Environmental regulations, Chinese-style fiscal decentralization, and carbon emissions: from the perspective of moderating effect

Fiscal decentralization is the source of China’s rapid economic growth, but inevitably leads to a surge in total carbon emissions. We verify whether the intermediary mechanism of real estate development and the urban construction investment bonds (UCIB) can share the fiscal pressure of local governments to provide empirical support to clarify and solve the realistic decentralization dilemma. This study conducted a spatial analysis of panel data from 266 Chinese prefecture-level cities from 2006 to 2019 and obtains the following findings. (1) Carbon emissions are spatially correlated, displaying the characteristics of ‘one glory and one loss’. (2) Fiscal decentralization drives an increase in carbon emissions over the entire spatial region. (3) The decomposition results show that although fiscal decentralization aggravates local carbon emission growth, it benefits the carbon emission reduction of neighboring regions. (4) The eastern regions’ fiscal decentralization does not significantly affect carbon emissions, whereas the central and western regions’ fiscal decentralization causes an upsurge in total carbon emissions. (5) Fiscal decentralization has promoted the prosperous development of the real estate industry, which positively influences carbon emissions. (6) The UCIB has a negative moderating effect on fiscal decentralization and carbon emissions, implying that it plays a role in alleviating financial pressure on local governments. Accordingly, we propose relevant countermeasures: adjusting the degree of decentralization, controlling real estate development, and issuing UCIB.

Facing the growing problem of carbon emission pollution, the scientific and reasonable division of environmental management power between governments is the premise and institutional foundation for realizing China’s carbon emission reduction target in 2030. In this article, we directly assess the degree of environmental decentralization according to the allocation of environmental managers among different levels of government. By incorporating fiscal decentralization indicators, the provincial panel data and dynamic spatial econometric model are used to empirically test the impact of environmental decentralization on carbon emissions from a spatial perspective. The results show that (1) China’s provincial carbon emissions have significant inertia dependence and spatial path dependence. The increase (decrease) of provincial carbon emissions will lead to the increase (decrease) of carbon emissions in neighboring regions. (2) At the national level, environmental decentralization, environmental administrative decentralization, and environmental monitoring decentralization significantly reduce China’s carbon emissions, while environmental supervision decentralization and fiscal decentralization significantly increase carbon emissions. Similarly, the interaction of environmental decentralization and its decomposition indicators and fiscal decentralization also significantly promotes carbon emissions, and the impact is related to the types of environmental management decentralization. (3) The carbon emission effects of environmental decentralization in different regions are heterogeneous. The inhibition effect of environmental decentralization, environmental administrative decentralization, and environmental monitoring decentralization on carbon emissions in the western region is significantly greater than that in the eastern and central regions, but the inhibitory effect of the interaction of environmental decentralization and its decomposition index and fiscal decentralization on carbon emissions in the eastern region was significantly stronger than that in the central and western regions. The above results provide theoretical support for China to construct a differentiated carbon emission environmental management system from two aspects of regional differences and environmental management power categories.

Using a two-way panel fixed effects model and a spatial econometric model, an empirical study examines the effect of FDI on carbon emissions based on inter-provincial spatial panel data in China from 1998 to 2016. The study shows that: Overall, there seems to be a significant positive spatial spillover effect on carbon emissions, and there is a high-high aggregation of carbon emissions across provinces. Among them, the direct effect and spatial spillover effect of FDI on carbon emissions have significant temporal and regional differences. From the analysis of regional heterogeneity, the direct impact of FDI on carbon emissions in the province exists only in the central region; the spatial spillover effect of carbon emissions in other provinces on carbon emissions in the province exists in the eastern region and the central region; the spatial spillover effect of FDI in other provinces on carbon emissions in the province exists in the eastern region and the western region, but the eastern region has a positive promoting effect and the western region has a negative inhibiting effect. Therefore, the quality of FDI should be further optimized and governed according to local conditions to achieve the goal of energy conservation and emission reduction, so as to promote the coordinated development of China's economy and environment.

Foreign direct investment (FDI) plays an important role in promoting industrial structure and curbing carbon emission. The study is based on panel data from 30 provinces in China from 2011 to 2021 and verifies the impact of FDI under environmental regulation on industrial structure upgrading and carbon emission. The empirical results show that FDI under environmental regulation can inhibit carbon emission and promote industrial structure upgrading. The carbon emission reduction effect and industrial structure upgrading effect of FDI show regional heterogeneity, with the strongest effect in the eastern region, followed by the central region, and no significant effect in the western region. The moderating effect examination of environmental regulation illustrates that formal and informal environmental regulation can effectively regulate the relationship between FDI and carbon emission, but due to differences in various factors such as economic development level and population quality, the moderating effect also exhibits regional heterogeneity. In the mechanism test, industrial structure upgrading plays a perfect mediating role in the path of FDI inhibiting carbon emission, and environmental regulation can further enhance the mediating effect of industrial structure upgrading. There is a threshold of industrial structure upgrading between FDI and carbon emission, and FDI can only suppress carbon emission after crossing the threshold of industrial structure upgrading.

