to explore the impact of different policies on the environment. The results show that increasing the subsidy is a more efficient way to protect the environment, and is one of the important drivers to eco-innovation in some underdeveloped regions in China.

An Analysis of the Eco-Innovation Mechanism and Policies in the Pulp and Paper Industry Based on Coupled Game Theory and System Dynamics