Does Environmental Regulation Lead To The Transboundary Pollution?

In China,the rapid deterioration of environmental quality has gained substantial attention.For improving the ecological condition,the central government has put pollution reduction into the promotion criteria since 2006.However,there remain doubts about the efficacy of environmental policy in improving the water quality across the provincial border.Besides,environmental regulation might only change the location of the polluting enterprises and make firms transfer to the area having a low regulation stringency,like provincial border areas and western provinces.It is inefficient for overall pollution reduction.In this paper,we investigate the effect of environmental policy on transboundary pollution and explore the mechanism about how the policy leads to the pollution spillover across the provincial border.The research logic of this article is as follows: This article first verifies the existence of transboundary water pollution.Is the concentration of water pollutants across the province borders significantly weaker than that in the interior areas? Then,it analyzes the impact of environmental policies on the water quality of the provincial border areas.Finally,it explores the mechanism of environmental policy failure.Firstly,based on the water quality data from the inspection station between 2007 and 2016,we use a spatial autoregression model to verify transboundary water pollution.Pollutant in the downstream area is the cumulative value of the upstream region.We can compare pollutants’ differences between the provincial and interior regions,only controlling the spillover effect.Under controlling the spillover effect,the most downstream city of a province faces more severe water pollution than the interior counterparts.Secondly,based on the water quality data from 2007 to 2016,using the difference-in-differences-differences(abbreviated as DDD)method,We analyze the impact of environmental policies on the water quality across the provincial border area.We exploit the natural experiment that the central government put-into promotion evaluation since 2011 to estimate the influence of environmental policy on the-at the provincial borders.W choose the interior cities and dissolved oxygen as the control group.Dissolved oxygen,not included in the promotion evaluation,can capture the local situation.Next,this article examines the impact of the "Twelfth Five-Year" environmental policy on the concentration of chemical oxygen demand in the provincial border areas.The chemical oxygen demand was included in the evaluation indicators for official promotion in 2007.The government has set COD emission reduction targets.This article empirically tests whether the "Twelfth Five-Year" policy has further increased COD concentration in the provincial border area compared with the "Eleventh Five-Year" policy.The empirical results found that the "Twelfth Five-Year Plan" policy significantly increased the concentration of chemical oxygen demand in the provincial border areas compared with the "Eleventh Five-Year Plan".Thirdly,based on a dataset on the environmental regulation intensity and the matching data in cities along 18 major rivers in China from 2006 through 2016,this paper analyzes the influence of environmental regulation on transboundary pollution.The empirical results found that the downstream border cities’ environmental supervision is significantly lower than the interior areas.In the eastern and central regions,downstream border cities’ environmental supervision is significantly weaker than the interior regions.In the western region,the gap in environmental supervision is not significant.The increase in the provincial government’s environmental regulation leads to the rise in the gap between the downstream border and the interior area.The gap in environmental supervision in 2009 and 2014 is larger than that in other assessment years.It indicates that the provincial government is inclined to reduce emissions strategically when closed to the examination deadline.Finally,using the dynamic panel model and the panel threshold model,based on the perspective of municipal government promotion incentives,this article analyzes the causes of transboundary pollution.Using the dynamic panel and panel threshold model on cities along 18 major rivers in China,we analyzed how the government balances economic performance and pollution reduction targets and explained why the government neglects environmental regulation along political borders.We found relative economic performance is positively related to environmental enforcement effort.While the effect of economic performance on environmental regulation effort is non-linear.Relative economic performance is negatively related to the environmental enforcement effort when relative economic performance is lower than the threshold;for the other,relative economic performance is still positively connected to environmental regulation effort.The relative economic performance of downstream border cities is far below the panel threshold,and governments cannot obtain a competitive advantage regarding economic growth.The absence of promotion incentives results in the neglect of environmental supervision for governments at borders.We propose the following policy recommendations.First,set the appropriate incentive for different cities.Second,central governments should provide appropriate financial incentives for environmental regulation,rather than just using promotion assessment.Third,in the long term,the environmental protection department should be separated from the local government.Lastly,compensation should be given to the negative externalities of pollution control in downstream border cities.