Local Environmental Performance Research Articles

The deterrent effect of central environmental protection inspection: evidence from Chinese listed companies

PurposeIn this paper, the authors take the central environmental protection inspection (CEPI) as an exogenous shock to study the reaction of the stock market in China. Using the event study method, the authors check how the first round of the first batch of CEPI supervision affects the cumulative abnormal return (CAR) of the listed firms on the Shenzhen or Shanghai stock exchange. This paper aims to discuss the aforementioned objective.Design/methodology/approachIn this paper, the authors take the first round of the first batch of CEPI supervision as a clean exogenous shock to study its effects on the capital market. The authors collect daily trading data from the China stock market and accounting research (CSMAR) database, with the sample containing 1,950 Chinese firms listed on either the Shenzhen or Shanghai stock exchanges. And detailed information on CEPI supervision is obtained from the official website of the Ministry of Ecology and Environment of the People's Republic of China. The event study method is adopted to analyze the reaction of the stock market under CEPI supervision. Specifically, the authors constructed the cumulative abnormal return of each firm around the event day of CEPI. To capture the deterrent effects of CEPI supervision, the authors examine the situation of polluting and non-polluting firms in the supervised provinces, adjacent provinces and provinces that are not supervised or close to the supervised provinces, respectively.FindingsThis paper throws light on the following: (1) the polluting firms in the supervised provinces were negatively impacted by CEPI within 20 trading days of the event day, and its effects spread to the polluting firms in the neighboring provinces; (2) CEPI had a favorable impact on the non-polluting businesses in the provinces that are neither supervised nor close to the supervised provinces. The authors contend that it is because the investment is being forced out of the polluting sector and into the non-polluting sector, which is more pronounced in the provinces not directly or indirectly targeted by CEPI; (3) by comparison, the “looking back monitoring of the first round” has had no discernible detrimental impact on the firms' CAR, indicating an important role of psychology anticipation of investors in the stock market performance; (4) although not physically located in the supervised provinces, the downstream enterprises of the polluting firms suffer significantly from CEPI shock; (5) the effectiveness of CEPI supervision in the supervised provinces depends on the level of local environmental regulation and the ownership structure of the company. Private firms in the provinces with stronger environmental regulations suffer more from the CEPI shock; (6) the multivariate analysis shows that while enterprises with high ROE and financial leverage may be at risk of CAR loss, older, larger firms are less likely to experience CEPI shock; (7) the study of persistent effect reveals that the strike of CEPI supervision can last for at least 10 months after the event day and deterrent effect can be spread within the whole polluting industry.Research limitations/implicationsIn this paper, the authors only concentrate on the market reaction within 20 trading days after the event day. An analysis of long-term effects should be valuable to get a deeper knowledge of the capital market reaction to the CEPI policy. In addition, the paper only focuses on the first round of the first batch of CEPI. Since CEPI has been built as a constant regulation of local environmental performance, further study may need to track both the reaction of listed firms and investment behavior in the capital market.Practical implicationsPolicy implications of the paper are as follows: First, for the policymakers, it is important to construct a constant environmental regulation system instead of a campaign movement. Second, for investors, as environmental issues are receiving increasing attention from both the government and the public, investment decisions should take into account firms' environmental performance, which can help reduce the risk from environmental regulations. Third, the firms in the polluting industry should take more action to reduce pollutant releases and adopt green technology, which is essential for sustainable development under environmental protection.Originality/valueThis paper contributes to the existing literature in the following aspects. First, the authors provide new evidence on the effects of environmental regulations as a shock to the stock market, which has been wildly concentrated in the literature about environmental policies evaluation and capital market reaction. Second, the authors supplement the literature on green finance and sustainability transformation, which has got increasing attention in recent years. Theoretically, by guiding investment and affecting the stock market performance, environmental regulations are considered to be an efficient way to stimulate polluting firms to transform into green development. The results of the paper support this intuition by showing that the CAR of the non-polluting firms in non-supervised provinces in fact benefit from the CEPI supervision.

