Does Proximity Enhance Compliance? Investigating the Geographical Distance Decay in Vertical Supervision of Non-Grain Cultivation on China’s Arable Land?

Economic geography suggests that geographical distance tends to weaken supervisory effectiveness, giving rise to a “distance decay effect”. However, in the context of vertical governance by the central government, local authorities tend to intensify their efforts to enhance performance. The existence of the “distance decay effect” under such circumstances requires further investigation. This paper considers the establishment of China’s National Agency of Natural Resources Supervision as a quasi-natural experiment, utilizing panel data from 2015 to 2020 for cities and employing a continuous DID model to explore how geographical distance under vertical governance affects the supervisory effectiveness of non-grain cultivation on arable land. This research indicates that the supervisory effectiveness of the supervisory agency on the non-grain cultivation of arable land tends to decrease with an increase in geographical distance. This negative impact is achieved through an escalation in direct supervisory costs. Further analysis reveals that the diminishing effect of geographical distance on supervisory effectiveness intensifies as the opportunity costs of local government response increase. The above study provides fresh evidence for the “distance decay effect” on supervisory effectiveness, which is beneficial for the central government in optimizing control measures to prevent the phenomenon of non-grain cultivation on arable land.