Fiscal Decentralization, Public Spending And Carbon Emission

Since the reform and openness, despite China’s remarkable economic growth, the contradictions between economic development and environmental deterioration gradually highlight, and environmental problems become big obstacle with the economic development. As the part of environmental pollution, carbon emissions are paid great attention for inducing global warming. The governments all over the world have made great effort to reduce gas emissions. Since2007, China has become the world’s largest carbon emitter, and has promise the reduction target of carbon emissions in2020. However, the demand of energy is still huge in the economic transition stage, and the use of energy may emit lots of carbon dioxide. The local governments face huge pressure of reducing carbon emissions, with the economic development.Recently, large number of literature studies the relationship between local government behavior and development. The extensive economic development reduces current environmental problems. Local governments have discretion in the financial expenditure and allocation of resources. Local governments of "compete for growth" may ease the control of carbon emissions, or even support pollution industries, for the externalities of carbon emissions and existing incentive mechanism, the carbon emissions will increase. The combination of fiscal decentralization and incentive mechanism may better explain the behavior of local governments, and financial expenditure is vital means for the local governments realizing their goals. The gross of financial expenditure develops rapidly, public spending accounts for the proportion of the whole financial expenditure also increased. Although financial expenditure scale could not keep eternal grow, but the effect of fiscal expenditure structure on environmental protection is long. Does the increase of financial expenditure scale stimulate carbon emissions growth? How the effect of financial expenditure structure on carbon emission reduction? Whether are all the public spending program "pro carbon emission reduction"? In addition, the research on trend of carbon emissions may attribute to formulation of environmental protection policy. Base on background, the paper studies the impact of fiscal decentralization on carbon emission; the effect of financial expenditure scale and structure on carbon emissions reduction; and the trend of carbon emission across provinces, the relationship between increase of carbon emission and economic increase, using provincial-level dynamic panel data. The conclusions are as follows:(1) It shows that there is positive correlated relationship between fiscal decentralization and environmental pollution, the increase of fiscal decentralization level doesn’t help to reduce carbon emission. The impact of fiscal decentralization on carbon emission varies greatly among provinces there are different energy consumption structure, different geographical location, and different environmental policy. The influence of fiscal decentralization increasing the carbon emission is through secondary industry and tertiary industry.(2) It shows that there is positive correlated relationship between financial expenditure scale and per capita carbon emissions, and negative correlated relationship between financial expenditure structure and per capita carbon emissions. The effect of subentry spending on the reduction of carbon emissions is difference. In addition, the impact that increasing of financial expenditure structure leads to the reduction of carbon emissions is different in per industry.(3) Carbon emissions have convergence across provinces. The factors impact on convergence of per capita carbon emissions are industrialization and trade openness, and the carbon emission intensity has absolute convergence. Per capita carbon emissions exist scale effect, and the growth rate of per capita GDP is positive with the growth rate of per capita carbon emissions. Carbon emission intensity does not exist scale effect, and the growth rate of per capita GDP is negative with the growth rate of carbon emission intensity.