Based on the panel data of 30 provinces in China from 2010 to 2019, this study empirically analyzes the relationship between fiscal decentralization and carbon productivity using a spatial econometric model and calculates the direct effect, spatial spillover effect, and total effect of fiscal revenue decentralization and fiscal expenditure decentralization on carbon productivity through effect decomposition. The empirical results show that 1) the spatial agglomeration effect of China’s provincial carbon productivity is obvious, which shows an upward trend. The heterogeneity of carbon productivity among different provinces is obvious. The overall performance is as follows: Eastern provinces > Central provinces > Western provinces. 2) Fiscal revenue decentralization and fiscal expenditure decentralization can significantly promote the improvement of carbon productivity. Fiscal expenditure decentralization plays a greater role in promoting carbon productivity than fiscal revenue decentralization. 3) Fiscal revenue decentralization and fiscal expenditure decentralization have significant positive direct effects and negative spatial spillover effects on the improvement of carbon productivity. Increasing fiscal decentralization is conducive to improving the carbon productivity of the province, but it will inhibit the carbon productivity of neighboring provinces. Finally, it puts forward policy suggestions to promote the improvement of carbon productivity from the perspective of fiscal decentralization.

To accomplish the goals of carbon mitigation, industrial green transformation is an inevitable requirement for achieving high-quality economic development. Based on the data of 30 provinces in China from 2007 to 2017, this paper uses projection pursuit model and entropy method to calculate the industrial green transformation and Chinese fiscal decentralization. It further employs static and dynamic spatial Durbin model to explore the impact of Chinese fiscal decentralization on industrial green transformation by the environmental fiscal policy. The study finds that: 1) China’s industrial green transformation presents an unbalanced state with high in the east and low in the west, which has a positive spatial spillover among provinces. 2) Fiscal decentralization is significantly conducive to the industrial green transformation, while the spatial spillover of fiscal decentralization is negative. Moreover, fiscal decentralization affects the industrial green transformation by environmental fiscal policy, in of which environmental fiscal expenditure is the main path. 3) From the perspective of heterogeneity of fiscal decentralization, the impact of fiscal expenditure decentralization in promoting industrial green transformation is significantly greater than that of fiscal revenue decentralization. In terms of heterogeneity of regional location, fiscal decentralization in the eastern and central regions plays a role in accelerating industrial green transformation, while it has an obstacle impact in the western region. In terms of market-based heterogeneity, Fiscal decentralization in high-market areas facilitates the green transformation of industry, while in low-market areas is the opposite.

Investigating the fiscal decentralization’s effect on the carbon intensity of agricultural production may assist the United States in reaching its carbon peak and becoming carbon neutral. This paper delves into the investigation of the spatiotemporal patterns and internal relationships between fiscal decentralization, agricultural carbon intensity, and environmental regulation. The goal was achieved by using the spatial Durbin model using panel data for 49 states of the United States from 2000 to 2019. The study has found that environmental regulations play a significant role in reducing regional carbon emissions in agriculture and contribute positively to carbon emissions control. However, fiscal decentralization, which grants local governments more financial autonomy, has a positive but insignificant impact on carbon emissions, indicating that the prioritization of economic development and carbon control over environmental protection is favored by local governments. In examining the impact of environmental regulations on carbon emissions, the study reveals that fiscal decentralization does not play a substantial role in moderating this relationship. To promote low-carbon agriculture projects and ensure coordinated economic and environmental development, the study recommends optimizing the fiscal decentralization system, formulating different policies for different regions, and regulating the competencies of local governments through an effective examination system. The study concludes that it is crucial to obtain data at the city or county level to accurately understand the relationship between agricultural carbon intensity, environmental regulation, and fiscal decentralization. As a result, the central government must focus on perfecting the fiscal decentralization system, developing a differentiated agricultural carbon emission control system, controlling competition among local governments, and perfecting a political performance assessment system.

