Transparency by Chinese Cities Improves Air Quality and Environmental Governance

• In Event: Transparency in Climate Politics: Evidence from China, Europe, and the US

Abstract

Although governmental transparency is purported to improve environmental regulation, this relationship is difficult to evaluate. Governments that perform well have incentives to be more transparent, which yields a strong association that might not be based on a causal relationship. Using a national-scale, randomized field experiment that increased transparency about the regulation of pollution by city governments in China as a source of exogenous variation, we assess how transparency affects the regulation of pollution, firms' responses, and aggregate environmental quality.

Transparency in regulation means that information about the actions that governments are taking (e.g., enforcement actions on polluting firms) and the outcomes of regulation (e.g., emissions levels, violations, ambient pollution) is publicly available. When this kind of information is not publicly disclosed, firms and governments can hide behaviors that do not reflect well on their management of pollution. When regulatory information is available, it may make it easier for national authorities to ensure that local authorities are effectively carrying out their mandates. Transparency may also activate public attention and facilitate the activities of nongovernmental organizations to hold accountable firms and governments that are not in compliance with regulations.

Our analysis shows that when the transparency of city governments about pollution increased through a randomized treatment, both city and firm-level pollution outcomes improve. City-level ambient air quality, measured in terms of PM2.5, PM10 and official air quality indices from monitoring stations, improves considerably in treated cities after several years. The number of firms and outlets that committed violations, as well as whether any violations occurred in a city, also decreased significantly because of transparency. A firm-level mechanism analysis suggests that improving transparency considerably reduces environmental violations in enterprises with high baseline pollution. However, higher transparency has little impact on the pollution of enterprises with a low rate of baseline violations. We also find that transparency has a significant effect on firms’ emissions, but no detectable effect on firm closures.

We present what is to our knowledge the first credible research design that can establish how transparency by local governments increases the quality of environmental regulation. The results of this study put common expectations about the promise of transparency on much stronger footing. The study suggests that transparency by governments holds a great deal of promise across many domains of governance.

Authors

• Sarah Anderson, University of California, Santa Barbara

• Mark Buntaine, University of California, Santa Barbara

• Mengdi Liu

• Bing Zhang, Nanjing Universiyt