The effect of fiscal decentralization, environmental regulation, and economic development on haze pollution: empirical evidence for 270 Chinese cities during 2007-2016.

Abstract

The current discourse addresses fiscal issues, financial decentralization, and environmental quality and significantly affects economic development and sustainability. This investigation aims to address the research gap in fiscal decentralization and haze pollution for innovation and sustainable growth. This study uses the annual data of 270 Chinese cities from 2007 to 2016 for comprehensive analysis and employs spatial regression methods. The key findings imply that haze pollution in neighbouring cities causes further ecological issues. While the environmental regulations of China tend to have negative impacts on pollution, fiscal decentralization was found to be a key contributor to environmental pollution in Chinese cities. Overall, the study supports the validity of the pollution refuge hypothesis in China. Lastly, the conclusions allow us to conclude that China might need micro-level reforms regarding fiscal decentralization, environmental tax laws, and encouragement of cleaner production technologies.