Does local empowerment come at an ecological cost? Evidence from China’s county power expansion reform

This study examines how enhanced local autonomy affects ecological quality by analysing China’s County Power Expansion reform, which granted unprecedented fiscal and administrative powers to county governments. Using a comprehensive ecological index that captures multiple environmental dimensions, we find that the reform is associated with a decline of 0.64 index points in local ecological quality. This deterioration is associated with a stronger prioritization of economic development, reflected in increased growth-oriented expenditure and business attraction, while environmental protection expenditure did not increase significantly. The negative ecological effects are amplified in counties facing stronger economic pressures but mitigated where environmental performance metrics are included in official evaluations. These findings reveal important trade-offs in decentralized environmental governance and highlight how institutional incentives can shape local governments’ environmental decisions.