Beyond technology: reducing environmental information asymmetry by centralizing environmental monitoring

Abstract

Due to an information gap between the central government and local governments, the principal-agent problem arises when power is devolved to the bureaucracy and local governments. We look at how China’s decision to consolidate its network of air quality monitoring stations has affected the ability of local governments to influence air quality readings. After the switch to centralized monitoring, an increase in PM2.5 and PM10 levels was detected. No increase in aerosol optical depth (AOD) from satellites or emission from nearby polluting firms corroborates the hypothesis that this reported rise in PM2.5 and PM10 is not due to an increase in air pollution. These findings highlight the potential for data manipulation by local governments and the benefits of data centralization in reducing information asymmetry. According to our research results, we suggest that the government should establish a unified, centralized environmental quality monitoring system to reduce information asymmetry and data falsification.