Constraints and incentives: Promoting air pollution governance through performance evaluation system

Abstract

This paper examines the impact of simultaneously strengthening environmental data authenticity constraints and targeted environmental incentives in officials’ performance evaluation system on local air pollution governance. To do so, we construct a simple theoretical model to illustrate the behaviors of local governments under strengthened environmental constraints and incentives in the context of China’s new air quality standards (NAQS). We then evaluate the effectiveness of NAQS using the 2008–2016 Chinese city-level panel data and the staggered difference-in-differences (DID) method. We find that the implementation of NAQS resulted in an average decrease of 1.50 % in PM_2.5 concentration in pilot cities, and exhibits heterogeneity under different levels of environmental decentralization, local environmental protection tendencies, and officials’ promotion incentives. Mechanism analysis suggests that this effect may be achieved by increasing the share of local government environmental expenditures and promoting industrial greening. Cost-benefit analysis shows that the Chinese government is willing to pay a premium for immediate pollution reductions. We also further discuss the impacts of NAQS on other air pollutants and carbon emissions. Our findings provide empirical evidence for simultaneously strengthening constraints and incentives related to environmental protection in officials’ evaluation system to promote pollution control. This provides a valuable reference for developing countries to consider similar policies.