Can environmental regulations change the environmental behaviour of local leaders and enterprises? Evidence using the accountability audit of natural resources in China

ABSTRACT

Securing long-term environmental pollution control in a system where local leaders in China hold tenure for only a short term is a challenge. The innovative Chinese accountability audit of natural resources (AANR) pilot project attempts to address this problem by mandating lifelong accountability for local leaders. Using this pilot as a quasi-natural experiment, we explored macro-effectiveness and micro-mechanisms of AANR. The results show that AANR has a positive impact on the environmental investment behaviour of enterprises. This paper finds that AANR stimulates enterprises’ investments in the environment by improving the environmental behaviour of local leaders. During mobilisation meetings, local leaders convey signals on environmental matters. Political connections are bridges which convey the signals of mobilisation to enterprises. Those enterprises receive the signals and increase environmental investment. AANR thus promotes collaborative governance by ensuring that the interests of key stakeholders are aligned to prevent pollution.

KEYWORDS:

• China
• environmental regulations
• local leaders
• political connections
• environmental investment

Acknowledgments

Thanks are due to three anonymous reviewers and the editor for their helpful comments. Financial support for the research was provided by the National Natural Science Foundation of China (72274118).

Disclosure statement

No potential conflict of interest was reported by the author.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Additional information

Funding

The work was supported by the National Natural Science Foundation of China [72274118]