Environmental Policy Innovation and Economic Performance in China: Multi-Stakeholder Governance under the River Chief System

• In Event: Student Research: Clean Energy Policy, Infrastructure, and Distributional Outcomes

Abstract

China’s River Chief System (RCS) combines top-down political accountability with bottom-up societal involvement. While its environmental benefits have received growing attention, its economic implications remain insufficiently understood. This study examines how RCS implementation relates to firm-level economic performance within a multi-stakeholder governance framework.
Using panel data on 862 listed firms in water-intensive and high-water-risk industries in the Yangtze River Economic Belt from 2010 to 2023, this paper employs a difference-in-differences design. Drawing on a tripartite framework encompassing government, the public, and regulated producers, the analysis examines operating efficiency, environmental investment, innovation, and governance conditions.
The average estimated efficiency effect is negative but not statistically significant with city-clustered standard errors. Under an industry-year efficiency measure and a policy-timing sensitivity specification, negative changes become more pronounced in later years, with a significant estimate for the fourth and subsequent years combined. Public environmental attention is associated with a stronger negative policy relationship, consistent with heightened monitoring pressure. There is no evidence of increased environmental investment or a significant invention response, leaving investment-driven compliance costs and innovation offsets unsupported. ESG and formal subgroup comparisons provide no clear evidence of buffering or differential effects.
These findings deepen understanding of the economic consequences of environmental policy innovation and highlight the conditional role of multi-stakeholder governance. They suggest evaluating firms’ operating adjustments alongside environmental outcomes and examining how public oversight and support for adaptation can work together.

Authors

• Hongde / Lyu, Southeast University (China)
  Presenting Author

• WENHE ZHAO, Southeast University
  Non-Presenting Co-Author