When More Isn't Better: The Diminishing Returns of Policy Pilots in Environmental Governance

ABSTRACT While the “pilot designation” mechanism is recognized for its flexibility and diversity in environmental governance, there remains an unresolved question regarding its optimal implementation. Specifically, the potential for resource redundancy and formalism when an excessive number of projects are initiated has not been thoroughly examined. This study addresses this research gap by conducting an empirical analysis using panel data from 283 cities in China to explore the diminishing marginal returns of the pilot designation system in environmental governance. We examine both the theoretical foundations and practical effects of this policy tool. Our findings indicate that pilot designations initially lead to significant improvements in local environmental governance performance. However, as the number of pilot policies increases, their impact exhibits diminishing marginal returns and can even become negative. Notably, once the number of pilot policies surpasses a certain threshold, the effectiveness of the policy not only stagnates but also declines, suggesting that “more” is not always “better” in the context of policy pilots. Additionally, the success of these pilots is contingent upon the level of attention that local governments devote to environmental governance. These results underscore the necessity for a balanced approach in the design and implementation of policy pilots to avoid overextension and ensure optimal resource allocation.