Has third-party monitoring improved environmental data quality? An analysis of air pollution data in China

Abstract

The significant role of high-quality data in environmental policymaking has led to the Chinese central government's concrete efforts to improve its monitoring system, which had long been plagued with data manipulation by local governments. The most remarkable policy innovation of the last decade in this area has been the introduction of a critical external oversight—profit-making third-party organizations—by the central government to monitor local governments' environmental performance. Despite the significance of third-party environmental monitoring, little is known about its effectiveness in improving data accuracy and whether and how it brings about changes to China's environmental governance. Framed within the literature on China's intergovernmental relationship and adopting a regression discontinuity model with a national database of air quality, this study examines whether third-party monitoring improves the accuracy of environmental data in China, and if so, how this approach can remedy the problem of data manipulation. Results show that data accuracy has been improved after the involvement of third-party organizations, providing evidence that supports China's efforts to advance its environmental governance from a mono-centric and non-participatory policy process to one that integrates both authoritarian control and market-based mechanisms. We discuss policy implications of this finding for environmental governance in China.