Effect of fiscal decentralization and dual environmental regulation on green poverty reduction: The case of China

Abstract

Given the increasing global emphasis on sustainable development, green poverty reduction, which integrates green development and poverty eradication, has become an important foundation and an inevitable choice for future resource conservation and long-term development. This study thus calculates the green poverty reduction index based on panel data of Chinese prefecture-level cities and constructs a panel fixed-effects model and a spatial Durbin model to empirically test the effects of fiscal decentralization and dual environmental regulations on green poverty reduction. We found that fiscal decentralization significantly inhibits green poverty reduction. Further, formal environmental regulation has a significant positive moderating effect on the above relationship, while informal environmental regulation has a weak negative moderating effect. Heterogeneity analysis showed that formal environmental regulation can significantly contribute to the green poverty reduction effectiveness of fiscal decentralization in the east-central region and in non-contiguous poverty-stricken areas, while informal environmental regulation can strengthen the disincentive effectiveness of fiscal decentralization in non-contiguous poverty-stricken areas. The results provide empirical evidence and policy insights on how to effectively optimize the fiscal decentralization structure and adjust the strength of environmental regulations to promote green poverty reduction efforts.