Performance Evaluation and Environmental Governance: From a Perspective of Strategic Interaction between Local Governments

Abstract

At present, China’s environmental problem has become a problem that has to be solved on the road to the healthy development of the economy and society. Under the Chinese style of decentralization, performance evaluation becomes an important factor affecting the implementation of environmental policies. Based on the strategic interaction among local governments, this paper combines the theories of decentralization, administrative subcontract and political tournament, and puts forward relevant hypotheses: the greening of performance assessment helps make good competition between local governments in environmental governance; decentralization affects the relationship between performance appraisal and environmental governance strategic interaction among local governments. This paper uses the panel data of 272 prefecture-level cities in China between 2003 and 2014 to build the spatial Durbin model, and uses maximum likelihood estimation（MLE）to get the results after regression: reasonable performance evaluation index and decentralization system can make environmental governance develop in the direction of ‘benign competition’. As a whole, the environmental governance between local governments has a strategic interaction of ‘imitative competition’. Based on political tournament theory, this paper empirically studies the impact of performance assessment on the interaction of environmental governance strategies among cities in China. Results show that environmental performance indicators enhance the strategic interaction of race to the top” among cities, and economic performance indicators weaken the race to the top” strategic interaction among cities. Furthermore, based on the theories of political tournament” and administrative contract”, we examine the impact of the combination of performance appraisal and decentralization on the strategic interaction between local governments. Environmental performance indicators combined with higher authority can weaken the race to the bottom” strategic interaction, and enhance the race to the top” strategic interaction. If equipped with higher financial power, it will weaken the race to the bottom” strategic interaction. The combination of economic performance and higher authority enhances the competitive interaction strategy and weakens the race to the top” strategic interaction. If the financial power is bigger, it will enhance the race to the bottom” strategic interaction. Accordingly, policy implications are given as follows: to establish the linkage mechanism” of environmental governance, namely joint defense and joint control” is the way to effectively control the environment; how to set reasonable performance evaluation index by the central government to hold the nose of an ox of local government environmental governance is the priority among priorities; a reasonable set of performance evaluation indicators, accompanied by reasonable decentralization system, namely environmental performance indicators as hard constraints” with the property rights and power, will encourage local government environmental governance to benign competition, to make the implementation of environmental policies get twice the result with half the effort.