Spatially-explicit environmental assessment of bioethanol from miscanthus and switchgrass in France

Bioethanol is promoted as a means of tackling climate change, diversifying energy sources and securing energy supply. However, there also concerns that their wider deployment could lead to unintended environmental consequences. Life cycle assessment (LCA) is a widely used methodology to assess the environmental performance of biofuels. However, its outcomes strongly depend on the inventory data and modeling assumptions. Agronomic variables such as crop yields, nitrogen fertilizer rates or field emissions of nitrous oxide are very sensitive inputs, as are soil carbon dynamics in response to land use changes (LUC) entailed by the deployment of energy crops. Models simulating agroecosystem processes and the economics of agricultural farms are promising tools to predict such variables and improve the reliability of LCA.Here, we combined the agro-ecosystem model CERES-EGC, the farm economic model AROPAj and the LCA approach to investigate the effect of local drivers on the environmental impacts of bioethanol from miscanthus and switchgrass over France.Overall, lignocellulosic bioethanol achieved GHG abatement targets in the 74 %–94 % range compared to gasoline, and complied with the 50 % minimum imposed by European regulations. Miscanthus-based ethanol achieved up to twice lower environmental impacts than switchgrass due to 50 % higher biomass yields overall. Low fertilizer N input rates (in the 0-30 kg N ha-1 yr-1 range) proved the most efficient strategy to optimize energy return. Significant inter-regional variability occurred, especially in terms of soil C sequestration rates, which weighed in substantially on GHG budgets. Some regions were more efficient than others as a result, which advocates a site-specific approach and a potential prioritization when planning biorefineries, taking into account local production and environmental performance potentials. Compared to previous studies, ours provided high-resolution data in terms of crop yields, nitrous oxide emissions and soil C dynamics, factoring in LUC effects at local to regional scales.

Spatial double dividend from China’s main grain-producing areas policy: total factor productivity and the net carbon effect

Because of the reductions in China’s cultivated land area and the significant impact on the agricultural market, the main grain-producing areas (MGPA) policy has become vitally important for ensuring China’s food security. However, guaranteed food security and sustainability require ecological security, which raises the question of whether food production should come at the expense of the environment. This study used 1998–2020 panel data from 30 Chinese provinces and a spatial difference-in-differences model (SDID) to explore the MGPA policy effects and mechanism paths on agricultural total factor productivity (ATFP) and the net carbon effect (NCS). It was found that economically, the MGPA policy promoted local ATFP improvements and had positive spillover effects on surrounding provinces through factor diffusion, and environmentally, the MGPA policy had a positive effect in the MGPA policy implementation areas but inhibited the NCS in surrounding provinces. Further explorations of the environmental performances revealed that the MGPA policy promoted growth in agricultural carbon sinks and agricultural carbon emissions, with the environmental performances being primarily reflected in an increase in carbon sinks and a decline in the carbon emissions density. The mechanism test showed that the MGPA policy’s local environmental performance was achieved through economic performance. The ATFP was refined into technical innovation (TI), technology adoption (TA), and business scale (OS), with the mechanistic roles of these three refining paths being OS > TI > TA. A further mechanism test revealed that the MGPA policy effects on the ATFP were influenced by the various adjustment of production support, government support, and collaborative support. Based on the above analysis, this study gives policy recommendations to ensure food security and the realization of China’s dual carbon target.

