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

Background 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. Results 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. Concur-rently, 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. Conclusions 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.

all of which contribute to the increase of health costs for residents and society (Liao et al. 2021;Lu et al. 2021).Therefore, environmental regulation has been employed by the Chinese government to curb pollution and ameliorate environmental quality, such as implementing the Environmental Protection Law and levying environmental taxes.These efforts have yielded impressive achievements.For example, the mean PM 2.5 concentration in key cities has dropped by 56% from 2013 to 2022, according to the Ministry of Ecology and Environment of China.As emphasized in the Environmental Health Work Programme, protecting public health is the main objective of environmental policy implementation, thus the health cost-effectiveness of environmental policies has become a key concern for researchers and governments.However, it remains unclear if regulatory environmental improvements will reduce costs related to the protection and enhancement of individual health.Therefore, we attempt to explore whether environmental regulation can reduce residents' health costs and examine the underlying influence mechanism from the following three perspectives.

Environmental regulation and health costs
Generating health economic benefits is a non-negligible and noteworthy outcome of environmental regulation.Consequently, the pivotal role of environmental regulation in enhancing the economic benefits associated with health has been examined by studies.For instance, Liu and Zhang (2022) indicated that the implementation of the "Two Control Zones" (TCZ) policy in China annually yields significant health benefits valued at 126.26 billion CNY, primarily attributed to reductions in mortality rates and disease occurrences.Furthermore, to examine the impact of direct reduction in public health spending resulting from environmental regulation, many empirical studies have been conducted at the macro level.For example, Alzahrani et al. (2020) found that the provision of drinking water that adheres to the health-based criteria outlined in the Safe Drinking Water Act contributes to a reduction in per capita healthcare expenditures at the state level.Lu et al. (2021) proposed that the prevailing level of environmental regulatory stringency exhibits a positive association with the reduction of the per capita level of health spending at the provincial level in China.Accordingly, we propose hypothesis 1: Hypothesis 1 The improvement of environmental regulation intensity is conducive to the reduction of individuals' health costs.

Relationship among environmental regulation, pollution, and health costs
Environmental regulation serves as a crucial role in mitigating negative environmental externalities (Xie et al. 2019), thereby enhancing individuals' health and wellbeing (Bonasia et al. 2022).It has been demonstrated that internet public participation (Wu et al. 2022), investment in pollution control (Liu et al. 2023), and clean air actions (Zhang et al. 2023) can alleviate air pollution effectively.Additionally, scholars have indicated that pollution control measures improve environmental quality by enhancing industrial control efficacy (Yang et al. 2021a), stimulating enterprise innovation (Sun et al. 2022), and influencing government efforts (Yang et al. 2021a).At the same time, the influence of pollution on health-related expenditures has also received much attention.From a macro perspective, studies have proposed that pollution causes economic losses from premature mortality (Du and Li 2015), expands government healthcare spending (Vyas et al. 2023;Zeng and He 2019), and raises per capita health expenditures (Lu et al. 2021).On the micro level, Lu et al. (2017) identified that the elevation of PM 2.5 level increases medical expenditures due to reduced sleep duration from air pollution and prolonged sedentary behaviors to minimize exposure.Based on the economic analysis of pollution-related health issues, scholars recommend adopting interventions to prevent pollution incidents and reduce health expenditures (Chen et al. 2022;Lu et al. 2021;Xie et al. 2021).Therefore, this paper reckons that the improvements in environmental quality are pivotal in enabling environmental regulation to reduce the residents' health costs and constructs hypothesis 2: Hypothesis 2 Environmental regulation reduces residents' health costs by improving environmental quality.

