The Analysis on the Influence of Fiscal Decentralization on Carbon Emission

Abstract

Among the many factors affecting carbon emissions, the degree of fiscal decentralization is an important factor that cannot be ignored. Based on the SPIRPAT model, using provincial panel data, this paper discusses the impact of fiscal decentralization on carbon dioxide emissions in China. In order to evaluate the effect of local fiscal system on the environment, this paper selects four indicators to reflect the degree of fiscal decentralization respectively, and combines other economic and social explanatory variables to build a panel data model. The results imply that when we use different indicators to characterize the degree of fiscal decentralization, it can be concluded that the degree of fiscal decentralization has a significant positive effect on carbon emissions. In current stage of development in China, the improvement of local government fiscal autonomy is not conducive to carbon emissions reduction. Due to the domestic fiscal decentralization and the promotion mechanism of government officials, local governments are only inspired by economic growth. So as the improvement of the degree of local government fiscal autonomy, the government has to sacrifice public goods with positive environmental externalization to support the development of the high carbon industries with higher economic benefits.