Does the Central Environmental Inspection actually work?

How does central-local interaction affect local environmental governance? Insights from the transformation of central environmental protection inspection in China

In recent years, one of the most important and innovative policy initiatives introduced by the Chinese government in the field of environmental protection and ecological civilization construction is the Central Environmental Protection Inspection (CEPI). CEPI is seen as a vital tool to encourage local implementation of environmental protection responsibility. Over the course of its operation (eight years), CEPI has transformed from the "campaign" phase to the "convention" phase. It is noted that while provincial governments face a common high-pressure environment created by CEPI, governance scenarios, behaviors, and performance vary across the country significantly. To better understand local governments' environmental governance behaviors under the transformation of CEPI, an integrated analysis framework consisting of two key elements, "central dominance" and "local proactiveness", is constructed based on the central-local interactions under the principal-agent model. Based on this framework, we conducted a multi-case comparative analysis of four classic cases, with the following findings. (1) Along with the operation of CEPI and its transformation, the interaction between the central and local governments leads to four governance scenarios: "control-active cooperation", "control-passive cooperation", "guidance-active promotion", and "guidance-passive promotion". (2) Influenced by various factors such as pressure by the central government, local governments' capabilities and governance motivations, local governments form governance behaviors with varying degrees of proactiveness and autonomy. (3) After examining the governance performance of varying behaviors, it is found that local government's "active promotion" behavior can achieve higher governance effectiveness in the "convention" phase. Therefore, it is of policy implication that local governments should be guided to transit from "passive cooperation" to "active promotion". This paper has important guiding significance for understanding local environmental governance behaviors under strong top-down institutional pressure.

Role of short-term campaigns and long-term mechanisms for air pollution control: lessons learned from the "2 + 26" city cluster in China

Protecting people from air pollution is an important task for developing countries. Over the past several decades, different types of policies have been enacted in developing countries to improve air quality, with policy impact analysis being conducted as well. As for China, while there is some existing literature on the impact of short-term action on air quality, there is much less research to investigate the roles of long-term air quality control mechanism on air quality change. This paper uses the "2 + 26" city cluster in China as a case study area to particularly analyze the roles played by short-term campaigns that compose the Winter Action Plan and a long-term mechanism referred to as the environmental accountability system in pollution control. Based on econometric and descriptive statistical analyses, it is found that the implementation of the Winter Action Plan has significantly improved the air quality, and the environmental accountability system seems to have exerted an impact, as cities with better air quality appear to establish a more stringent environmental accountability system. The paper provides the following insights for other developing countries: short-term campaigns can quickly reduce pollution and protect human health, while long-term mechanisms are needed to ensure sustainable environmental protection.

Study on the impact of central environmental protection inspection on the health of the older adult population-A quasi-natural experiment in China

In 2015, the central government of China established the Central Environmental Protection Inspection (CEPI) system for oversight of local governments. It enhanced local government enforcement of environmental regulations, which had a considerable influence on the health of the local older adult population. This study quantifies the effects of local government regulation brought about by CEPI on the health of the older adult. It examines the impact mechanism using the DID model and panel data from the China Health and Retirement Longitudinal Study (CHARLS). The results show that (1) local governments' environmental protection regulations implemented by CEPI have a positive impact on the general health of the older adult. The results of the study passed the parallel trend test, PSM test, replacement variable test, and placebo test and remained significant; (2) in terms of the impact mechanism, CEPI has promoted local governments' environmental governance initiatives, which has reduced industrial wastewater emissions, industrial sulfur dioxide emissions, and industrial fumes emissions. This has improved air quality, thereby creating a good living environment for the older adult and improving their overall health; (3) according to heterogeneity research, the health of older adult living in the Yangtze River Basin, urban older adult, and older adult without chronic diseases is more significantly affected by the environmental protection regulations of the local governments brought about by CEPI.

