Fiscal Decentralization, Fiscal Spending And Environmental Pollution

China as the biggest country in carbon emissions, has tremendous pressure inreducing energy consumption and achieving a low-carbon economy. In this regard, thetraditional literature majored in the research of carbon emissions from economicgrowth, urbanization, foreign investment perspective. However, any economic factorcannot occur in isolation from the institution, especially in our country that as aeconomy in transition. Fiscal decentralization as an important part of Chineseeconomic reform, is one of the important systems in ensuring rapid economicdevelopment. Therefore, the study of the impact of government’s fiscal spendingbehavior under fiscal decentralization on carbon emissions is particularly important.This article explained the environmental problems such as carbon emissionsfrom the perspective of Chinese fiscal decentralization, and qualitative analysis theimpact mechanism between Chinese fiscal decentralization, local government fiscalspending behavior and carbon emissions. And put forward two hypotheses:(1) thehigher degree of fiscal decentralization, the more serious environmental pollution;(2)the larger size of local government fiscal spending, the more serious environmentalpollution. In order to verify the above hypotheses, this article use carbon emissions asindicators of environmental pollution, and use the provincial panel data from1999to2012, empirical analysis the relationship between fiscal decentralization, fiscalspending and carbon emission in our country. Then, divided our country into high,middle and low-emission-area, and study the regional differences. Finally, on thebasis of theoretical research and empirical analysis, we put forward some policyrecommendations to conductive China’s carbon emission and achieve low carboneconomy from the perspective of fiscal policy.The study has the following conclusions:(1) Chinese fiscal decentralization willincrease carbon emissions. It requires our country to adjust the financial evaluationsystem of local government and put the Green GDP into the evaluation index, in orderto change the local government’s behavior.(2)From the perspective of fiscal spendingscale, increase the size of the local fiscal spending is not conducive to reduce carbon emissions. However, from the structure of fiscal spending, the economic constructionspending,administrative spending and social-security-spending both have positivecorrelation with carbon emissions, while the science-education-spending has anegative correlation with carbon emissions.(3) From the result of regional differencesanalysis, we found that the fiscal decentralization has the largest impact on the highemission area, the middle emission area followed, the low emission area is notsignificant. The fiscal spending in all area have the positive correlation with carbonemissions. While the area has higher carbon emission, the fiscal spending on role ofpromoting carbon emission will more obvious.