Environmental policy integration and performance: The effectiveness of China's one permit management reform

Abstract

The increasingly complex environmental governance causes the authorities responsible for implementing environmental policies fragmented. Whether environmental policy integration could improve governance effectiveness remains unclear. This paper investigates the short-term impact of China's One Permit Management (OPM), aiming at integrating existing environmental regulations, on environmental performance. Using unique high-frequency facility-level data and the difference-in-differences-in-differences (DDD) approach, we find that noncompliant facilities reduced emissions after being issued the discharge permit. Specifically, COD, NH3-N, SO2 and NOX declined by 7.75%, 29.88%, 18.21%, and 11.04%, respectively. In addition, the analysis of the heterogeneity of firm size suggests that large firms that interact more frequently with regulators are less affected and the analysis of heterogeneity in the capacity of regions to implement policy integration shows that the effect of policy integration is more significant in eastern regions. The emission reductions of COD, NH3-N, SO2 and NOX achieved by the issuance of pollution permits accounted for 7.72%, 14.66%, 11.31% and 19.89% of the five-year target emission reductions, respectively. Given the prevalence of policy fragmentation, policymakers need to focus not only on how to set goals, but also on how to achieve those goals in a coordinated and coherent manner.