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Fiscal decentralization, environmental regulation, and pollution: a spatial investigation

Environmental Science and Pollution Research volume 27, pages 31946–31968 (2020)Cite this article

Abstract

To investigate the effects of regulation on environmental pollution under Chinese-style fiscal decentralization, this research analyzes annual data over the period 2003 to 2017 covering 30 provinces in China with the spatial economic model. The empirical results show significant spatial agglomeration effects on the emissions of wastewater, sulfur dioxide, and solid waste. Environmental regulation helps reduce discharge of wastewater and solid waste, but does not help reduce the emission of sulfur dioxide; because there is significantly positive externality in treating pollutants with high fluidity, cost is larger than revenue for local governments. The relationship between fiscal decentralization and pollutants shapes an inverted U-shaped curve. We finally offer some implications in accordance with our empirical finding, such as the intensity of environmental regulation should be suitable for economic development, different measures should be taken based on the fluidity of pollutants, and a new evaluation system should be established.

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Notes

  1. The values of these variables are from the China Statistical Yearbook and China Environmental Statistics Yearbook

  2. Tibet is not included, because of its incomplete data.

  3. The reason for the data range from 2003 to 2017 is that the statistical caliber of some indicators has changed since 2003 and the updated data in 2018 and 2019 are incomplete.

  4. The correlation matrices of SO2 and solid waste estimation equation are presented in Appendix Tables 17 and 18.

  5. The Moran’s I is calculated by the 0–1 weight matrix.

  6. We draw Moran’s I scatter plots from 2003 to 2017. Due to space limitation, only four maps are listed.

  7. In this part, the panel data models are used to examine whether there exist spatial effects and which spatial panel model is the most appropriate. Please see Econometric Analysis (Greene 2007, Prentice Hall press) for the details of the fixed panel effects models.

  8. The values of the Hausman tests in the estimations of wastewater, SO2, and solid waste are 12.1931, 13.4328, and 13.7143, respectively, and p < 0.01 in all estimations, indicating that the random effects model must be rejected and the spatial fixed model is more suitable. Thus, we only show the results of SDM with fixed effects.

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Acknowledgments

We thank the editor and anonymous referees for their helpful comments and suggestions. Xia Chen is grateful to the Project of Educational Commission of Hunan Province (18B129). All remaining errors are our own.

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  1. Changsha University of Science and Technology, Changsha, 410114, Hunan Province, China

    Xia Chen

  2. Shih Chien University, Kaohsiung, Taiwan

    Chun-Ping Chang

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  1. Xia Chen
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Correspondence to Chun-Ping Chang.

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Appendix

Appendix

Fig. 1
figure 1

Moran’s I scatter plot for wastewater

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Fig. 2
figure 2

Moran’s I scatter plot for sulfur dioxide emissions

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Fig. 3
figure 3

Moran’s I scatter plot for solid waste

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Fig. 4
figure 4

Moran’s I scatter plot for environmental regulation

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Table 17 Correlation coefficient matrix in SO2 estimation equation
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Table 18 Correlation coefficient matrix in Solid estimation equation
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Table 19 IS statistic for serial correlation
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Table 20 Estimation results of the SDM model (dependent variable: water)
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Table 21 Estimation results of the SDM model (dependent variable: SO2)
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Table 22 Estimation results of the SDM model (dependent variable: solid)
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Chen, X., Chang, CP. Fiscal decentralization, environmental regulation, and pollution: a spatial investigation. Environ Sci Pollut Res 27, 31946–31968 (2020). https://doi.org/10.1007/s11356-020-09522-5

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Keywords

  • Fiscal decentralization
  • Environmental regulation
  • Spatial economic model

JEL classifications

  • H77 Q53