Is environmental regulation conducive to the reduction of residents’ health costs? – evidence from the Chinese Family Panel Survey

In response to environmental degradation and the associated health challenges, the Chinese government has implemented a comprehensive array of environmental protection measures. Given the health enhancement objective of environmental protection measures and the considerable costs involved in the implementation process, evaluating whether environmental regulation is beneficial to reducing the health costs of the population is of great significance for enhancing environmental governance efficiency and social welfare. The data from the Chinese Family Panel Survey (CFPS) is applied to examine the effect of environmental regulation on the reduction of residents’ health costs from a microscopic perspective. The results indicate that for a 1% increase in total investment in environmental governance, residents’ health costs will decrease by 0.189%. The examination of the causal pathway suggests that implementing environmental regulation can diminish residents’ health costs through improving air quality and residents’ health status. Concurrently, there exist significant heterogeneities in the role of environmental regulation in reducing residents’ health costs. The effect of environmental regulation is more pronounced for the young, males, and individuals with better self-perceived health. Furthermore, the outcome of environmental regulation exhibits greater efficacy in urban areas compared to rural areas. Lastly, market-incentive environmental regulation in reducing health costs is more effective than command-controlled regulation. Enhancing the intensity of environmental regulation contributes to decreasing residents’ health costs. The findings can provide policy reference for implementing environmental governance and achieving tangible enhancements in individuals' life quality.