Study On The Heterogeneous Impact Of Fiscal Decentralization On Environmental Pollution

Since the reform and opening up,China’s fiscal decentralization policy has greatly promoted the enthusiasm of local governments to develop their economies.However,with the rapid economic development,China has also paid a huge resource and environmental cost.Therefore,the study of fiscal decentralization and environmental pollution is of great significance for the government to formulate effective environmental policies.In addition,pollutants are heterogeneous,and understanding the impact of fiscal decentralization on different types of pollutants is helpful for the government to formulate different emission standards and policies according to different pollutants.This paper uses the panel data of 262 cities in China from 2003 to 2016 to establish a quantile regression model to study the impact of fiscal decentralization on three pollutants under different quantile levels.The study shows that the increase in fiscal decentralization will promote pollutant emissions and cause environmental degradation.However,for different pollutants,fiscal decentralization has a heterogeneous effect on its promotion.For industrial smoke（powder）dust,with the continuous increase of the quantile level,the promotion effect of fiscal decentralization shows an inverted u-shaped change,which first increases and then decreases,for industrial wastewater,with the continuous improvement of the quantile level,fiscal decentralization plays a more and more important role.For industrial SO₂,with the continuous improvement of the quantile level,the promotion effect of fiscal decentralization presents an inverted"N"type change,which first decreases,then increases and then decreases.Based on the results of quantile regression,we reasonably assume that there is a nonlinear effect on the impact of fiscal decentralization on environmental pollution.so,we introduce foreign direct investment（FDI）as a transition variable,construct a smooth panel transition regression model（PSTR）,and study the impact difference of fiscal decentralization on three pollutants under different FDI levels.The study also shows that fiscal decentralization has a promoting effect on pollutant emissions,and the promoting effect is heterogeneous for different pollutants.The promoting effect of fiscal decentralization on the emission of industrial smoke（powder）and dust was inhibited after FDI exceeded the threshold value,and the promoting effect was reduced.The promotion effect on industrial wastewater discharge increases after FDI passes the first threshold value,and then decreases after FDI passes the second threshold value.That is to say,in regions with low and high FDI levels,fiscal decentralization plays a smaller role in promoting industrial wastewater discharge.The promotion effect on industrial SO₂ increased after FDI crossed the threshold value.Based on the results of this study,we propose the following policy recommendations:First,change the local government assessment mechanism based on GDP,and establish local government assessment criteria that are compatible with environmental incentives.Second,guide foreign-funded enterprises to gather reasonably in certain regions and cities.Third,optimize the industrial structure.Fourth,develop differentiated environmental protection policies based on the specific conditions of each region.Fifth,strengthen public supervision of the environment and establish an environmental feedback mechanism.