China's extremely high levels of urban air, water and greenhouse gas emission levels pose local and global environmental challenges. China's urban leaders have substantial influence and discretion over the evolution of economic activity that generates such externalities. This paper examines the political economy of urban leaders' incentives to tackle pollution issues. We present evidence consistent with the hypothesis that both the central government and the public are placing pressure on China's urban leaders to mitigate externalities. Such "pro-green" incentives suggest that many of China's cities could enjoy significant environmental progress in the near future.