An evolutionary game study on the collaborative governance of environmental pollution: from the perspective of regulatory capture

Local governments have been captured by enterprises and, thus, have relaxed environmental regulations. This phenomenon has occurred repeatedly and has resulted in serious environmental pollution, posing an enormous threat to public health. To solve this problem, this study introduces central environmental protection inspection and media supervision and considers the economic preferences and environmental preferences of local governments. A four-party evolutionary game model composed of enterprises, local governments, the central government and the media is constructed, and the equilibrium solution of four-party replicator dynamics equations is obtained. The influence of relevant parameters on the choice of strategies of the four main bodies is simulated by using MATLAB software to explore the paths and measures for overcoming regulatory capture and to further improve the modern environmental governance system. The results show the following: First, local governments are easily captured by large enterprises. Second, the central government can improve the environmental behavior of local governments by reducing their economic preferences and strengthening punishment. Third, compared to the penalties imposed by the central government, those imposed by local governments have a more significant impact on the environmental behaviors of enterprises. Fourth, compared to the use of an environmental protection tax policy or a tax relief policy alone, the combination of the two has a more significant impact on the environmental behaviors of enterprises. Fifth, central environmental protection inspection and media supervision can improve the environmental behaviors of both local governments and enterprises, and the effect of media supervision is better than that of central environmental protection inspection. This study recommends improving the performance evaluation system for local governments to coordinate economic development and environmental protection, ensuring that local governments assume the main responsibility, using a combination of incentive and constraint policies for enterprises, and increasing the environmental protection inspection and media supervision of local governments and enterprises to resolve the dilemma of regulatory capture in environmental pollution through the simultaneous enhancement of the environmental behavior of local governments and enterprises.

How does environmental punishment affect regional green technology innovation?-Evidence from Chinese Provinces

As an important means of environmental regulation, environmental punishment lacks in empirical evidence on its impact on regional green technology innovation in China. Based on panel data of 30 provinces in China from 2010 to 2020, this paper systematically examines the relationship between environmental punishment and regional green technology innovation. It is found that environmental punishment has the quantity and quality enhancing effects on regional green technology innovation, and the quantity enhancing effect is greater than the quality enhancing effect. There is no significant effect difference between monetary punishment and non monetary punishment on green technology innovation effect, but the effect of punishment on institutions is obviously greater than that of punishment on individuals. And the performance of ecological provinces and provinces with better legal environment is also relatively better. Environmental punishment enhances the quantity and quality of green technology innovation through pressure, and improves the quality of green technology innovation through deterrence. Besides, in China, deterrence promotes regional green technology innovation together with the Central Government's environmental protection inspection, the national green manufacturing strategies and other policies concerned.

Impact of the emergency response to COVID-19 on air quality and its policy implications: Evidence from 290 cities in China

The emergency response to the COVID-19 pandemic had an extreme exogenous impact on society and the economy. This paper aims to explore the impacts of the national emergency response and the subsequent emergency response termination on air quality and its policy implications through regression discontinuity design (RDD) estimation by employing panel data on daily air quality from January 1, 2019, to July 31, 2020, for 290 cities in China. The empirical results showed that the emergency response resulted in a significant decrease in most of the major pollutant concentrations within a short time frame, and the average air quality index (AQI) decreased by approximately 11.0%. The concentrations of PM_2.5, PM₁₀, SO₂, NO₂, and CO decreased by approximately 18.8%, 13.1%, 13.5%, 11.1% and 6.7%, respectively, while the O₃ concentration did not change significantly. Further causal analysis found that mandatory traffic restrictions and the shutdown of industries were two important factors that contributed greatly to air quality improvement. Moreover, since the process of returning to normal daily activities and promoting the economy were gradual, the results showed that air pollution did not rebound immediately after the government called for the "resumption of production and work" and announced the "termination of the emergency response". Our findings suggest that to achieve a substantial and sustainable improvement in air quality, it is necessary to continuously implement strict emission control routines and take co-control measures for various VOCs precursors of ozone.

