opening up and improving economy can significantly promote the level of efficiency； the industrialization was negative mainly due to the industry was a major source of environmental pollution； under the condition of shortage of environmental protection funds， higher industrialization would naturally reduce the efficiency of the capital； the different effects on efficiency of fiscal expenditure on the environmental protection revealed that it was proportion of educated population not population density that can force the government to improve the level of efficiency of fiscal expenditure on environmental protection. Therefore， with the consideration of local governments’ action inertia and path dependence， institutional revision and development should be made through ‘toplevel design’ which could generate institutional supply to sustainable and healthy development； we could improve pollution emissions by motivating enterprises’ technical innovation and mitigate the negative effects of industrialization by setting more careful environmental standards， strict supervision and law enforcement； last but not least， continuous improvement of the proportion of educated population could force local governments to improve efficiency of fiscal expenditure on the environmental protection so as to realize the functions of

government.

Key words environmental protection； fiscal expenditure efficiency； DEATobit model； fiscal decentralization