Relationship among environmental regulation, health, and health costs
Both practical implementation and existing research evidence demonstrate that environmental regulation contributes to the enhancement of individual health.The Assessment of the Health Effects of Air Quality Improvement in China released by the Center for Environment and Health Research at Peking University highlighted that the implementation of the Ten Atmospheric Rules and the Battle of the Blue Sky since 2013 has yielded substantial health benefits, notably, the reduction of PM 2.5 -related life expectancy loss decreased from 1.86 to 1.38 years.Meanwhile, scholars have supplemented the economic pathways to improve population health with environmental regulation implementation.Zhou et al. (2021a) emphasized that environmental regulation constrains the pollution practices of enterprises, resulting in substantial environmental improvements and a subsequent reduction in environmentally induced diseases.In a word, environmental regulation helps to improve residents' health status.Meanwhile, the debate regarding the existence of a negative correlation between health status and individual health costs continues.Due to the improved health level, people can save certain healthcare expenditures.On the other hand, supplementary healthcare expenditures of longer life expectancy due to enhanced physical status may surpass the anticipated cost savings in healthcare (Zapata-Diomedi et al. 2016).However, if we only consider the correlation between individual health costs and the health status in a short-term, most literature holds that poorer health results in higher health costs (Alexeeff et al. 2022;Cohen et al. 2017;Liao et al. 2021).Based on above discussion, we make efforts to test hypothesis 3: Hypothesis 3 Environmental regulation can enhance the health status of individuals, resulting in the reduction of residents' health costs.Above all, previous studies have mainly focused on analyzing public health costs at the macro level, while few studies have investigated the role of environmental regulation on reducing individual health costs at the micro level.Therefore, drawing on micro-level analysis, we make an empirical analysis by matching the micro survey data of the Chinese Family Panel Survey (CFPS) with the macro environmental regulation data to examine the relationship between environmental regulation and residents' health costs.In addition, pollution control measures can effectively prevent the environmental deterioration (Du et al. 2022;Zhou et al. 2021b), thus mitigating the risk of individuals being exposed to hazardous environmental conditions, which can contribute to a decrease in the occurrence of diseases caused by environmental degradation.Consequently, we explore the influence mechanism of environmental regulation by validating the intermediary role of environmental pollution on health status.The action mechanism is illustrated in Fig. 1.Besides, according to the heterogeneous influences of environmental regulation on both pollution and individual health status reported by previous literature (Lu et al. 2021;Zhang et al. 2020a), we wonder whether the connection between environmental regulation and residents' health costs exhibits heterogeneity.This paper analyzes the effects of three types of environmental regulation on the reduction of health costs across various populations and regions of China.

Data
We analyze the impact of environmental regulation on reducing residents' health costs by integrating microlevel survey data from Chinese residents' survey with the macro-level data of environmental regulation in China.The details of the proxy variables and the data source are as follows.

Dependent variables
The data of residents' health costs obtained from the adult questionnaire of the CFPS from 2010 to 2020 is utilized as the dependent variable.The CFPS is formally conducted by the Institute of Social Science Survey, Pecking University and the survey has been conducted every two years since 2010 in China.The national sample households and their members are tracked using the probability sampling method, allowing for the collection of multi-time point information at the individual, household, and societal levels.The survey is designed to capture the dynamics of the Chinese residents in terms of social, economic, demographic, education, and health status.In the CFPS, the respondents are asked the two questions: "Incorporating tests, treatment, lodging, nursing care, etc., how much have you spent on hospitalization in the year, including reimbursement Fig. 1 The impact mechanism of environmental regulation on health costs and expected reimbursement?" and "In addition to hospitalization, how much have you spent as a result of your injury or illness in the year, including reimbursements and expected reimbursements?".The total medical expenditures of the respondents for the year are obtained by summing the responses to the two questions and are used as the proxy index of the residents' health costs in this paper.

