Economic Development, Fiscal Ecological Compensation, and Ecological Environment Quality

Abstract

Focusing on the exploration of the important role of fiscal ecological compensation in green development, this paper incorporates fiscal ecological compensation into the analytical framework of green development. Based on samples of data from county areas in China in 2017 and 2018, this paper empirically examines the shape of the green development routes in county areas in China. On this basis, this paper explores the impact and mechanism of fiscal ecological compensation on the green development path in China. The empirical results show that there is a nonlinear, N-shaped relationship between economic development and the ecological environment in China within the range of the sample examined. Fiscal ecological compensation has a direct governance effect on the ecological environment of deterring ecological damage and providing financial compensation. Fiscal ecological compensation has an indirect impact on the ecological management of different regions by influencing economic development. Therefore, while focusing on transforming the economic development model, local governments should adopt policy instruments such as expanding the coverage of financial ecological compensation, deepening the design of the financial ecological compensation system, and systematically evaluating the effects of financial ecological compensation policies. The government should further improve and optimize the fiscal eco-compensation system in order to help China’s green and high-quality development.