Fiscal decentralization, government environmental preference, and regional environmental governance efficiency: evidence
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Fiscal decentralization, government environmental preference, and regional environmental governance efficiency: evidence from China Jianing Zang1 · Liangliang Liu2 Received: 17 April 2019 / Accepted: 28 February 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The purpose of this study is to discuss the direct and indirect effects of fiscal decentralization on environmental governance efficiency (hereafter referred to as EGE). We first put forward hypotheses by using a theoretical framework. Subsequently, we conduct an empirical investigation by using panel data of 30 Chinese provinces over the period 2003–2015. A province-level dataset is used to measure EGE, and new indices are regressed on fiscal decentralization. Results demonstrate that fiscal decentralization has a significant negative effect on EGE and government environmental preference has a mediating effect on the relationship between fiscal decentralization and EGE. The results obtained are robust when different methods are used. A further investigation of heterogeneous responses to policy changes across regions demonstrates that the effect of fiscal decentralization on EGE presents evident regional heterogeneity. JEL Classification H77
1 Introduction The differences in the efficiency of delivering public services among governments have long been recognized and accepted (Tanzi and Schuknecht 1998; Afonso et al. 2005). Some are exceedingly wasteful and ineffective in executing even basic activities, whereas others systematically and comprehensively achieve their targets (Adam * Liangliang Liu [email protected] Jianing Zang [email protected] 1
School of Management, University of Science and Technology of China, Hefei, China
2
School of Public Finance and Taxation, Nanjing University of Finance and Economics, Nanjing, China
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J. Zang, L. Liu
et al., 2014). The determinants of these phenomena have been of much interest to scholars. Fiscal decentralization is regarded as a part of a reform package to enhance the efficiency of the public sector (Bahl and Linn 1992). The roles of fiscal decentralization in dealing with the government’s efficiency in providing education and health services (Adam et al. 2014) and solving environmental pollution (List and Gerking 2000; Millimet 2003; Sigman 2007; He et al. 2012; He 2015; Que et al. 2018) have been emphasized in the past. However, no work has been performed to understand how environmental governance efficiency (EGE) is influenced by fiscal decentralization. Such understanding is of importance in making and performing effective decisions to respond to the challenges from environmental pollution. Accordingly, in this study, we use province-level historical data on EGE to empirically investigate the extent to which this historical increase or decrease is affected by the increased degree of fiscal decentralization in China. Such an investigation is important because, from a theoretical perspective, the impact of prominent fiscal decentralization attribute
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