Abstract
The effectiveness of government environmental policies is pivotal to environmental quality and provides the reference for further policy design. This paper estimates the effect of comprehensive demonstration of fiscal policy for ECER (Energy Conservation and Emission Reduction) on pollution emissions in Chinese cities with the sample period from 2003 to 2016, which is an important practice for policy integration. We find that this policy reduces the industrial SO2 (sulfur dioxide) emission by 23.8% on average and the industrial wastewater emission by 17.5% on average. This policy, implemented by Chinese government, has effectively achieved its target for emission reduction. A series of robustness checks are also conducted to verify the baseline results. Mechanism analysis indicates that this policy has the effect by the change in the industry structure and the enhancement of fiscal capacity, especially the capacity of fiscal revenue. Some policy recommendations, such as laying emphasis on the policy integration, integrating the financial resources of governments and expanding the demonstration effect, are proposed in order to facilitate green development in Chinese cities.
Highlights
Environmental issues have become a major concern around the world
The main issue discussed in this paper is whether the comprehensive demonstration of fiscal policy for energy conservation and emission reduction has effectively reduced urban environmental pollution
We use the DD approach to estimate the effect of the comprehensive demonstration of fiscal policy for ECER on urban pollution emissions
Summary
Environmental issues have become a major concern around the world. Pollution generates several negative externalities, which result in the inconsistencies between social cost and private cost, social benefit and private benefit [1,2,3]. We estimate the effect of comprehensive demonstration of fiscal policy for ECER (Energy Conservation and Emission Reduction) on pollution emissions in Chinese cities. Our study contributes to two strands of literature: studies regarding government environmental policies as well as the connected decision problems, and studies that examine the effects of public policies and regulations, especially fiscal policy, to address the negative externalities that are generated by pollution emissions. This research provides a reference by which other countries and regions can understand the role of emission reduction policies in urban environmental protection. These findings will be useful for the policy makers seeking to devise more effective policies.
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