The pollution control effect of the atmospheric environmental policy in autumn and winter: Evidence from the daily data of Chinese cities

The pollution control effect of seasonal environmental regulation policies in developing countries still lacks empirical evidence. In 2017, China implemented its first Atmospheric Environmental Policy in Autumn and Winter (AEPAW) to coordinate efforts among cities in reducing air pollutant emissions. Taking the daily panel data of 174 cities in northern China from July 2017 to July 2020 as samples, this paper empirically examines the pollution control effect of the AEPAW using a difference-in-differences model, a difference-in-difference-in-differences model, and a regression discontinuity design. The results show that the AEPAW significantly improves air quality in autumn and winter, with the air quality index decreasing by 5.6% on average by reducing PM_2.5, PM₁₀, SO₂, and O₃ emissions. However, the AEPAW only creates a short-term "policy-induced blue sky", and there exists a phenomenon of "retaliatory pollution" after the AEPAW ends. Besides, the pollution control effect of the AEPAW is moderated by the heterogeneity of the national "Two Sessions" and the Central Environmental Protection Inspection. The implementation of the AEPAW also has a significant spillover effect on air pollution control in surrounding areas. The net benefit from the AEPAW is estimated to be approximately US$ 670 million per year. These findings not only have practical significance for strengthening the comprehensive control of air pollution in China, but also give some important references for other developing countries.

The impact of environmental supervision on firms' energy efficiency: evidence from the Environmental Protection Admonishing Talk policy in China

Enhancing energy efficiency is an important issue for countries facing pressures from energy shortages and environment pollution. Given increasing interest in the role of environmental supervision and the current lack of empirical evidence on this topic, this study investigates the impact of environmental supervision on firms' energy efficiency by taking the Environmental Protection Admonishing Talk (EPAT) policy in China as a quasi-natural experiment. Using the difference-in-differences method and the panel data of more than 3 million firms in China from 2008 to 2016, we find that environmental supervision improves firms' energy efficiency. This finding is validated by robustness tests and the difference-in-differences method combined with propensity score matching. The EPAT policy has varying effects on firms based on their location and size. A mechanism analysis shows that the EPAT policy improves firms' energy efficiency mainly by incentivizing them to adopt new technologies and transforming their modes of production. These findings can provide novel microscopic evidence on environmental supervision and energy efficiency and offer clues for the improvement of environmental enforcement in developing countries.

Does vertical supervision promote regional green transformation? Evidence from Central Environmental Protection Inspection

Vertical supervision is an important institutional arrangement designed to overcome the challenges of environmental governance and promotion of green development in the region. Based on the panel data of 278 cities in China from 2010 to 2018, we use Central Environmental Protection Inspection (CEPI) as an exogenous policy and the multi-period Difference-in-Differences method to test the role of vertical supervision in promoting regional green transformation. Our findings indicate that CEPI, a typical vertical supervision policy, effectively promotes green transformation regionally by reducing local pollution emissions and improving total factor productivity. The analysis of mechanism shows that local governments mainly promote regional green transformation by increasing the investment in pollutant governance, research and development in green technologies, and updating fixed assets. Our study provides a valuable reference for the implementation of vertical supervision policies and effective governance of local governments by the central government.

Can vertical environmental regulation induce enterprise green innovation? A new perspective from automatic air quality monitoring station in China

Based on panel data of listed companies in China from 2006 to 2020, this study takes the establishment of automatic air quality monitoring stations as a quasi-natural experiment and uses the staggered difference-in-differences method to explore whether the establishment of monitoring stations promotes green innovation of listed companies. The empirical results show that: (1) The green innovation of companies achieves an increase of 3.5% with monitoring stations in their locations, and an increase of 2.3% with the establishment of each additional monitoring station. This conclusion is valid after a series of robustness tests and exclusive tests. (2) The heterogeneity analyses show that monitoring stations have a greater role in promoting green innovation for non-state-owned enterprises, enterprises in heavy polluting industries and enterprises in key cities for environmental protection. (3) The transmission mechanism test results show that the establishment of automatic air monitoring station has crowding-out effect rather than leverage effect on green innovation, substantial innovation rather than strategic innovation. (4) The further analyses manifest the promotion of end-to-end green innovation, independent invention and quality of green patents.

