Local government competition on setting emission reduction goals

Tingru Yang; Hua Liao; Yi-Ming Wei

doi:10.1016/j.scitotenv.2020.141002

Local government competition on setting emission reduction goals

Sci Total Environ. 2020 Nov 25:745:141002. doi: 10.1016/j.scitotenv.2020.141002. Epub 2020 Jul 19.

Authors

Tingru Yang¹, Hua Liao², Yi-Ming Wei³

Affiliations

¹ School of Management and Economics, Beijing Institute of Technology, Beijing 100081, China; Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing 100081, China; Collaborative Innovation Center of Electric Vehicles in Beijing, Beijing 100081, China; Sustainable Development Research Institute for Economy and Society of Beijing, Beijing 100081, China.
² School of Management and Economics, Beijing Institute of Technology, Beijing 100081, China; Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing 100081, China; Collaborative Innovation Center of Electric Vehicles in Beijing, Beijing 100081, China; Sustainable Development Research Institute for Economy and Society of Beijing, Beijing 100081, China; Beijing Key Laboratory of Energy Economics and Environmental Management, Beijing 100081, China. Electronic address: hliao@bit.edu.cn.
³ School of Management and Economics, Beijing Institute of Technology, Beijing 100081, China; Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing 100081, China; Collaborative Innovation Center of Electric Vehicles in Beijing, Beijing 100081, China; Sustainable Development Research Institute for Economy and Society of Beijing, Beijing 100081, China; Beijing Key Laboratory of Energy Economics and Environmental Management, Beijing 100081, China.

PMID: 32738687
DOI: 10.1016/j.scitotenv.2020.141002

Abstract

The incentive of environmental protection for local authorities is important for large and unitary states. Local authorities may be competed for both of environmental and economic performance. However, there is possibly trade-offs between the two performances in the short term. This paper focus on the incentives among China's local governments. Our empirical research finds that local governments compete for setting ambitious goals of pollution emission reduction according to their goals release date, and the increase in emission reduction goal leads to a decline in real economic growth. One of the transmit channels is that high goals result in more efforts on emission reduction and then crowding out the economic growth. Local governments are inclined to set more ambitious emission reduction goals, even when doing so comes at some cost of reduced economic growth. The results are robust to regression methods, emission types, and the variable choices of economic growth in different years. It implicates that if the superior governments strengthen the local authorities' competition for environment protection and reduce that for economic growth, it would improve the environment performance effectively. Such competition mechanism may include but not be limited to official promotion based on environment performance.

Keywords: Economic growth; Emission reduction goal; Incentive; Regional competition; Trade-off.