Research on the relationship between fiscal decentralization and environmental management efficiency under competitive pressure: evidence from China.

Abstract

Taking industrial waste gas control as an example, this study explores the impact of fiscal decentralization on the efficiency of local governments' environmental governance under the pressure of competition, and analyzes the role of competition among local governments and support for R&D activities. The results demonstrate that fiscal decentralization can significantly promote the efficiency of local governance on control of waste gas, and this positive effect is mainly realized through the support from local government for R&D activities. As for the influence of inter-governmental competitions, only the competition in terms of governance efficiency delivers a significant U-shaped impact, and competition in expenditure scale and economy area weakly inhibits the positive influence of decentralization, meaning that the evaluation system centered on economic growth and the imitation strategy of local expenditure will not lead to a great decline in the efficiency of the use of environmental governance. Overall, this study suggests that further fiscal decentralization, emphases on government support for R&D activities, and enhanced environmental assessment in official evaluation are all the important directions for boosting the efficiency of governance.