Central environmental inspection and corporate environmental investment: evidence from Chinese listed companies

As a new type of environmental policy, the central environmental inspection (CEI) policy is an important innovative strategy in economic transition. Using the panel data of Chinese listed companies from 2011 to 2018, we apply the extended STIRPAT model to examine the direct impact of CEI policy on corporate environmental investment and its heterogeneity effects. The main findings are as follows: (1) The CEI policy has a positive influence on the environmental investment of all listed companies. (2) The promotion effect of CEI policy is quite different among five-round campaigns; while companies in later rounds fails to learn some experiences and lessons from the earlier rounds. (3) Due to the differences in property rights, industries, and environmental situations, the positive effect of CEI policy will be more significant in non-SOEs, companies in non-heavy-pollution industries, and companies in provinces with poor environment performance. This study supplements the research of environmental regulations, potentially contributing to the next stage of green and sustainable development in China.

Can national environmental protection supervision and control have a lasting impact on corporate production efficiency? - an empirical study based on the multi-phase difference-in-difference model

National environmental protection supervision and control has become essential means to regulate the environmental behavior of enterprises. Furthermore, the optimization, promotion, and sustainability of relevant policies are key topics of inquiry. Taking the implementation of national environmental protection supervision policies as the time series, this paper studies the impact of national environmental protection supervision and control on corporate production efficiency. It uses the multi-phase difference-in-difference (DID) method and explores the sustainability of said policies. Results indicate that, first, national environmental protection supervision and control can considerably enhance corporate production efficiency, and green technology innovation plays a vital role as an intervening variable. Second, national environmental protection supervision and control can only boost the increase in corporate production efficiency in the short term, and the impact will no longer be noticeable in the third year. This paper provides a decision-making basis for constantly boosting and revising national environmental protection supervision and control policies and stimulating green technology innovation.

Economic Growth Targets and Carbon Emissions: Evidence from China

Carbon emissions have become a new threat to sustainable development in China, and local government actions can play an important role in energy conservation and emission reduction. This paper explores the theoretical mechanisms and transmission paths of economic growth targets affecting carbon emissions from the perspective of economic growth targets and conducts an empirical analysis based on 30 provincial panel data in China from 2003 to 2019. The results show that: economic growth targets are positively correlated with carbon emissions under a series of endogeneity and robustness; there are regional heterogeneity, target heterogeneity and structural heterogeneity in the impact of economic growth targets on carbon emissions; after economic growth targets are set, government actions can influence carbon emissions by affecting resource mismatch and industrial restructuring; It is further found that there is a “U” shaped relationship between economic pressure and carbon emissions. Based on the above findings, this paper further proposes that a high-quality performance assessment mechanism should be developed to bring into play the active role of local governments in achieving carbon reduction goals, and thus contribute to high-quality economic development.

Benefits and costs of campaign-style environmental implementation: evidence from China's central environmental protection inspection system

Campaign-style environmental implementation (CEI) is widely exerted in environmental protection, while its benefits and costs are controversial. We take advantage of the Central Environmental Protection Inspection (CEPI) System-a latest and distinguished form of CEI launched by China in 2016, as a quasi-natural experiment, to compare the benefits and costs of CEI based on water pollution effect estimates. Our results based on the annual panel data from 500 cities during 2009-2018 show that CEPI significantly reduced water pollution by an average of 20.7%. Further cost-benefit analysis based on the estimates of water pollution reduction shows that the potential health benefits of mortality and morbidity reduction resulting from CEPI are at least $12.26 billion, without bearing additional economic costs. We also explore why CEPI is cost-effective and find that CEPI reduces water pollution and becomes cost-effective mainly through deterring local officials, punishing polluting enterprises, and increasing public participation in environmental governance.

How does Chinese central environmental inspection affect corporate green innovation? The moderating effect of bargaining intentions

Central environmental inspection (CEI) is an environmental governance tool launched by the Chinese central government in recent years. The aim of CEI is to enhance the implementation of environmental regulations by going beyond supervising enterprises to supervise local governments. Previous studies have shown that CEI is beneficial for improving corporate environmental performance, but the relationship between CEI and the environmental behavior of companies achieving a high level of environmental performance is not clear. Drawing on principal-agent theory, this study explains how CEI influences corporate green innovation by changing the incentive structures of local governments and firms for adopting different environmental strategies. Moreover, two boundary conditions between CEI and corporate green innovation are identified: political connections and industry competition. The boundary conditions affect the individual and collective bargaining intentions of companies to comply with environmental regulations. We test our hypotheses by using a sample of 1152 publicly traded industrial firms in China from 2014 to 2018. Our findings show that CEI is conducive to corporate green innovation. This positive effect is strengthened in politically connected firms or firms in highly monopolized industries with lower bargaining intentions. Our study contributes to a better understanding of the effect of CEI on micro (firm-level) environmental behaviors and the antecedents of corporate green innovation.

