Vertical environmental protection pressure, fiscal pressure, and local environmental regulations: evidence from China's industrial sulfur dioxide treatment

Incorporating vertical environmental protection pressure, fiscal pressure, and government environmental regulatory behavior into a unified research framework, this paper empirically tests local governments' regulatory behavior on sulfur dioxide under incompatible dual pressures using data of 30 regions in China from 2003 to 2017. The results show that as the vertical environmental protection pressure increases, local governments will improve the regulation intensity on sulfur dioxide. However, as local governments' fiscal pressure increases, the effect of vertical environmental protection pressure on local governments' environmental regulations will be weakened. Based on the "neighborhood imitation effect," the impact of neighboring regions is considered when measuring fiscal pressure. The results still show that fiscal pressure will weaken the improving effect of vertical environmental protection pressure on the local government's environmental regulation. After controlling the endogenous problem and a series of robustness tests, the above conclusions are still valid. The results indicate that improving the status of environmental protection in the performance evaluation is an effective means to promote the implementation of environmental regulations by local governments. However, China's environmental governance cannot depend solely on improving the proportion of environmental protection in performance evaluations of local officials. A reasonable promotion incentive mechanism should be designed to avoid the incompatibility pressure caused by conflicting tasks to distort the local government's compliance with the central government's pollution control intention.