Explaining Provincial Variation in Implementation of China’s Clean Water Policies

Abstract

This research analyzes the local implementation of China’s central clean water policies over the recent decades. Based on a series of panel data analyses on Chinese provinces between 2004 and 2015, this study empirically examines the impact of decentralization and interest groups on water policy implementation, leading to three main findings. First, fiscal decentralization has a significant positive effect on policy output as measured using per-capita provincial expenditures on industrial wastewater. But it has no significant influence on policy outcome as measured by per-capita emissions of chemical oxygen demand. Second, while increasing environmental decentralization at the provincial level tends to increase provincial expenditures, wastewater discharge also increases. Third, increased industrial contributions to the provincial economy are associated with increased environmental spending from the province, yet foreign trade and environmental petitions do not have the expected impact. The results suggest that China’s decentralization reforms appear to have increased provincial policy responses without improving the actual environmental outcomes. Experiences from authoritarian China may provide lessons for other countries.