Does Fiscal Stress Improve the Environmental Efficiency? Perspective Based on the Urban Horizontal Fiscal Imbalance

The resilience of the fiscal system has a driving effect on environmental governance, and it is always a challenge to solve the problem of matching fiscal power with administrative power. Based on the panel data of 193 cities in China from 2013 to 2018, the data envelopment analysis method was used to evaluate the comprehensive indicators of urban environmental efficiency. The impact of fiscal stress on environmental efficiency is examined from the perspective of urban horizontal imbalance. We find that the smaller the fiscal stress, the higher urban environmental efficiency. The endogeneity is mitigated by using instrumental variables and the generalized method of moments, and the results are still robust after considering the interference of sample selection bias and variable estimation bias. At the same time, the impact of fiscal stress on environmental efficiency varies with spatial location, ecological strategic planning, economic development, and other factors, especially in southern cities, cities in the Yangtze River Basin, and cities in urban agglomerations, where reducing fiscal stress promotes environmental efficiency. In addition, green production and public environmental services are important channels for its role, and the rational allocation of self-raised funds can effectively moderate the improvement of environmental efficiency.