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Using a relational two-stage network data envelopment analysis (DEA) model considering undesirable outputs, this paper evaluates both the process and system performances of industrial environmental governance in China’s 30 provincial-level regions during 1998–2015. Furthermore, this is the first study to apply the spatial econometric models with a geographical distance matrix to investigate the local and spatial spillover effects of environmental regulations on heterogeneous environmental governance performance (i.e. clean production and end-of-pipe treatment performances). The results show that clean production performance is generally higher than end-of-pipe treatment performance, but both performances present a declining trend during the sample period. The estimation results of the spatial econometric models confirm the Porter hypothesis market-based environmental regulations improve local clean production performance. By contrast, we also find that command-and-control environmental regulations improve end-of-pipe treatment performance but curb clean production performance, and exert a “race-to-the-top” effect on local governments.

Heterogeneous performances and consequences of China’s industrial environmental governance: clean production vs. end-of-pipe treatment