Spatial compactness and carbon emission: Nighttime light satellite‐based exposure assessment

AbstractScholars of urban sustainability are increasingly interested in the influence of spatial configuration on local environmental performance, with a focus on urban compactness. Spatial compactness with urban density boosts energy‐efficient construction and infrastructure, subsequently encouraging lower carbon emissions. In this study, we first documented the distributional pattern of spatial compactness in the prefectures of Japan using refined measurement and nighttime light satellite data, which is a more consistent indicator of economic activities. Further, we investigate the underlying impact of this compactness on the local carbon emission intensity with quantitative evidence. The regression results indicate that higher compactness in a prefecture corresponds to lower carbon intensity even in different settings. Moreover, robustness checks verify the consistency of the abatement effects. Additionally, the mitigating role of compactness presents a heterogeneous pattern across sectors. The effect is statistically significant only in the manufacturing and household sectors. These findings add to the value of urban compactness and offer important policy implications for addressing sustainable societies in the long term.

Does central ecological transfer payment enhance local environmental performance? Quasi-experimental evidence from China

Central transfer payment for the key ecosystem zones has become the most funded payments for ecosystem services program in China. The ecological fiscal transfer (EFT) aims to improve the eco-environmental quality of the targeted counties by providing supplementary fiscal funds, though not strictly specifying the usage. This study employs a time-varying difference-in-difference strategy to investigate the impact of EFT on environmental outcome by using a comprehensive county-level dataset covering 1949 counties from 2004 to 2015. Estimates show that the policy had a positive impact on local air quality, whereas the dynamic effect is diminishing. The policy effect is achieved through more stringent environmental regulation and stricter industrial access. Reduction of industrial dust emission is more noticeable than that of sulfur dioxide. There is an economic scale effect that the scale of a county can increase effectiveness of EFT on air quality improvement, whereas an opposite development stage effect will undermine its effectiveness. Heterogeneities were detected concerning transfer intensity, intervention period, geographical region, and ecosystem type. These findings facilitate a deep understanding how EFT could play a significant role in protecting local environment in large developing countries. Several policy implications are drawn to enhance the effectiveness of the largest EFT program.

Environmentally-Inclined Politicians and Local Environmental Performance: Evidence from Publicly Listed Firms in China

Environmentally-Inclined Politicians and Local Environmental Performance: Evidence from Publicly Listed Firms in China

Does the construction of ecological civilization institution system promote the green innovation of enterprises? A quasi-natural experiment based on China's national ecological civilization pilot zones.

Enhancing green innovation is fundamental for constructing China's new ecological civilization era and participating in the global green industrial revolution. Therefore, it is necessary to improve the green innovation of the enterprises by enhancing the ecological civilization institution system. This study assesses the impact of China's ecological civilization institution system on green innovation, taking the establishment of the National Ecological Civilization Pilot Zone (NECPZ) as a quasi-natural experiment and the non-financial listed firms in China's A-share market from 2010 to 2019 as the research objects. A time-varying difference-in-differences approach is adopted to evaluate the effectiveness of the pilot policy. It is found that the pilot policy has promoted green innovation in the treatment group. The results are proven valid after a series of robustness tests. Heterogeneous impacts of the ownership and industry are also discussed, finding a more substantial effect on the non-state-owned enterprises and firms in non-heavy polluting industries. Furtherly, it is found that the policy implementation has suppressed firms' total factor productivity but has improved local environmental performance. Based on the above results, a series of policy recommendations are put forward.

“It’s not a very certain future”: Emotion and infrastructure change in an industrial town

Four decades on from the onset of deindustrialisation in the UK and other late-capitalist societies, industrial places are again emerging as key objects of policy discourse. Under the dual pressures of decarbonisation, and the recognition of ‘left behind’ regions as potential hotspots for feelings of political marginalisation, new strategies for clean growth are emerging, aiming to boost local economic and environmental performance. Presenting data produced via biographical interviews and deliberative workshops in Port Talbot, South Wales, we explore how experiences of life in one of the UK’s most significant manufacturing towns has shaped local feelings towards four place-based scenarios for industrial and energy systems decarbonisation. Drawing on the rich literatures detailing the cultural and emotional impacts of deindustrialisation, we illustrate how situated experiences of industrial dependence and decline shaped how Port Talbot residents made sense of visions for the town’s future. In so doing we show how, in the face of industrial decline, alternative aspects of place emerged as locus points of emotional and cultural identification, ‘public things’ (Honig, 2017) in which alternative hopes for the future are invested. As emergent policies for clean growth become enacted in concrete projects, we argue for a clearer focus on experiences of and relationships embedded in industrial places, to ensure such strategies meet the desires of local communities.

