Does vertical administrative integration of environmental monitoring at the provincial level effectively motivate firms to improve environmental behaviour in China?

A few cities and provinces in China have implemented vertical administrative integration of environmental monitoring to the provincial level as a response to severe environmental pollution. This study used an adaptive agent-based simulation model to explore whether the reform might effectively motivate polluting industrial firms to improve their environmental behaviour. Simulation results found that the reform might not effectively motivate the desired improvements in environmental behaviour unless policy-makers improve individual enterprises’ financial capacities, enhance their subsidies, and encourage managers to improve their environmental awareness. These findings could be used in the vertical administrative reform efforts to help achieve the reform’s success. Points for practitioners The vertical reform needs to be sufficiently systematic across its governmental structure because it cannot operate in isolation. It is a part of the country’s complex economic, social, and environmental societal system. Combining administrative restructuring with regulation of micro-agents’ behaviour might increase the reform’s likelihood of success, and financial policies might improve preventive/enthusiastic environmental behaviour. A sophisticated policy approach, such as encouraging preventive/enthusiastic environmental behaviour through business opportunities, might ease behavioural change.