Regional Competition, Heterogeneous Factors and Pollution Intensity in China: A Spatial Econometric Analysis

Abstract

Regional competition may play an important role in the balance of environmental protection and economic growth. However, it is a pending issue of whether the competition among Chinese local governments leads to a race to black development or green development. This paper aims to explore the strategic interactions in provincial development in terms of an environment-economic indicator, i.e., the pollution intensity in China from 2000 to 2013. We divide four predominant industrial pollutants into two groups according to whether the pollutant is regulated, and then test the strategic interactions among regions based on the spatial lag term by employing the spatial Durbin model. The results show that the heterogeneous factors, such as various pollutants and regional difference, may give rise to diversified competition strategies. We find that the "race to black development" hypothesis is not supported at the national level, and the "race to green development" hypothesis is established in the developed eastern regions only in terms of the regulated industrial pollutants. We also detect how pollution intensity is influenced by the direct and spatial spillover effects of environmental regulation and find that environmental legislation has been effective in reducing regulated pollutants' pollution intensity, while the effects of environmental staff and investment are weak. Finally, some policy suggestions are discussed.

Toward a Sustainable Low-Carbon China: A Review of the Special Issue of “Energy Economics and Management”

“…Using the spatial lag term by employing the regional Durbin model, the strategic interactions among regions is tested. How pollution intensity is influenced by the direct and spatial spillover effects of environmental regulation was also explored [6]. One paper uses a logit model to examine purchasing propensities [19], another takes the establishment of Poyang Lake Eco-Economic Zone in 2009 as a quasi-natural experiment because of its exogeneity and utilizes the DID method to evaluate its influence on agricultural labor productivity [17].…”

“…However, competition among provinces may lead to serious pollution problems and high environmental costs because provincial officials are evaluated based on economic performance. This causes local governments to compete with each other to ease environmental regulation in order to attract investment for economic growth [6]. Thus, whether competition among local governments leads to a race to the bottom, or green development, remains uncertain.…”

“…It also shows that the "race to green development" hypothesis is supported in the east for pollutants with obligatory emission reduction targets, such as SO 2 and Chemical Oxygen Demand (COD). Moreover, increasing environmental legislation has been effective in reducing PI, especially for pollutants with obligatory reduction targets [6].…”

The Water Pollution Policy Regime Shift and Boundary Pollution: Evidence from the Change of Water Pollution Levels in China

“…Zheng et al [26] found that mayors have reduced the total amount of pollution emissions under pressure from the central government and the public during this period. Huang and Xia [27] proved that regional competition affected the intensity of environmental protection from 2002 to 2010 and that environmental regulation is the most effective measure in achieving pollution reduction. Binding targets may also cause strategic behavior in pollution reduction because only a few goals are examined.…”

Modeling the Dynamics and Spillovers of the Health Labor Market: Evidence from China’s Provincial Panel Data

“…The SEPM is used most often to address the spatial autocorrelation of error items [39]. The SDPM is most useful when the DV should be explained by the IVs in both the region and in other geographical units [40].…”