Understanding the institutional logic of urban environmental pollution in China: Evidence from fiscal autonomy

Abstract

Fiscal decentralization is considered to be an important factor affecting government environmental governance, but the relationship between fiscal autonomy and environmental pollution has not been systematically explained. This study explores the institutional logic of urban environmental pollution from the perspective of fiscal autonomy in China. Based on systematically sorting out the influence mechanisms of fiscal autonomy on environmental pollution, the panel data of Chinese cities are used for the empirical test. The results show that urban fiscal autonomy directly leads to pollution emissions and indirectly increases environmental pollution by restraining the industrial structure upgrading and green technological innovation. Meanwhile, the impact of fiscal autonomy on environmental pollution varies with geographical location, administrative status and comprehensive strength. When faced with more significant economic growth target, fiscal autonomy may be transformed into motivation and ability to the environmental pollution. It can be seen that the development targets affect the fiscal behavior of local governments. In sum, our findings are helpful to understand the relationship between local government behavior and environmental protection under the framework of fiscal decentralization, and provide policy implications for promoting energy conservation and emission reduction.