Environmental effect of flattening administrative structure on local water quality: A county-level analysis of China’s County-Power-Expansion reform

Abstract

This paper examines the environmental effect of flattening administrative structure on local water quality. By taking the County-Power-Expansion reform as a quasi-natural experiment for delayering, we employ the Generalized Difference-in-Differences (GDD) model and a unique county-level dataset from 2004 to 2010 to examine the impact of this reform on county water pollution. The results show that, after this reform, the water pollution indicators of biochemical oxygen demand (BOD), NH3–N, and Permanganate in pilot counties decrease by 21.9%, 21.8%, and 14.3%, respectively, while dissolved oxygen (DO) as a reverse pollution index increases by 5.74%. Through the identification of intermediary mechanisms, this paper finds that the structure upgrading effect, the fiscal improvement effect, and demand anti-driving effect are the main factors. In conclusion, delayering can significantly improve local environmental performance. It provides a new direction for the local government to implement a comprehensive flattening structural reform and win the battle against severe environmental pollution.