Impact of the ' environmental protection vertical reform' policy on urban economic green transition from the perspective of environmental decentralization.

The vertical reform of environmental protection agencies is an important means to break through the dilemma of the traditional environmental governance model. It represents an innovative exploration of institutional reform in the field of ecological and environmental protection, holding long-term significance for improving the environmental protection system and promoting economic green transition. Based on panel data from 280 cities from 2005 to 2021, this study employed the vertical reform of sub-provincial environmental protection agencies (referred to as ' environmental protection vertical reform') as a quasi-natural experiment and investigated the impact of this policy, characterized by environmental centralization, on economic green transition. The findings were as follows: (1) The ' environmental protection vertical reform' policy could significantly promote urban economic green transition, and the policy effects were persistent. This conclusion remained robust after a series of robustness tests, including parallel trend tests, placebo tests, counter-factual tests, exclusion of other environmental policy impacts, and PSM-DID estimation. (2) Mechanism analysis revealed that from the perspectives of market response and local government behavior, the ' environmental protection vertical reform' policy could drive economic green transition by optimizing the efficiency of factor resource allocation and expanding environmental governance expenditure. (3) Heterogeneity analysis showed that the economic green transition effects of the policy varied depending on city level, geographical location, degree of fiscal decentralization, and the presence of pollution control targets. The promotion effect was more pronounced in non-provincial capital cities, eastern and central regions, high fiscal decentralization cities, and cities without clearly defined binding pollution control targets. (4) Spatial spillover results showed that this policy had a negative spatial spillover effect on the economic green transition in surrounding areas. This study recommends the continuous deepening of environmental management system reform, mobilizing the enthusiasm of local governments for environmental governance, and stimulating the potential for economic green transition. It also suggests strengthening the aggregation capacity of urban factors such as technology, funds, and human capital, establishing a fiscal system that matches environmental management powers with expenditure responsibilities, and formulating differentiated environmental governance strategies tailored to local conditions. This study has reference value for optimizing the design of environmental management systems and improving the efficiency of government environmental governance in the context of constructing a harmonious coexistence between humanity and nature. [ABSTRACT FROM AUTHOR]