Environmental Effects of City-County Mergers in China: Strengthening Governance or Aggravating Pollution?

Green and high-quality development is the focus of China's urban development strategy in the new era. The city-county merger policy has been one of several powerful tools used by the Chinese government to promote urbanization in recent decades, but whether and how it influences the environment has been rarely discussed. Using the multi-period difference-in-differences method and urban panel datasets, we investigated the environmental effects of the city-county merger policy in China from 2000-2016 and obtained the following results. First, the city-county mergers significantly reduce the environmental pollution of merged cities. The robustness tests support this conclusion. Second, the effects of city-county mergers on environmental pollution control decrease with the increase in geographical distance between the merged cities and counties; the smaller the differences in economic strength of merged cities and counties, the better the coordinated control of environmental pollution; the environmental governance effects of merged cities in the eastern region are lower than those in the central and western regions. Third, by intensifying the vertical management of urban environmental protection agencies, unified urban planning and fiscal centralization, the city-county mergers can strengthen the overall environmental governance capabilities of merged cities, reduce the negative effects of urbanization, and ultimately improve the environmental quality.