Can Environmental Centralization Curb Environmental Risk? Empirical Evidence From Environmental Accidents

Environmental risk, represented by environmental accidents, constitutes pivotal and challenging issues in environmental governance. However, the key role of institutional factors in environmental accident prevention is understudied. This paper investigates the governance effect of environmental centralization on corporate environmental accidents. Using the 2016 vertical environmental reform (VER) in China as an exogenous shock, we find that environmental centralization reduces the probability of corporate environmental accidents. Strengthening local environmental regulation and improving corporate environmental risk management in the jurisdiction seems to be the two key mechanisms behind the effect. Further analysis indicates that this effect is more pronounced in industrial-reliant provinces, as well as those with more public participation and more advanced government digital infrastructure. Finally, we find that environmental centralization exerts a significant mitigating effect on regional environmental accidents. Overall, our study highlights the advantages of environmental centralization in reducing environmental accidents and we provide valuable insights into environmental risk management aimed at ensuring ecological security.