Local government competition on setting emission reduction goals

Area of Science:

• Environmental Economics
• Public Policy
• Governmental Competition

Background:

• Local authorities in large states face incentives for both environmental protection and economic performance.
• Short-term trade-offs between environmental and economic goals are possible for local governments.
• Understanding governmental incentives is crucial for effective environmental policy.

Purpose of the Study:

• To investigate the incentives among China's local governments regarding environmental protection and economic growth.
• To empirically analyze the relationship between pollution emission reduction goals and economic performance.
• To identify the mechanisms through which environmental goals impact economic growth.

Main Methods:

• Empirical research on Chinese local governments' goal-setting behavior.
• Analysis of the correlation between the ambition of pollution emission reduction goals and economic growth.
• Robustness checks using various regression methods, emission types, and economic growth variables.

Main Results:

• Local governments set ambitious pollution emission reduction goals, influenced by goal release dates.
• Increased emission reduction goals correlate with a decline in real economic growth.
• Higher environmental goals lead to increased emission reduction efforts, crowding out economic growth.

Conclusions:

• Local governments are willing to accept reduced economic growth for more ambitious environmental targets.
• Strengthening competition for environmental protection and reducing emphasis on economic growth can enhance environmental performance.
• Policy interventions, such as performance-based official promotion, can shape governmental competition effectively.