Does the Central Environmental Protection Inspectorate Accountability System Improve Environmental Quality?

China is dedicated to enhancing the quality of its ecological environment, and the Central Environmental Protection Inspectorate (CEPI) system, which is an essential program for ecological civilization, has earned widespread acknowledgement for its efficacy in environmental improvement. This study investigated whether the CEPI accountability system contributed to enhancing the environmental quality by focusing on the CEPI accountability system. This study collected, explicitly, the number of people held accountable, the number of people being handed over for accountability, and the regions that the people held accountable were from; analyzed the current state of the CEPI accountability system in terms of the regional and batch differences in the accountability degree; and investigated whether the CEPI accountability system promoted environmental quality by using SPSS 10.00. The study discovered that, first and foremost, the CEPI system’s scientific level has gradually improved, and the CEPI has been more precise in its accountability targets. Second, the CEPI enhances environmental quality, and significantly impacts wastewater-discharge reduction. Third, the CEPI system lacks sustainability. Finally, the paper presents several recommendations for enhancing the CEPI accountability system, with a particular focus on how to make the CEPI system more sustainable.

An evolutionary analysis of corruption in the process of collecting environmental tax in China

Considering the bargaining power of enterprises, this paper distinguishes between "Offering Bribes Voluntarily" (OBV) and "Offering Bribes under Pressure from Environmental Inspectors" (NOBV). An evolutionary game model between environmental inspectors and enterprises is constructed to study the corruption of environmental inspectors in the process of environmental tax collection under the system of upward accountability. At the same time, numerical simulations are carried out using China's pollution discharge data and pollution discharge fee collection standards in 2017. The results show that when enterprises have different bargaining powers, there are differences in the evolutionary stable strategy (ESS) in the process of environmental tax collection. Enterprises with weak bargaining power may adopt "OBV" strategy. Under the system of upward accountability, it is difficult for the public to form adequate supervision over polluting enterprises and environmental inspectors. Only with the power of the upper-level government can the public's supervisory role be brought into play. High audit costs and environmental tax rates may be objective incentives for environmental inspectors' corruption and enterprises' bribery.

Does the central environmental inspection effectively improve air pollution?-An empirical study of 290 prefecture-level cities in China

In order to control air pollution better, China has adopted the central environmental inspection mechanism. This paper adopts the data of 290 prefecture-level cities in China to evaluate the air improvement effect of the central environmental inspection mechanism. Firstly, based on the Mechanism Design Theory and Principal-agent Theory, this paper analyzes the government incentive measures and effort levels under the conditions of information as symmetry and asymmetry. Then, this paper introduces Regression Discontinuity Design (RDD) Model to evaluate the air improvement effect of the central environmental inspection mechanism. Lastly, this paper explores the sustainability of the environmental inspection mechanism through the regression analysis of environmental inspection revisit. The results show that: under the condition of information symmetry, the central government can make the local governments reach the Pareto optimal effort level through the design of incentive contract. In a short period of time, the first round of environmental inspection and environmental inspection revisit have significantly improved air quality, and significantly reduced PM2.5 and PM10 and other major single pollutants. In general, this system has had an immediate effect. The environmental inspection revisit has also significantly reduced the concentrations of AQI, PM2.5 and PM10. Compared with the first round of environmental inspection and environmental inspection revisit, the latter has a higher level of air pollution reduction and better effect. The sustainability of the improvement effect of environmental inspection mechanism is questioned. It is of great significance to evaluate the actual effect of the central environmental inspection system and tap the unique experience of "Chinese style" to explore how to control air pollution and promote green development.