Independent variables
Environmental governance has been widely implemented in China for a long time (Lan et al. 2011;Wang et al. 2021).The investments in environmental governance encompass various aspects such as pollution control and treatment, technology upgrades for pollution control.Therefore, this paper selects the total investment in environmental governance as the primary independent variable representing the level of environmental regulation.Furthermore, existing studies always categorize environmental regulation into three distinct types according to their inherent characteristics: commandcontrolled environmental regulation, market-incentive environmental regulation, and spontaneous-public environmental regulation (Zhang et al. 2020a;Zheng and Shi 2017).Specifically, command-controlled regulation is established and enforced by governments to ameliorate environmental quality by implementing environmental standards, investing in pollution control, etc. Market-incentive regulation aims to mitigate pollutant emissions through the utilization of diverse economic instruments, including sewage charges and environmental taxes.Spontaneous-public regulation, characterized by public spontaneity, primarily relies on the conscientiousness of residents, communities, and environmental non-governmental organizations (NGOs) to monitor polluting behavior of enterprises (Cheng et al. 2017;Liu et al. 2023;Wu et al. 2022;Zhang et al. 2020a).Therefore, referring to the previous studies, this paper uses industrial pollution control investment (Guo and Yuan 2020), sewage charge and environmental protection tax (Zheng and Shi 2017), and the amount of complaints and reports on environmental pollution (Zhang et al. 2020a) as proxy indicators of the three different types of regulation.Subsequently, the effects of three types of environmental regulation on the reduction of health costs are examined.The data of environmental regulation are collected from the National Bureau of Statistics, China Statistical Yearbook, China Environmental Statistical Yearbook, and Environmental Statistics Yearbook of 31 provinces/autonomous regions/municipalities in China spanning the period from 2010 to 2020.

Mediating variables
We choose the concentration of PM 10 as the variable to measure the pollution level index.All kinds of pollutants exert detrimental effect on human health, consequently, people's health costs will be greatly increased for the purposes of self-defense and disease treatment.In most literature, particulate matter concentrations (specifically PM 2.5 and PM 10 ) are commonly selected as indicators for assessing the magnitude of air pollution (Chen et al. 2022;Li et al. 2021;Liao et al. 2021).Given that China has initiated the monitoring of PM 2.5 concentrations in selected major cities since 2012, this paper adopts the yearly concentration of PM 10 as an intermediate variable to examine the correlation among environmental regulation, pollution, and residents' health costs, considering the adequacy and continuity of the pollution data.The data of PM 10 are obtained from the Environmental Statistics Yearbook of 31 provinces/autonomous regions/ municipalities in China.
Whether the respondent has been diagnosed with a chronic disease is applied to measure the health status of individual.In the CFPS, respondents are required to respond to the question "Have you been diagnosed with a chronic disease within the past six months?".The response options are set with "1 = yes" and "0 = no".This measurement index focuses on "doctor-confirmed diagnosis", which is representative, accurate, and indicative of the respondents' physical condition in the corresponding year.Therefore, the response to the question is chosen as the mediating variable to conduct a mechanism analysis.

Control variables
Given that the effect of environmental regulation on reducing health costs may be influenced by other factors, a multivariable approach is adopted to mitigate the risk of biased results arising from omitted variables.The GDP per capita and the number of medical institutions of each province are employed as macro-control variables (Bhattacharjee and Mohanty 2022), and the data is sourced from the National Bureau of Statistics.Meanwhile, individual characteristic variables in the CFPS are selected as micro-control variables, including gender, living areas, marital status, age, education level, and the individual's perceived health.
In brief, we integrate residents' health costs and individual characteristics data from the CFPS with provincial-level data of environmental regulation, air pollution, and other macroscopic control variables spanning from 2010 to 2020.The descriptive statistic of each variable is presented in Table 1.The average value of health costs is relatively low (3,829 CNY), and the gap is large (the standard deviation is 16,483).The total investment in environmental governance averages 6,268.8 million CNY, and environmental pollution is still serious (the mean value is 78.8 μg/m 3 , the maximum value is 165 μg/m 3 ).Residents perceive that their health status is poor (the mean value is 2.808).

