In the last three decades, China has taken actions to tackle its environmental issues while the tension between policymakers at the central level and decentralized implementation of such policies has been a major concern. This study investigates how policy clarity and high powered incentive system jointly affect organizational performance in the context of environmental governance in China. Utilizing city-level data compiled with text data extracted from Report on the Work of the Government from 2004 to 2015 and Difference in Differences (DID) design, we find that the compliance of local officials to protect the environment as well as the actual environmental protection outcome significantly increased. Our study also finds evidence that newly-appointed Party Secretaries at the city level are the main facilitators of enhancing environmental regulation policies. This research proposes a two by two typology based on the principal-agent theory explaining how successful environmental governance within this period in China is realized and offers practical implications for those who seek to enhance the effectiveness of environmental governance.

No abstract