Impact of decentralization policy on air quality

This study analyzes how political and administrative decentralization influences the effectiveness of air pollution mitigation plans in Chile. Exploiting the creation of the Ñuble Region as a quasi natural experiment, we combine ARMA and GARCH time series models with a Difference-in-Differences framework applied to high-frequency hourly data on PM2.5 concentrations across comparable communes. The results show that while Air Quality Management Plans (AQMPs) do not produce immediate reductions in pollution levels, their effectiveness becomes statistically significant over time, with even stronger effects observed within a more decentralized institutional framework. Mechanism evidence indicates that regional institutional deepening increased implementation intensity through expanded stove replacement programs, thermal insulation subsidies, monitoring, and public engagement. Robustness checks using PM10 concentrations and seasonal placebo tests confirm that the estimated effects operate primarily through residential heating channels. These findings highlight the role of institutional capacity in shaping environmental policy outcomes. More broadly, the paper extends the empirical literature on decentralization and environmental governance to a Latin American unitary state context, complementing the predominantly China-based evidence in recent research.