Methods
This paper establishes a baseline model to estimate the association between residents' health costs and environmental regulation.The model is as follows: where the HC ijt represents the health costs of resident i in province j during year t .ER jt stands for the total investment in environmental governance of province j during year t .A matrix for micro control variables is rep- resented by X it , including gender, living areas, marital status, age, education level, and self-perceived health status of individual i during year t .Y jt is a matrix for macro variables, including provincial GDP per capita, the number of medical institutions of province j during year t .The individual-fixed effect is represented by µ i , regional fixed effect, including provincial fixed effect and county fixed effect, is represented by θ j .ε ijt represents the error term.
Environmental regulation indirectly affects health costs by mitigating pollution and improving residents' health status.Specifically, environmental regulation (1) can curb the release of pollutants and decrease residents' exposure to harmful environmental conditions, thereby helping mitigate the occurrence of diseases related to pollution and contributing to the enhancement of residents' overall health status.As a result, the health costs of residents decrease.A three-step mediating effect model is built to verify whether environmental regulation has an indirect effect on individual health costs.The models are as follows: where M ijt denotes the mediating variables, includ- ing pollution status and residents' health status.ε ijt , ijt , and υ ijt indicate the random disturbance term.Among the above three equations, Eqs. ( 2) and ( 4) are regarded as the decisive equations for determining the level of health costs, and Eq.(3) serves as the decisive equation for the mediating variable.The total effect of reduced health costs resulting from environmental regulation is presented by α 1 , and δ 1 manifests the impact of environ- mental regulation on mediating variable.In Eq. ( 4), the direct effect of reduced health costs resulting from environmental regulation is denoted by ϕ 1 , while ϕ 2 provides the estimated effect of mediating variable, after controlling for environmental regulation. (2)

Estimation of the baseline model
The regression results of Model (1) are reported in Table 2.The explained variable and the main explanatory variable are the logarithmic form of residents' health costs and of the total investment in environmental governance, respectively.In Table 2, column (1) represents that the coefficient of environmental regulation ( β 1 = −0.124,p < 0.01) is significantly negative, which con- forms to hypothesis 1.Specifically, the health costs of residents will decrease by 0.124% for a 1% increase in total investment in environmental governance.The reduction of residents' health costs brought by environmental regulation is examined, as expected.To account for variations in city size, geographical location, and natural conditions across different cities, we gradually introduce provincial fixed effect and county fixed effect to exclude the unobserved urban characteristics.In column (2), it can be found that the environmental regulation ( β 1 = −0.215,p < 0.01) remains negatively correlated with health costs when the provincial fixed effect is controlled.In column (3), where the county fixed effect is introduced, the coefficient ( β 1 = −0.214,p < 0.01) for environmental regula- tion remains significantly negative.Finally, to control for the effect of unobserved inter-individual differences, we use a random effects model, so that the R-squared is not reported.As reported in column (4), the relationship between environmental regulation and health costs persists significantly negative ( β 1 = −0.189,p < 0.01).In essence, for a 1% rise in the total investment in environmental governance, the health costs decrease by 0.189%.Moreover, we can find that most individual characteristic variables and socioeconomic variables also display significant impacts on health costs.As we can observe, there is a difference in health costs between urban and rural residents, with urban residents typically having higher level of health costs.Compared with females, males demonstrate comparatively lower health costs, which is in line with the results of Liao et al. (2021).As people get older, they become more susceptible to diseases such as hypertension, diabetes, and cancer, consequently leading to the increase in health costs (Feng et al. 2023;Zhang et al. 2020b).Besides, the health costs of single individuals are lower than those of partnered individuals.There exists a positive relationship between residents' health costs and self-perceived health status.When residents perceive their health status as poor, they tend to allocate additional financial resources to improve it.In addition, a positive association can be observed between the degree of economic advancement and residents' health costs, as indicated by the fact that the higher the GDP per capita, the more the healthcare demand, which is in line with the results of Li et al. (2020).

