Research on Financial Pressure, Poverty Governance, and Environmental Pollution in China

Zenglian Zhang,Wenju Zhao

doi:10.3390/su10061834

Abstract

The traditional environmental governance theory attributes pollution to the result of market failure, but ignores the institution-level factors and the possibility of government failure. Using provincial panel data from 2001 to 2016 in China, and by drawing impulse response function graphs and building PVAR models, this paper studies the financial pressure and poor governance effect on environmental pollution. Financial pressure represents fiscal decentralization and debt pressure. The study finds that the increase of fiscal autonomy brings about the reduction of various types of pollutant emissions; the expansion of the scale of government debt causes very large pressure on the local governments to repay their debts and exacerbates environmental pollution in order to obtain debt repayment funds. For a long time, there was indeed a phenomenon in China in which the goal of reducing poverty was achieved at the cost of the environment. However, since 2012, the reduction of the poverty-stricken population has brought about a good trend of reducing emissions of various types of pollutants. There are no “PPE vicious circles” and “environmental traps” in China. There has been no contradiction between poverty reduction and the green development strategy implementation since 2012. There is a win-win trend in the process of environmental protection and poverty governance in China.

Highlights

Since the reform and opening-up, on the one hand, China’s economic growth has developed rapidly
In order to eliminate the influence of heteroscedasticity, Debt Pressure (DP), regional competition (RC), economic development (ED), and energy consumption (EC) were taken logarithmically
By plotting the impulse response function map and building a panel regression model under the PVAR model, the effects of Fiscal Decentralization (FD), DP, and Poverty Governance (PG) on Environmental Pollution (EP) were studied at the institutional level

Summary

Introduction

Since the reform and opening-up, on the one hand, China’s economic growth has developed rapidly. Water damage, and poisonous land incidents have undermined the sustainability of economic development, and the environmental carrying capacity has reached, or is approaching, the upper limit in China [1]. Taking the “Environmental performance index 2014” calculated by Yale University as an example, China ranked second in the world in terms of environmental pollution in 2014 [2]. The World Air Quality Index calculated by the World Health Organization shows that only nine cities in China have entered the ranks of the 100 cities in the world [3]. Changing the mode of economic development, exploring the deep causes of environmental pollution, and exploring the contradictions between development and the environment have become one of the hot topics

Methods

Results

Conclusion