The Impact of Environmental Regulation on Air Quality: Empirical Evidence from the National Ecological Civilization Demonstration Counties Policy in China

Abstract China faces increasing ecological constraints, and the National Ecological Civilization Demonstration Counties (NECDCs) policy may offer an effective solution. Using a sample of 1,963 counties in China from 2015 to 2021, which represents approximately 70% of all Chinese counties after screening for data completeness, this study treats the selection of NECDCs as a quasinatural experiment and employs a multiperiod difference-in-differences model to empirically examine its impact on county-level air quality. The results indicate that NECDCs experience a 2.4% reduction in the PM2.5 index, which is driven by mechanisms of promoting dynamic adjustments in firms, enhancing innovation capabilities, facilitating industrial upgrading, and increasing public environmental awareness. The impact is more pronounced in regions with higher digital financial inclusion, better ecological quality, and those in central and western China. This study also finds the spillover effects of NECDCs in surrounding areas. This research enriches the theoretical framework linking environmental regulation and air pollution and provides policy insights for sustainable development of air quality.