Mediating effect
The estimated outcomes of Eq. ( 2) to (4) are presented in Table 3. Column (1) displays the results of Eq. ( 2), i.e., the results in column (4) in Table 2. Columns (2) to ( 5) respectively show the mediating effects of pollution and health status, that is, the regression results of Eqs. ( 3) and (4).The subsequent analysis is presented in detail below.
Column (2) presents the results regarding the effect of environmental regulation on reducing the level of environmental pollution.The coefficient ( δ 1 = −0.024,p < 0.01) implies that the strengthening of total investment in environmental governance demonstrates a mitigating influence on the emission of PM 10 .This result is similar to the findings of most research (Lu et al. 2021;Yang et al. 2021a;Zhang et al. 2020a;Zhou et al. 2021b), that is, environmental regulation has an ameliorative effect on environmental quality.In Column (3), when controlling for pollution as a mediator in the regression model, the direct health costs reduction effect of environmental regulation ( ϕ 1 = −0.084,p < 0.01) becomes much weaker.The correlation between pollution and health costs ( ϕ 2 = 0.224, p < 0.01) remains positive, which is con- sistent with the findings of Liao et al. (2021).Therefore, we conclude that pollution amelioration plays a mediating role in the reduction of residents' health costs associated with environmental regulation.Columns (4) and ( 5) present the results of the mediating effect of residents' health status.Column (4) reveals that there is a negative relationship ( δ 1 = −0.016,p < 0.01) between the total investment in environmental governance and whether respondent suffers from chronic disease.Indeed, the increase of intensity of environmental regulation can improve residents' health status (Liu and Zhang 2022;Woollacott et al. 2022;Zhou et al. 2021a).Similarly, column (5) indicates a direct negative correlation between environmental regulation and health costs ( ϕ 1 = −0.176,p < 0.01), and also reveals a significantly positive relationship between suffering chronic diseases and residents' health costs ( ϕ 2 = 0.856, p < 0.01).That is, environmental regulation can reduce health costs by enhancing residents' health status.The results suggest the existence of intermediate effect of health status between environmental regulation and residents' health costs.
Additional evidence of the mediation effects analysis through the implementation of the Bootstrap test is provided in Table 4.The mediating effect of environmental regulation on the reduction of health costs through alleviating environmental pollution is −0.003 and the mediating effect by improving health status is −0.012.The confidence intervals for the two above mediating effects do not include 0, i.e., all mediating effects are significant at the 95% confidence interval.Hypothesis 2 and hypothesis 3 are further confirmed.

Heterogeneity analysis
Significant heterogeneities have been noted in various studies regarding the health benefits derived from environmental improvements (Liao et al. 2021;Stewart et al. 2015).The effects vary across different demographic

Table 3 Mediating effects of pollution and health status
This table presents the mediating role of environmental pollution and individual health status on the impact of environmental regulation on residents' health costs.Control variables include gender, living areas, marital status, age, education level, the individual's perceived health, provincial GDP per capita, and the number of medical institutions.All regressions control for individual-fixed effect and regional fixed effect (including provincial fixed effect and county fixed effect  characteristics, such as gender, age, income, and education, etc.Consequently, the implementation of environmental regulation may bring different health economic effects.Therefore, we conduct a detailed analysis to examine the heterogeneities in the relationship between environmental regulation and residents' health costs among different groups from both the socioeconomic and regional perspectives. The interaction term is able to capture and quantify the interaction effects between multiple variables.By introducing interaction terms, we can reveal how other factors affect the efficiency of environmental regulation and thus analyze the sources of heterogeneity.Therefore, we introduce the interaction terms into Model (1) to explore the moderating effect from the socioeconomic perspectives (Li et al. 2019;Yin and Guo 2021).Firstly, we make effort to examine the heterogeneous effect of individuallevel socioeconomic factors.The findings are presented from column (1) to (3) in Table 5.As illustrated in column (1), the interaction term consists of environmental regulation (ER) and age (ER×Age) is used to demonstrate the moderating effect of age.The coefficient of ER×Age is positive, indicating that the total effect of ∂lnHC/∂lnER is related to age and this effect is weakened by increasing age.In column (2), ER×Gender indicates the interaction term of environmental regulation and gender.The coefficient of ER×Gender is observed to be negative, revealing that the presence of the interaction term amplifies the association between environmental regulation and health costs.As in column (3), the interaction term ER×Self-perceived health status is significantly positive, which demonstrates that the worse the people's self-perceived health is, the weaker the effect of the reduction in residents' health costs brought about by environmental regulation is.Secondly, we focus on investigating the heterogeneous effect among individuals with different level of economic development and medical infrastructure condition from a macro perspective.As indicated in column (4) in Table 5, ER×GDP per capita is introduced to represent the interaction term of environmental regulation and GDP per capita and analyze the heterogeneity of different economic conditions.The coefficient is positive,

