Threshold Effect of Environmental Decentralization on Environmental Regulation and Carbon Emissions

Liangrong Yu and Weixian Wei ()
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Liangrong Yu: School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China
Weixian Wei: School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China

Sustainability, 2025, vol. 17, issue 7, 1-26

Abstract: Under the “dual carbon” targets, the influence of environmental regulation on carbon emissions is critical, and the moderating role of environmental decentralization should not be overlooked. Using provincial panel data from China, this study builds a Panel Smooth Transition Regression Model (PSTR) with environmental decentralization as the threshold variable to examine the nonlinear relationship between environmental regulation and carbon emissions. The study finds that when environmental decentralization is below the threshold, raising the intensity of environmental regulation leads to a significant reduction in carbon emissions; however, once decentralization surpasses the threshold, strengthened environmental regulation may result in a rise in carbon emissions. Three subcategories of decentralization exhibit similar threshold effects, but their direct emission reduction effects are heterogeneous. This research offers empirical evidence supporting the optimization of the distribution of environmental responsibilities across central and local governments, as well as for formulating regionally differentiated emission reduction policies.

Keywords: environmental regulation; environmental decentralization; carbon emissions; panel smooth transition regression model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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