Can Environmental Centralization Enhance Emission Reductions?—Evidence from China’s Vertical Management Reform

Abstract

In the industrialization process, the difficulty in implementing environmental protection and enhancing the effect of environmental emission reduction are common problems to the developing countries, which are directly related to the quality of social development. This paper takes environmental centralization as the solution idea, takes the vertical management reform of environmental protection agencies implemented in China as the research object, and evaluates the environmental emission reduction effect and mechanism of action of centralized reform based on provincial environmental economic panel data using difference-in-differences model and intermediary model. The following conclusions are drawn: (1) The environmental centralization has significantly improved the provincial environmental emission reduction effect. After China’s vertical management reforms were implemented, per capita CO2 emissions decreased by 11.1%, and industrial source SO2 emissions fell by 35.7%. (2) By increasing investment in urban environmental infrastructure construction, the reform has raised the level of investment and regulation in environmental protection construction, which in turn has effectively improved the ability to reduce environmental emissions. (3) After the implementation of the reform, the emission reduction effects of the reform on per capita CO2 and industrial source SO2 are 10.1% and 14.2% higher in provinces with lower industrial output value compared to those with higher industrial output value. At the same time, the effect of reform in provinces with a strong degree of local government intervention was significantly lower than that in provinces with a weak degree of local government intervention. The emission reduction effects of the reform implementation are 10.2% (per capita CO2) and 30.5% (industrial source SO2) lower, respectively. Based on the above findings, this paper argues that environmental centralization is an effective measure to advance the improvement of environmental quality and efficiency. In addition, China’s reform experience has implications for other developing countries.