Table 5 Heterogeneity analysis of socio-economic characteristics
This table presents the heterogeneous effects of socio-economic characteristics on the impact of environmental regulation on residents' health costs.Control variables include gender, living areas, marital status, age, education level, the individual's perceived health, provincial GDP per capita, and the number of medical institutions.All regressions control for individual-fixed effect and regional fixed effect (including provincial fixed effect and county fixed effect).T-statistics in parentheses.***, **, and * denote statistical significance levels at 1%, 5%, and 10%, respectively.F.E. denotes fixed effect  revealing that as GDP per capita increases, the effect of health costs reduction from environmental regulation diminishes.Last but not least, as observed in column (5), the coefficient of ER×Medical institutions is positive.It implies that individuals with better access to medical institutions may experience a weakened impact of environmental regulation on reducing their health costs.

Variables
Besides, some research demonstrates that the effectiveness of alleviating environmental pollution and reducing public health expenditure generated by environmental regulation varies across different regions (Lu et al. 2021;Yang et al. 2021a).Based on this, we attempt to investigate the heterogeneity in the reduction of residents' health costs due to environmental regulation across various regions by dividing our sample into distinct groups.The results are reported in Table 6.Firstly, China exhibits a distinctive urban-rural dual structure, stemming from notable differences in economic status, cultural practices, and environmental behavior between the two regions, that is, there exists the problem of urban-rural environmental inequality (Cai et al. 2023;Long et al. 2022).Within this context, we examine whether there exists heterogeneity in the reduction of health costs brought by environmental regulation between urban and rural areas.The samples are categorized into two panels according to the living areas of the respondents.The findings in columns ( 1) and ( 2) reveal that the reduction in health costs due to environmental regulation is weaker for rural residents ( β 1 = −0.149,p < 0.01) than for urban residents ( β 1 = −0.182,p < 0.01).Secondly, due to the disparities among administrative regions in China, we categorize the samples into the eastern, central, and western regions according to the province of the respondent.After conducting respective regressions for each group, the heterogeneity of different regions is examined and the coefficients are shown columns (3) to ( 5) in Table 6.We can obtain that the reduced health costs effect of environmental regulation is not considerably different among the three regions.
Lastly, it has been indicated by previous analysis that the effectiveness of mitigating pollution varies among different types of environmental regulation (Liu et al. 2023;Zhang et al. 2020a).Therefore, we also examine the effect of different types of environmental regulation

Table 6 Heterogeneity analysis of different regions
This table presents the heterogeneous effects of different regions on the impact of environmental regulation on residents' health costs.Control variables include gender, living areas, marital status, age, education level, the individual's perceived health, provincial GDP per capita, and the number of medical institutions.All regressions control for individual-fixed effect and regional fixed effect (including provincial fixed effect and county fixed effect).T-statistics in parentheses.***, **, and * denote statistical significance levels at 1%, 5%, and 10%, respectively.F.E. denotes fixed effect

Variables
Living areas Three regions (1) Urban ( 2  by replacing proxy variables.The results are presented in Table 7.As indicated by the regression results, industrial pollution control investment ( β 1 = −0.016,p < 0.1) and environmental fees ( β 1 = −0.154,p < 0.01) still have a negative and statistically significant relationship with residents' health costs, while the number of complaints ( β 1 = 0.020, p < 0.01) is positively correlated with health costs.Specifically, the effect of the reduction of residents' health costs brought by market-incentive environmental regulation is obviously better than command-controlled types, while the connection between spontaneous-public regulation and health costs is positive.

