Multi-Tasking Policy Coordination and Corporate Environmental Performance: Evidence from China

Area of Science:

• Environmental Economics
• Public Policy
• Industrial Ecology

Background:

• Local governments often face dual pressures of economic growth and environmental protection.
• The coordination between economic growth targets (EGT) and environmental protection targets (EPT) significantly influences corporate environmental behavior.
• Understanding this dynamic is crucial for effective environmental regulation and sustainable development.

Purpose of the Study:

• To investigate the coordination strategies of local governments between EGT and EPT.
• To analyze the impact of this coordination on firms' environmental performance.
• To explore the role of central government's hard constraints in mitigating environmental externalities.

Main Methods:

• Utilized pollution emission data from China's industrial firms (2003-2013).
• Employed econometric analysis to assess the relationship between EGT, EPT, and firm-level environmental performance.
• Examined the moderating effect of central government's EPT constraints.

Main Results:

• Overweighted EGT by local governments leads to higher sulfur dioxide intensity.
• Central government's hard constraints on EPT in performance evaluations partially mitigate the negative environmental impact of EGT.
• Overweighted EGT negatively affects firms' desulfurization facilities, capacity, and ratio, with EPT constraints offering mitigation, especially in dirty industries.

Conclusions:

• Local government's emphasis on EGT can exacerbate environmental issues, particularly in polluting industries.
• Central government's stringent EPT regulations are effective in curbing the environmental externalities of EGT.
• Shifting from hard constraints to self-regulation by local officials could potentially reverse the environmental impact of EGT.