Does central environmental protection inspection enhance firms’ environmental disclosure? Evidence from China

AbstractAn increasing number of emerging countries have begun implementing central environmental protection inspection (CEPI) to make up for the lack of environmental decentralization. Extant literature has shown that CEPI improves local environmental enforcement and performance. However, it is unclear whether CEPI, which is regarded as a non‐routine environmental enforcement and independent of the system of environmental decentralization, has an increasing effect on firms’ environmental disclosure. This paper selects the listed firms located in Hebei Province, the pilot province inspected by the CEPI, as the treatment group and uses the listed firms of the third and fourth rounds of inspected provinces as the control group. The difference‐in‐difference results show that the environmental information level and quality of listed firms in Hebei Province is improved compared with those of firms in other provinces, and the increasing effect is more significant in state‐owned firms, in developed regions and in regions where local officials have more promotion incentives. The results of this study suggest that the central government should establish a regular environmental inspection mechanism and coordinate it with the system of environmental decentralization in emerging countries.

Government Environmental Information Disclosure and Environmental Performance: Evidence from China

Government environmental information disclosure (GEID) is a key policy instrument in environmental governance. Local governments in China are improving the disclosure level of environmental information, but does the environmental information disclosed by local governments reflect the existing state of the local ecological environment? This paper analyzes the correlation between GEID and environmental performance and verifies whether or not the environmental information disclosed by local governments can reflect actual local ecological environment conditions. Based on data from Chinese cities, this paper adopts a multiple regression method, and the results show that the environmental information disclosed by governments can reflect the local environmental performance as a whole, and the higher the level of GEID, the better the local environmental performance; but the relationship between the two has significant regional differences. In eastern China, the higher the level of GEID, the better the local environmental performance. In central and western China, the correlation between GEID and environmental performance is not significant. In addition, it should be noted that the correlation between the level of GEID and the emission intensity of water pollutants is not significant in all regions. This study contributes to further clarifying the effectiveness of GEID policy and identifying a breakthrough for the optimization of environmental policies faced with the dilemma of serious environmental pollution and urgent economic development needs.

Environmental Efficiency Analysis for Multi Plants Production Technologies

The current article extends the literature by proposing new models for estimating the classical and environmental performance of multi-plant firms. This yields some new indices for capturing the environmental performance vs. classical economic performance at the local and global level. The proposed approaches and indices were applied for the economic and environmental performance assessment of 46 power plants in Iran. The primary result emphasizes considering not only local environmental performance but also global performance to have a broad insight of environmental performance assessments. Moreover, we find only a few power plants with a resistant environmental performance at the global level. Proposed models in this article are general because they can be utilized in environmental analysis of any multiple plant production units.

Listed Local State-Owned Enterprises and Environmental Performance: Evidence from China

Listed Local State-Owned Enterprises and Environmental Performance: Evidence from China

Environmental effect of flattening administrative structure on local water quality: A county-level analysis of China’s County-Power-Expansion reform

This paper examines the environmental effect of flattening administrative structure on local water quality. By taking the County-Power-Expansion reform as a quasi-natural experiment for delayering, we employ the Generalized Difference-in-Differences (GDD) model and a unique county-level dataset from 2004 to 2010 to examine the impact of this reform on county water pollution. The results show that, after this reform, the water pollution indicators of biochemical oxygen demand (BOD), NH3–N, and Permanganate in pilot counties decrease by 21.9%, 21.8%, and 14.3%, respectively, while dissolved oxygen (DO) as a reverse pollution index increases by 5.74%. Through the identification of intermediary mechanisms, this paper finds that the structure upgrading effect, the fiscal improvement effect, and demand anti-driving effect are the main factors. In conclusion, delayering can significantly improve local environmental performance. It provides a new direction for the local government to implement a comprehensive flattening structural reform and win the battle against severe environmental pollution.

