Association for Public Policy Analysis & Management

In environmental governance, the construction of pollution control facilities is intended to reduce the emissions of pollutants. However, infrastructure projects are also potential sources of corruption for pubic bureaucrats who have monopolistic control over licenses and permits for request to build. One possible result from political corruption is inferior quality and failure in pollution abatement. However, China uses high-powered performance-based incentives to reward public officials for reducing pollution, and pollution control facilities are needed to achieve this goal. Consequently, another possible result from corruption is the use of bribes to speed construction of effective pollution control facilities: the possible reward may be greater than the threat of punishment for corruption. While the adoption of high-powered performance management system in environmental governance will increase the demand for pollution-abatement facilities, it may also raise the central government’s levels of tolerance for sub-national political corruption.
However, previous research fails to examine whether anti-corruption efforts speed or delay the construction of high-quality facilities. It also ignores whether the inception of high-powered rewards for emission reduction speeds the construction of anti-pollution facilities, and whether anti-corruption efforts together with high-powered rewards alter the relation between outputs (facility construction) and possible rewards or punishment. This study aims to fill these gaps by empirically exploring these questions.
China is a centrally managed one-party system that is focused on economic growth to maintain stability. Pollution emissions in China have become costly, which reduces economic growth. Controlling emissions, however, must happen at the local level. Consequently, China’s central government introduced a high-powered performance incentive system (i.e., the Eleventh Five Year Plan) in the mid-2000s to hold the subnational leading bureaucrats (the nomenklatura) personally accountable for the reduction in emissions of two targeted pollutants (sulfur dioxide, chemical oxygen demand in wastewater).
Using a panel design with data from 2001-2010 on 31 provinces collected from China's Statistics Yearbooks, Procuratorial Yearbooks, and several official news archives, this study measures the dependent variables using three indicators: (1) the number of hazardous air and wastewater treatment facilities; (2) the capacity of industrial hazardous air (or wastewater) treatment facilities; and (3) a ratio between the total volume of industrial hazardous air (or wastewater) treated and the number of facilities. Independent variables are the high-powered performance-based incentive system and government’s anti-corruption efforts. The former is measured by a dichotomous variable indicating the adoption of the Eleventh Five Year Plan. We measure the latter by the aggregated yearly number of registered provincial cases for investigation of public officials’ corruption and misfeasance by the procuratorates. We also compute the interaction of the two variables. This study includes control variables indicating bureaucrats’ career motivation (i.e., the age of provincial governors, provinces’ chance of access to the Politburo, and current Politburo membership), the share of governmental spending on social security and welfare, and on education and health, disposable income per capita, tax revenues, pollution-intensive industry fixed assets, population, and population density.