Impact of Environmental Decentralization on Regional Green Development

• Author: Xuan Zou,Chun Hu,Can Lei,Keying Gao
• DOI: 10.1177/1070496519870276
• Date: 01 December 2019
• Published date: 01 December 2019
• Subject Matter: Articles

Article

Impact of Environmental

Decentralization on

Regional Green

Development

Xuan Zou

1

, Can Lei

1

, Keying Gao

1

, and

Chun Hu

2

Abstract

Having a reasonable environmental management system is key to achieve regional

green development. This article integrates environmental decentralization into an

environmental/economic analytical framework, introducing a fiscal decentralization

indicator to explore the mechanism of environmental decentralization and regional

green development, and then tests this concept using Chinese provincial penal data.

The results show that the spillover effect of green development is significant:

Improving regional green development will promote green development in neighbor-

ing regions. At the national level, different categories of environmental decentraliza-

tion have different effects, and these can also affect green development through both

direct and indirect paths. There is also a positive interaction mechanism between

these two variables. Moreover, the interaction between environmental and fiscal

decentralization has a negative effect on regional green development, with the

impact varying across regions. These findings play an important role in green devel-

opment, industrial transformation, and advancement, especially in China.

Keywords

empirical test, environmental decentralization, fiscal decentralization, regional

green development, theoretical mechanism

Journal of Environment &

Development

2019, Vol. 28(4) 412–441

!The Author(s) 2019

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/1070496519870276

journals.sagepub.com/home/jed

1

College of Economics and Trade, Hunan University, Changsha, China

2

Research Center for Economy of Upper Reaches of Yangtze River, Chongqing Technology and Business

University, China

Corresponding Author:

Xuan Zou, Hunan University, No. 109, Shijiachong Road, Yuelu District, Changsha 410079, China.

Email: zouxuanlysq@aliyun.com

While many countries have a federal political system, the ‘‘optimal’’ allocation of

power at each level of government has been the subject of numerous pieces of

research. Most of these studies focus on f‌iscal policies; however, in a federal

political system, the distribution of power in environmental decision-making is

also important. The theory of an ‘‘optimal’’ distribution of environmental power

at each level of government is often referred to as environmental federalism.

At the same time, to promote regional green development, existing literature

has also studied f‌inancial markets, industrial policies, and government policies

(Bento, Garg, & Kaf‌f‌ine, 2018; Busch, Bauer, & Orlitzky, 2015; Kemp & Never,

2017). However, regional green development is also af‌fected by the distribution of

the rights and responsibilities of central and local governments (Zou, Lei, & Hu,

2019), which is known as environmental decentralization. The purpose of this

process is to use local advantages to improve the environment.

While the aim of environmental decentralization is clear, its impact is unclear.

Most researchers have only analyzed this problem from the perspective of the

environment. Some scholars have also pointed out that the central authorities

should play a more important role in information transmission and guidance

regarding environmental decentralization (Oates, 2002). Analysis has been

conducted regarding the ef‌fects of decentralization on both the utility level of

nonresidents (Gordon, 1983) and on the race-to-bottom competition (Boskovic,

2015). However, other researchers maintain that decentralization is more rea-

sonable. Oates and Schwab (1988), for example, applied a cross-jurisdictional

competition framework to conclude that environmental decentralization man-

agement is also likely to increase ef‌f‌iciency. However, this result is based on six

strict assumptions. Based on their research, other scholars have further analyzed

this question on issues ranging from the crowding-out ef‌fect of federal environ-

mental regulation on state government regulation (Adler, 2007), the related cost

advantage (D’Amato & Valentini, 2011), the implications of a federal pollution

tax (Williams, 2012), and the incorporation of environmental compliance in the

promotion standards of local governments (Kahn, Li, & Zhao, 2013).

Additional perspectives have also been proposed arguing that the impact of

environmental decentralization is conditional (Grooms, 2015).

In addition, environmental management systems vary from country to coun-

try. In China, the implementation of environmental protection rights is related

to both the governmental level and the government duty. The government level

refers to the vertical management system, from the Ministry of Ecology and

Environment (the central environmental protection department in China) to

the Provincial Environmental Protection Department and to the Local

Environmental Protection Bureau; government duty, meanwhile, ref‌lects the

horizontal management system, namely, the local environmental protection

department that is af‌f‌iliated with the local government (Zhang, Feng, & Liu,

2017). Hence, when the goals of the central and local governments are incon-

sistent, the implementation of environment policies will be af‌fected as a result.

Zou et al. 413