Has third-party monitoring improved environmental data quality? An analysis of air pollution data in China

The significant role of high-quality data in environmental policymaking has led to the Chinese central government's concrete efforts to improve its monitoring system, which had long been plagued with data manipulation by local governments. The most remarkable policy innovation of the last decade in this area has been the introduction of a critical external oversight—profit-making third-party organizations—by the central government to monitor local governments' environmental performance. Despite the significance of third-party environmental monitoring, little is known about its effectiveness in improving data accuracy and whether and how it brings about changes to China's environmental governance. Framed within the literature on China's intergovernmental relationship and adopting a regression discontinuity model with a national database of air quality, this study examines whether third-party monitoring improves the accuracy of environmental data in China, and if so, how this approach can remedy the problem of data manipulation. Results show that data accuracy has been improved after the involvement of third-party organizations, providing evidence that supports China's efforts to advance its environmental governance from a mono-centric and non-participatory policy process to one that integrates both authoritarian control and market-based mechanisms. We discuss policy implications of this finding for environmental governance in China.

Chinese Local Governments to be Held Responsible for Their Local Environment: New Law, Old Problems

Local governments in China have been frequently blamed for the deteriorating environmental conditions due to their failure to implement and enforce national environmental laws. To improve local governments' environmental performance, the recently amended Environmental Protection Law provides a comprehensive responsibility system to hold local officials accountable. However, the underlying reasons behind local governments' failures, as the author argues, are much more complicated than they may appear. While variables like motivation, incentives and capacity are widely recognised as key factors in successful implementation of the new law, the transparency, accuracy and rigidity of legal provisions are equally important. When the new law is ambiguous and fails to explicitly delegate responsibilities, local leaders become confused about their environmental responsibilities and may act improperly to cheat the accountability system. All of these variables must be understood in the current context of central–local relations which informs local governments' identity, decision-making process and law implementation.

Production intensity in dairy farming and its relationship with farm environmental performance: Empirical evidence from the Swiss alpine area

In the last two decades, agricultural production intensity has become a subject of growing attention in the field of agricultural sustainability. Based on an empirical application for Swiss mountain dairy farming, the goal of our research was to better understand the relationship between agricultural production intensity, defined as the biophysical agricultural production per unit of land use area, and farm environmental performance. We thereby revisited the definition of production intensity and, more precisely, of the spatial system boundaries of its denominator. For that purpose, we analyzed the relationship between the “classical” production intensity indicator accounting only for the on-farm land use area and a cradle-to-farm gate intensity indicator encompassing off- and on-farm land use area. In a subsequent step, we investigated the relationship between farm environmental performance and the two production intensity indicator types. The analysis relied on the cradle-to-farm gate Life Cycle Assessments of 56 farm observations. Spearman's correlation analysis revealed a very strong positive correlation between on-farm and cradle-to-farm gate production intensity. The definition of production intensity did not play a crucial role in the observed relationship between production intensity and farm environmental performance. Production intensity was positively correlated with farm global environmental performance. Conversely, it was negatively correlated with both on-farm local environmental performance and cradle-to-farm gate aggregate local environmental performance. By revealing this environmental trade-off associated with agricultural intensification, our findings highlight the challenging nature of achieving sustainable intensification simultaneously on the global and local ecosystem scales.

