Abstract: A rational assignment of environmental power among multi-level governments is perceived as a footstone to establish modernized environmental governance system in China. This paper establishes a theoretical framework for environmental decentralization (ED) based on cost-benefit analysis. Focusing on China's multi-level local governments, this paper calculates the degree and evolution of ED for provincial, prefecture-level, and county-level divisions based on staff number of environmental management system. To the authors' knowledge, this paper fills a research gap by examining China's multi-local ED quantitatively. We then evaluate the effect of each ED for the first time on industrial pollution abatement by employing panel datasets from 1992 to 2015 based on several instrumental variables methods. Empirical results indicate that China's environmental management is characterized by both decentralization toward counties and centralization toward the central, and environmental power of provincial and prefectural-level is weakened relatively. In China's decentralization system, environmental management by counties increases industrial pollution, indicating that there exists excessive decentralization. Enlarging prefectural-level power, especially environmental monitoring power, will facilitate the reduction of industrial pollution. The strong coordination by environmental target-oriented responsibility system can partially neutralize the opposite effects of ED on pollution at county and prefectural levels. The abatement effect varies significantly due to the difference in management function, region and pollutant, suggesting that there is a need to explore a more feasible system that best fits the features of specific function, region and pollutant.

Key words: environmental decentralization, pollution abatement, centralized reform, environmental management system