Regional competition, environmental decentralization, and target selection of local governments

Abstract

Promoting environmental management system reform in an orderly manner and coordinating central and local environmental protection responsibilities are important for high-quality economic development. Based on panel data of 289 cities in China from 2008 to 2016, this paper uses the fixed effects model and threshold regression model to discuss the relationships among regional competition, environmental decentralization, and target selection of local governments and to analyze whether environmental decentralization produces the Porter effect. Findings show that environmental decentralization does significantly promote economic development, strengthen environmental pollution control, and generate a strong Porter effect, due to greater R&D investment, improvement in green technology innovation ability, and optimization of the industrial structure. The effect of environmental decentralization shows significant regional heterogeneity in terms of regional financial pressure, economic development level, and environmental pressure, while regional competition distorts the effect of environmental decentralization. With the intensification of regional competition, environmental decentralization greatly improves the emission intensity of pollutants, whereas it promotes economic development after inhibiting it. The above conclusions are of great significance for pushing forward environmental decentralization, formulating a differentiated environmental decentralization strategy, and perfecting the government performance appraisal system.