Exploring the effectiveness of fiscal decentralization in environmental expenditure based on the CO2 ecological footprint in urban China

Abstract

Under the fiscal decentralization of government environmental management, this paper investigates the relationship between local environmental protection expenditure (LEPE) and CO2 ecological footprint (CEF). Unlike conventional emissions-based greenhouse gas metrics, this research calculates per capita CEF for 253 Chinese cities, considering both carbon emissions and absorption. The dynamic spatial Durbin model demonstrates that LEPE not only reduces a city’s own CEF but also exerts a long-term influence on neighboring cities, signifying competitive dynamics among local governments in LEPE. This decentraliztion of environmental budget authority may yield adverse outcomes. Further analysis reveals an inverted U-shaped relationship between CEF and LEPE intensity, partly mirroring the environmental Kuznets curve. Different developmental stages should consider economic levels when allocating resources to environmental budgets. The low-carbon pilot policy strengthens LEPE, with varying effects across Chinese urban agglomerations, remaining consistent post-environmental protection tax introduction. These findings hold critical reference value for local policymakers aiming to collaboratively adjust market-oriented environmental policies.