Does central environmental inspection improves enterprise total factor productivity? The mediating effect of management efficiency and technological innovation

The strong demand from the public to find new ways to both improve economy and protect nature has been evoked by "pollute first and control later", which is the previous Chinese mode of development. With the new round of central environmental inspection approaching, should the Chinese government continue to intensify its supervision? The policy effect of the first round of central environmental inspection in 2015 can be a good reference. Based on the data from 1498 listed companies during the period between 2014 and 2018, the Levinsohn-Petrin (LP) method was used to measure enterprises' total factor productivity. Also, a propensity score matching-difference in difference (PSM-DID) method was established to explore the impact of central environmental inspection on enterprises' total factor productivity and its impact mechanism. The results indicate that first, central environmental inspection improved the total factor productivity of enterprises by promoting management efficiency and technological innovation. Second, the mediating effect of management efficiency accounts for approximately 16.6% of the total effect, while the mediating effect of technological innovation accounts for only 7.7% of the total effect.

Can China's pollution reduction mandates improve transboundary water pollution?

This paper discusses how the pollution prevention mandate imposed by China's central government triggers water pollution across provincial borders. Because the central government has put the pollutant reduction into the promotion evaluation, and pollution control in the downstream area of a province mainly brings benefit to other regions, the provincial officials are incentivized to reduce the water pollutants away from the downstream city and strengthen environmental regulation within the province. We apply the difference-in-differences-differences (DDD) method to the dataset on water quality in cities along 18 major rivers in China from 2007 through 2016. We find that compared with the interior cities, the most downstream city of a province faces worse water quality. Besides, we find that environmental policy significantly increases the extent of pollution across jurisdictional boundaries. Then, we turn on the mechanism and find that the pollutant reduction target is significantly lower in the most downstream city of a province. Unanticipated provincial government behavior leads to severe transboundary water pollution.

Can Chinese Central Government Inspection on Environmental Protection Improve Air Quality?

Environmental pollution is one of the major sustainability problems in China. As a major institutional innovation to supervise local governments to implement environmental governance measures, the effect of central environmental protection inspection needs to be carefully investigated. In this paper, the environmental protection inspection in July 2016 was used as a quasi-natural experiment to estimate the effect of central environmental protection inspection on air quality by using the synthetic control method. The study found that not all regions under inspection have significantly reduced the Air Quality Index (AQI). For the four inspected regions, the AQI decreased in Inner Mongolia Autonomous Region and Jiangsu Province during the period of inspection. But the inspection does not affect Henan Province and Jiangxi Province. In terms of individual pollutants, for Inner Mongolia Autonomous Region and Jiangsu Province where AQI has declined, not all individual pollutant concentrations have decreased. The treatment of specific individual pollutants still needs to be concerned.

Does Environmental Inspection Led by the Central Government Improve the Air Quality in China? The Moderating Role of Public Engagement

The severe air pollution in China has imperiled public health and resulted in substantial economic loss. To tackle the unprecedented pollution challenges, China has launched a campaign-based environmental inspection over all regions to impel local governments’ actual pollution abatement. At the same time, with the public’s awakening awareness about environmental protection, the public has also played a particularly vital role in this inspection. Under this circumstance, the study tries to reveal the impact of Environmental Inspection led by the Central Government (EICG) on air quality improvement, and to examine the role of public engagement in their relationship. Specifically, utilizing daily data covering 249 prefecture-level cities in China from 1 June 2015 to 31 May 2018, this study employed multiple regression models and then found that due to the implementation of EICG, the concentrations of PM2.5, PM10, SO2 and NO2 decline by 2.642 μg/m3, 6.088 μg/m3, 1.357 μg/m3 and 1.443 μg/m3, respectively, and the air quality index decreases by 2.4 in total, which implies that EICG can improve the air quality to a great extent. However, the coefficients for major variables change from negative to positive, suggesting that an attenuation effect of EICG on air quality improvement exists in Chinese institutional background. Meanwhile, public engagement is shown to enhance the positive association between EICG and air quality improvement. Additionally, further analysis demonstrates that EICG promotes the improvement in air quality up to three months after the inspection in cities during the heating period, while the positive effect has existed during one month before the inspection in cities during the non-heating period. Additionally, in contrast to the instant effect in cities not specially monitored, there is a lagged effect of EICG in controlling the air pollution in cities specially monitored.