Resources Science ›› 2018, Vol. 40 ›› Issue (4): 851-861.doi: 10.18402/resci.2018.04.18

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Fiscal decentralization, environmental protection expenditure and haze pollution

Xun WU(), Jie WANG   

  1. School of Economics and Management, Xi'an Shiyou University, Xi'an 710065, China
  • Received:2017-08-14 Revised:2018-01-27 Online:2018-05-02 Published:2018-05-02


Chinese style fiscal decentralization has resulted in stunning economic growth, but haze pollution has aroused concerns from stakeholders. Research on the mechanism of China's decentralization and environmental protection expenditure on haze pollution is needed to provide decision-making references for urban haze management in China. Here, we empirically researched relationships among fiscal decentralization, environmental protection expenditure and haze pollution using static and dynamic modeling of panel data from 73 monitored environment cities in China from 2008-2015. We found that fiscal expenditure decentralization or revenue decentralization or financial freedom have a remarkable positive correlation with haze pollution, and a significant negative correlation between environmental protection expenditure and haze pollution. The interaction between fiscal decentralization and environmental protection expenditure is negatively related to haze pollution and the interaction coefficient is far less than the fiscal decentralization coefficient. The degree of economic development and haze pollution is not a ‘reverse U’ relationship, and there is a significant positive correlation between foreign direct investment and haze pollution. For early realization of China's new normal of urban haze governance, we need to improve the environmental assessment system for local governments; establish a system of lifelong accountability for officials; standardize competition among local governments; reform the soft constraint of environmental budget; promote reform of fiscal decentralization; and accelerate the upgrade of industrial structure.

Key words: fiscal decentralization, environmental protection expenditure, local government behavior, haze pollution, PM2.5 concentration, China