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Does central supervision enhance local environmental enforcement? Quasi-experimental evidence from China

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  • Zhang, Bing
  • Chen, Xiaolan
  • Guo, Huanxiu

Abstract

This paper draws on a natural experiment generated by the National Specially Monitored Firms (NSMF) program in China to evaluate the effectiveness of central supervision at improving local environmental enforcement. We explore a unique firm-level Chinese Environmental Statistics dataset and utilize a regression discontinuity design to assess the impact of central supervision through the NSMF program on an industrial firm's chemical oxygen demand (COD) emissions. The results suggest that central supervision significantly reduces industrial COD emissions by at least 26.8%. These results highlight the substantial room for improvement in Chinese environmental regulations via central supervision. A more flexible environmental decentralization regime and comprehensive central supervision are thus recommended for future reforms.

Suggested Citation

  • Zhang, Bing & Chen, Xiaolan & Guo, Huanxiu, 2018. "Does central supervision enhance local environmental enforcement? Quasi-experimental evidence from China," Journal of Public Economics, Elsevier, vol. 164(C), pages 70-90.
    • Handle: RePEc:eee:pubeco:v:164:y:2018:i:c:p:70-90
    DOI: 10.1016/j.jpubeco.2018.05.009
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    More about this item

    Keywords

    Environmental federalism; Central supervision; Water pollution; Regression discontinuity design; China;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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