Keywords：环境经济，城市与环境，Market Decentralization, Fiscal Decentralization, SO2 Emission, Industrial Dusts, China.
Author：Canfei He; Fenghua Pan
Date：2011-01-07
Summary：
Economic reform has resulted in considerable decentralization and exceptional economic growth in China. It has however posed a serious contradiction for China‘s environmental protection efforts. This study empirically investigated the environmental effects of market and power decentralization using data on industrial SO2 emission and dusts at the city level. Statistical results indicate that SOEs have significantly contributed to the environmental degradation in Chinese cities. Market decentralization has been harmful to urban environment, especially in the central and western regions and in the small and medium cities. Power and fiscal decentralization has induced the race to the bottom competition by lowering environmental regulations to attract taxable and high value added pollution intensive industries, which is more remarkable in the coastal and central regions and in the medium and small cities. Evidently, there is a tradeoff between environmental degradation and economic growth associated with decentralization in China. The policy shall minimize the environmental impacts of decentralization using economic leverages.
