Pollution Transfer under Intergovernmental Competition: Suppression or Opportunity

Abstract

In recent years, the Sustainable Development Goals have introduced a “race to the top” mechanism to complement the “race to the bottom” in local governance and have an impact on pollution. This study utilizes the environmentally oriented accreditation of National Civilized Cities as a policy shock and applies the PSM-DID method to identify the pollution-relocation effects among cities triggered by the competition in local governance. The results indicate that environmentally oriented intergovernmental competition leads to the transfer of industrial enterprises to non-accredited cities, resulting in a significant increase in their pollution emissions and industrial pollution intensity. This indicates that the competition in asymmetric local governance will lead to the transfer of pollution to backward regions, which hampers the overall implementation efficiency of national environmental policies. Furthermore, heterogeneity analysis reveals that the impact is more significant for cities in the central and western regions. Being nominated for the National Civilized City accreditation helps to inhibit the influx of polluting enterprises. Cities that are not part of integrated environmental regulatory regions show a more pronounced increase in pollution emissions compared to other cities, indicating that symmetric local government environmental regulations and environmental collaborative governance contribute to restraining pollution transfer.