Does environmental management system reform improve air quality? Quasi-experimental evidence from China

Environmental decentralization faces significant institutional barriers, contributing to failures in environmental governance observed in many countries. While prior research highlighted the benefits of external vertical supervision, there is limited research seeking fundamental solutions from the perspective of institutional reform. Using panel data of Chinese prefecture-level cities over the period 2014-2019, we examine the impact of Vertical Reform of Environmental Protection (VREP) on air pollution by exploiting staggered difference-in-differences (DID) model. The findings suggest a positive effect of VREP on air quality, with a more pronounced effect in regions experiencing heightened environmental governance challenges. Interestingly, pressures from economic development appear to have no adverse effect on this relationship. The observed improvements in air quality seem to stem from stricter environmental regulation rather than increased environmental investment. Additional findings indicate a reduction in data falsification within environmental monitoring post-reform. Overall, the evidence underscores the significance of VREP in enhancing air pollution control.

Automated summary

Environmental decentralization faces institutional barriers, but vertical reform can improve air quality and reduce data falsification.