Factors Affecting Global versus Local Environmental and Economic Performance of Dairying: A Case Study of Swiss Mountain Farms

Improving the sustainability of the dairy food chain requires a simultaneous improvement in global and local environmental performance, as well as in the economic performance of dairy farms. We investigated the effect of different structural, farm management, socio-demographic, technological and natural-environment-related factors on the economic and environmental performance of dairying. Our analysis relied on a case study of 56 Swiss alpine dairy farm observations, for which cradle-to-farm gate life cycle assessments and farm accountancy data were combined. The data refer to the years 2006 to 2008. The effect of the selected factors on farms’ economic and environmental performance was analysed by means of non-parametric statistical approaches. The results revealed the existence of some factors presenting synergies and several factors showing trade-offs in the enhancement of farm global environmental, local environmental and economic performance. More generally, the promotion of farm global environmental performance and farm economic performance was shown to be synergetic whereas the enhancement of farm global and local environmental performance turned out to be mostly antinomic. However, some factors, namely organic farming, higher agricultural education, silage-free milk production, and also, to a weaker extent, full-time farming, larger farm size and lower intensity of cattle concentrates use, showed a potential to bring simultaneous improvements in the global and local environmental performance as well as the economic performance of dairy farming. Policy-makers should be aware of the complexity of the joint improvement of farm economic and environmental performance and only promote factors capable of synergistically enhancing the environmental and economic performance of dairy farming.

The drivers of local environmental policy in China: An analysis of Shenzhen’s environmental performance management system, 2007–2015

To combat significant pollution problems, a number of local governments in China have utilized performance management to improve cadres’ accountability on environmental issues. Despite the extensive literature on public sector performance management, attention to environmental performance management has been relatively scant. Taking Shenzhen – one of China’s most densely populated, affluent, and rapidly growing cities – as a case study, this article describes and analyzes the evolution of the local environmental performance management system from 2007 to 2015. A series of external and internal factors are identified as determinants of policy evolution, including cadres’ individual decision-making, higher-level policies, intra-governmental interactions (horizontally and vertically), the relative salience of environmental issues, and strategies in policy experimentation. The multiplicity of factors further complicates the already complex process of performance measurement by setting it in a complex political context, which can distort the efficacy and objectives of the system, resulting in an unpredictable and compromised policy tool. Improving government environmental performance management involves reducing complexity by reforming aspects of the political context, allowing for a more serious, open, and transparent decision-making process.

Vertical Environmental Management: A Panacea to the Environmental Enforcement Gap in China?

After being proposed in 2015, environmental vertical management (vm) reform was hailed as being able to bridge the environmental law enforcement gap, because it helps in insulating environmental protection agencies from intervention by local governments, thus functioning to end local protectionism brought about by the traditional ‘dual leadership’ model. This article identifies how the ongoing reform process changes the institutional structure of environmental management, explains the reasons for initiating such a reform and analyses whether vm can be as effective as intended. It is concluded that promotion of an environmental vm reform reflects the vicissitudes of central government-local government relations in the environmental era. As a method to strengthen central oversight on local environmental performance, vm is far from the sole or the most cost-effective method to realize this goal. The environmental vm reform plan combines both centralization and decentralization approaches. The design of ‘soft’ (extension of reform below provincial level) and fragmented (selected monitoring and inspection) centralization may decrease the anticipated effectiveness of vm reform by moving local malfeasance from municipal and county levels to the provincial level (‘provincial protectionism’) and thus continuing to harm the integrity of environmental management. As a partial solution, vm reform needs to be supplemented with incentive and accountability mechanisms, and by more effective and professional enforcement activities at local levels.

Political connections buffer and local environmental performance deterioration: evidence from spring model and empirical data in China

In this paper, three-stage spring models have been established to demonstrate changes in local environmental performance under the effects of the communities of interest that is constituted by firms and local governments. To support the theoretical results, Zijin Mining Group is selected as the typical case, and listed companies’ data are analyzed by using the spring model. The results show that, over countless cycles of changing status, local environmental performance has continuously deteriorated. To break this cycle, political connections should be restricted in the short term, and a system for local governments to evaluate environmental performance should be established in the long term.