Research on the strategic interaction and convergence of China’s environmental public expenditure from the perspective of inequality

Abstract

Environmental public expenditure (EPE), which is critical to ecological protection and environmental governance, has not played its due role. From the perspective of inequality, this paper utilizes the single-regime and two-regime spatial panel models to explore the strategic interaction pattern of EPE and analyze the convergence of per capita environmental investment based on the data from 30 provinces in China from 2000–2015. The main results are as the following. A significant imitative strategic interaction in inter-provincial EPE is observed, that is, one region would reduce its EPE accordingly if EPE in its competitive area was reduced first. Underdeveloped regions are more sensitive to regional strategy changes. Furthermore, the low-pollution areas are more sensitive to the decisions on EPE in the neighboring regions. The convergence of inter-provincial EPE indicates that the gap between provinces further leads to the imitation pattern of expenditure, which better explains the steadily low EPE among different regions in the long term. Based on the conclusions of this study, we recommended policies, such as narrow regional differences, weaken the unequal aversion of local governments, and improve interactive strategies.