Research On Environmental Pollution Under Fiscal Decentralization

Over the past four decades of reform and opening up,China’s economy has grown rapidly.In 2011,China surpassed Japan to become the world’s second largest economy.From 1979 to 2018,China’s economic aggregate grew at an average rate of 9.2 percent.In 2018,China’s economic aggregate was 90.03 trillion yuan,219.5 times that of 1979,creating a "Chinese miracle".With the rapid development of economy,the environmental pollution in our country is becoming more and more serious.The traditional literature mainly studies the environmental pollution problem in China from the economic perspective,but this only partly explains the environmental pollution problem,and it cannot play a role without the institutional factors,especially in such a transitional economy as China.In the process of transformation,the most obvious characteristic of China is the tax distribution reform implemented in 1994.The fiscal decentralization has two major characteristics: economic decentralization and political centralization.It readjusts the pattern of interest distribution between the central and local governments.A large number of studies have shown that fiscal decentralization has aroused the enthusiasm of local governments to develop the economy and promoted the development of local economy,but at the same time it has also caused environmental damage and neglected environmental supervision.This paper studies environmental pollution in China from the perspective of fiscal decentralization.Firstly,the paper expounds the theoretical basis,including the theory of fiscal decentralization,the theory of public goods and the theory of externality.Secondly,it analyzes the evolution of fiscal decentralization in China,and analyzes the current situation of fiscal decentralization and environmental pollution.There are three ways for fiscal decentralization to influence environmental pollution: investment attraction competition,tax competition and expenditure competition.Moreover,the game model is constructed to provide a theoretical basis for the subsequent empirical test.This paper finds that under the assessment of government officials’ performance with GDP as the core,local governments often concentrate superior resources to develop local economy and reduce the supervision of environmental protection in order to increase local fiscal revenue and promote local positions.Finally,based on the panel data of 30 provinces It is found that both revenue decentralization and expenditure decentralization have a significant positive effect on environmental pollution from the national sample regression results,and the fiscal decentralization index measured by expenditure decentralization has a greater positive effect on environmental pollution than income decentralization.Economic development level,industrial structure and urbanization rate are positively correlated with environmental pollution,while government competition is negatively correlated with environmental pollution,which proves the existence of "pollution halo" hypothesis,while education level has no significant impact on environmental pollution.in China from 2003 to 2017,the influence of fiscal decentralization on environmental pollution was empirically tested by constructing a fixed-effect panel data model.In order to study the differences between different regions,this paper selects different indicators to divide the samples according to the spatial spillovers of three kinds of pollution,and carries out regression test on the regional differences of fiscal decentralization on environmental pollution.We divided industrial so2 pollution into controlled and non-controlled areas,and found that fiscal decentralization in the control areas is beneficial to reduce so2 emissions,while fiscal decentralization without control intensifies emissions.The solid waste pollution was divided into two groups: the eastern region and the central and western regions.The waste water was divided into rainy and rainy areas,and it was found that both fiscal decentralization and pollutant discharge had significant positive effects.In short,this paper argues that Chinese fiscal decentralization has an important impact on environmental pollution.According to the results of theoretical and empirical analysis,this paper puts forward the following five Suggestions:(1)Improving the assessment system for government,Enforcing environmental oversight;(2)Improving reform of the financial system,Defining the responsibility of local governments for environmental protection;(3)Upgrading the industrial structure,Promoting the development of energy-saving technologies;(4)Constructing diversified supervision mechanism,Improving the efficiency environmental governance;(5)Strengthening trans-regional cooperation,Implementing differentiated environmental protection policies.