Elucidating the complex mechanism between urbanization, economic growth, carbon dioxide emissions is fundamental necessary to inform effective strategies on energy saving and emission reduction in China. Based on a balanced panel data of 31 provinces in China over the period 1997-2010, this study empirically examines the relationships among urbanization, economic growth and carbon dioxide (CO2) emissions at the national and regional levels using panel cointegration and vector error correction model and Granger causality tests. Results showed that urbanization, economic growth and CO2 emissions are integrated of order one. Urbanization contributes to economic growth, both of which increase CO2 emissions in China and its eastern, central and western regions. The impact of urbanization on CO2 emissions in the western region was larger than that in the eastern and central regions. But economic growth had a larger impact on CO2 emissions in the eastern region than that in the central and western regions. Panel causality analysis revealed a bidirectional long-run causal relationship among urbanization, economic growth and CO2 emissions, indicating that in the long run, urbanization does have a causal effect on economic growth in China, both of which have causal effect on CO2 emissions. At the regional level, we also found a bidirectional long-run causality between land urbanization and economic growth in eastern and central China. These results demonstrated that it might be difficult for China to pursue carbon emissions reduction policy and to control urban expansion without impeding economic growth in the long run. In the short-run, we observed a unidirectional causation running from land urbanization to CO2 emissions and from economic growth to CO2 emissions in the eastern and central regions. Further investigations revealed an inverted N-shaped relationship between CO2 emissions and economic growth in China, not supporting the environmental Kuznets curve (EKC) hypothesis. Our empirical findings have an important reference value for policy-makers in formulating effective energy saving and emission reduction strategies for China.

The debate over the role of fiscal decentralization and industrial structure upgrading in China's environmental governance has received increasing attention. Based on China's provincial panel data from 2003 to 2019, this paper investigates the impact of fiscal decentralization and industrial structure upgrading on carbon emissions to provide empirical evidence for the above theoretical argument. The results show that fiscal decentralization and industrial structure upgrading are negatively correlated with carbon emissions, while the interaction term for fiscal decentralization with industrial structure upgrading presents a facilitating effect on carbon emissions. Besides, fiscal decentralization, industrial structure upgrading, and the interaction term have significant regional heterogeneity on carbon emissions. When fiscal decentralization and industrial structure upgrading are taken as threshold variables, the effects of industrial structure upgrading and fiscal decentralization are significantly nonlinear. Moreover, environmental regulation, transportation infrastructure, and carbon emissions are positively correlated. There exists an inverted U-shaped relationship between carbon emissions and economic growth, which proves environmental Kuznets curve theorem. However, FDI and urbanization have no significant effect on carbon emissions. According to the above conclusions, it is necessary to strengthen the positive interaction between fiscal decentralization and industrial structure upgrading in mitigating carbon emissions, promoting the green and low-carbon transformation of China's economy, thus realizing the goals of "carbon peak" and "carbon neutrality."

In 2017, the 19th National Congress of the Communist Party of China put forward the concept of high-quality economic development, indicating that the Chinese economy has shifted from rapid growth to high-quality development. High-quality economic development is the growth mode of an innovation-driven economy, an innovative, high-efficiency, energy-saving, environmentally friendly, and high-value-added growth mode. Environmental regulation is an important means to solve economic development and environmental pollution and plays an important role in high-quality economic development. In order to explore the impact of China's environmental regulations on the high-quality economic development, this paper based on the panel data of 30 provinces (cities) in China from 2004 to 2015 uses the dynamic spatial Dubin model (DSDM) to analyze the direct and indirect effects of China's environmental regulations on high-quality economic development and regional heterogeneity. It also incorporates R&D (Research and Development) investment, government investment in environmental governance, and fiscal decentralization into the model and analyzes the direct and indirect effects of the above three factors in the process of environmental regulation affecting high-quality economic development. We found that China's high-quality economic development is spatially related between different provinces. And environmental regulations have obvious direct and indirect effects in the impact of high-quality economic development in the central and eastern regions, and this effect phenomenon is not significant in the western region. R&D investment, environmental protection investment, and fiscal decentralization have different adjustment effects on environmental regulation and high-quality economic development, and the same kind of adjustment variable also shows obvious heterogeneity among different regions. Finally, we put forward relevant policy recommendations based on the conclusions, with a view to improving China's high-quality economic development.

Environmental regulation and CO2 emissions: Based on strategic interaction of environmental governance

Environmental regulation, Foreign investment behavior, and carbon emissions for 30 provinces in China

Assessing the efficiency of China’s environmental regulation on carbon emissions based on Tapio decoupling models and GMM models

Fiscal decentralization's impact on carbon emissions and its interactions with environmental regulations, economic development, and industrialization: Evidence from 288 cities in China

There are significant spatial differences on carbon emissions across China's provinces. The goal of this work is to explore diverse factors of carbon emissions and space pattern across China's provinces. IPCC carbon emission model is used to calculate the carbon emissions in China province. Geographically weighted regression (GWR) model is the method for modeling the local relationships, helps to reveal the spatial heterogeneity. Therefore, we calculated the spatial relationships on carbon emissions and its influence factors, and estimated the factors' coefficient by GWR. The carbon emissions coefficient is in the range of 0.868 to 2.650 from energy structure. The carbon emissions coefficient is in the range of 0.868 to 2.650 from industrial structure. Our findings indicate that significantly non-equilibrium and spatial differences exist between the China's provinces carbon emissions and the each factor. Therefore, these results provide the basis for making carbon emission reduction measures across China's provinces.