Environmental Regulation and Urban Ecological Welfare Performance in China: Evidence from the Key Cities for Air Pollution Control Policy

Sustainable urban development is a critical pathway to harmonize economic growth, environmental protection, and public well-being, playing a vital role in addressing air pollution. The Key Cities for Air Pollution Control (KCAP) policy is a representative mandatory environmental regulation aligned with sustainable development principles. It aims to promote economic stability, environmental sustainability, and public welfare, thereby fostering harmonious coexistence between humans and nature. This study treats the KCAP policy as a policy-induced quasi-natural experiment and applies a two-stage Data Envelopment Analysis (DEA) model to evaluate the ecological welfare performance (EWP) of 207 Chinese cities from 2007 to 2023. The results show that KCAP policy significantly improved EWP by 1.33 percentage points. Spatial spillover analysis reveals heterogeneous impacts: no significant effect within 30 km, a negative effect between 30 and 70 km, and a positive effect at 70–80 km. Mechanism analysis indicates that labor misallocation weakens policy effectiveness, whereas stronger market-oriented regulation enhances it. The policy effects are more pronounced in heavily polluted regions, old industrial bases, and large city centers. These findings provide theoretical and policy insights for advancing equitable ecological welfare in the context of dynamic development.