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The spatial effect of fiscal decentralization on haze pollution in China

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Abstract

The fiscal decentralization system under China’s political centralization affects local economic and environmental policies, and thus has an important impact on environmental quality. This paper uses the panel data of 285 cities in China from 2003 to 2018 and the spatial Durbin model to empirically analyze the impact of fiscal decentralization on haze pollution and its mechanism. The results show that the increase in fiscal decentralization will significantly aggravate the haze pollution in and around the region, and this conclusion is still valid after a series of robustness tests. Moreover, the impact of fiscal decentralization on haze pollution has significant heterogeneity in the size and region of the city, and the sample period. In addition, mechanism analyses show that fiscal decentralization has aggravated haze pollution by increasing infrastructure construction, reducing environmental regulations, and intensifying market segmentation. Further analyses reveal that, on the one hand, local governments have the ability to control haze pollution in their own regions according to their own wishes and interests, but on the other hand, adjustments to environmental policies in surrounding areas will significantly inhibit the control of environmental policies in the region, thereby making local governments haze pollution has not been effectively controlled. This is essentially a “Race to bottom” phenomenon among local governments in environmental policies.

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Notes

  1. Bijie, Tongren, Chaohu, Sansha, and Haidong were not included in the analysis due to administrative division adjustment, and Lhasa was not included in the analysis due to incomplete data.

  2. Both the null hypothesis H0 : θ = 0 and H0 : θ + δβ = 0 are expressed relative to the basic form of the spatial Durbin model. The specific model is as follows:

    $$ \kern2.5em Y=\rho WY+\alpha {l}_N+ X\beta + WX\theta +\varepsilon $$
    $$ \kern2.5em \upvarepsilon \sim \mathrm{N}\left(0,{\sigma}^2{I}_n\right) $$

    When θ = 0, the spatial Durbin model is simplified to the spatial lag model.

    When θ + δβ = 0, the spatial Durbin model is simplified to a spatial error model.

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Funding

This paper was supported by the National Natural Foundation of China (71803087).

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Authors and Affiliations

  1. China Institute of Manufacturing Development, Nanjing University of Information Science & Technology, Nanjing, 210044, China

    Zhonghua Cheng & Yeman Zhu

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  1. Zhonghua Cheng
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  2. Yeman Zhu
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Zhonghua Cheng: conceptualization; formal analysis; methodology; writing-original draft.

Yeman Zhu: formal analysis; writing-review and editing; software.

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Correspondence to Zhonghua Cheng.

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Cheng, Z., Zhu, Y. The spatial effect of fiscal decentralization on haze pollution in China. Environ Sci Pollut Res 28, 49774–49787 (2021). https://doi.org/10.1007/s11356-021-14176-y

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