Robustness tests
Several robustness tests are conducted to ensure the robustness and credibility of results.Table 8 reports the corresponding results.In the previous analysis, we select the total health costs of residents in a year as a representative variable for residents' health costs.In the CFPS questionnaire from 2014 to 2020, the respondents are also asked to answer the question "How much did you spend on hospitalization in the past 12 months, excluding reimbursement and expected reimbursement?".In comparison, we replace former dependent variable with the direct health costs to test the robustness.The result is presented in column (1) in Table 8.We observe that the relationship is still negative.In addition, we substitute per capita investment in environmental governance for the explanatory variable.The finding in column (2) reveals that the coefficient of per capita investment is not much different from the original.Moreover, considering the notable improvement in the environment and the strenthened medical awareness among the residents in recent years, the results obtained in the overall regression may be significantly influenced by a particular year.We remove the data of 2020 to exclude any potential biases arising from specific factors.The regression result, presented in column (3), continues to demonstrate a statistically significant negative relationship.In addition, we obtain a balanced panel after removing individuals with missing data and conduct the robustness test.As reported in column (4), our baseline regression result is affirmed by the consistent finding.Lastly, due to the presence of truncation or censoring in the continuous dependent variable, estimators may become inconsistent.In order to address this issue and validate the results obtained through the Ordinary Least Squares regression, the Tobit regression analysis is employed.As displayed in column (5), our finding from the Tobit method aligns with the regression results obtained through the Ordinary Least Squares method, indicating their consistency.Above all, the robustness tests reveal that the reduction of residents' health costs by environmental regulation is consistent and reliable.It is demonstrated that environmental regulation can effectively reduce health costs.

Baseline regression
This paper conducts a micro-level analysis illustrating the health costs reduction effect of environmental regulation and the mediating role of environmental pollution and individual health status on the health costs reduction effect of environmental regulation.The findings can provide strong support for the health economic benefits of policy practices worldwide.For example, the Clean Air Act (CAA), the first U.S. federal legislation addressing air quality, exemplifies the tangible health and economic benefits of proactive policy practices.Enacted with the primary goal of safeguarding public health and wellbeing, the CAA has yielded substantial improvements

Table 8 Robustness tests
This table presents the results of robustness tests assessing the impact of environmental regulation on residents' health costs.Control variables include gender, living areas, marital status, age, education level, the individual's perceived health, provincial GDP per capita, and the number of medical institutions.All regressions control for individual-fixed effect and regional fixed effect (including provincial fixed effect and county fixed effect).T-statistics in parentheses.***, **, and * denote statistical significance levels at 1%, 5%, and 10%, respectively.F.E. denotes fixed effect

Substitute independent variables
Remove the data of 2020 Use balanced panel across several key metrics.By requiring the development of federal, state, and local air quality management plans and setting stringent emissions standards (Vandenberg 2005), the CAA has successfully reduced air pollutants such as particulate matter, ozone, and sulfur dioxide (Cropper et al. 2023;LaCount et al. 2021;McHale et al. 2021).By 2020, the Clean Air Act Amendments is expected to prevent 2.4 million asthma exacerbations, 135,000 hospitalizations, and more than 230,000 premature deaths.From an economic standpoint, the U.S. would gain more than $2 trillion in health savings (DeMocker 2003).In other words, environmental regulation can produce significant health economic benefits.Moreover, beyond environmental regulation, various socioeconomic variables also exert a significant influence on residents' health costs.This paper finds that urban residents incur higher health costs compared to rural residents.This disparity may be attributed to urban residents having a greater depth of medical and healthrelated knowledge, and manifest heightened awareness and financial capacity to allocate resources towards enhancing their overall health status (Kolahdooz et al. 2014).Besides, due to the long-term effect of the urbanrural dichotomy, the medical infrastructure and service in urban areas is more advanced than in rural areas (Hao and Yeo 2023).As a result, urban residents spend more on health than rural residents.Additionally, males' health costs are lower than females.The possible explanation is that females tend to face socioeconomic disadvantages that contribute to their health disparities (Waldron 1983).Therefore, the health costs for females are higher than for males.Furthermore, individuals who are single experience lower health costs in comparison to partnered people, which could be caused by the fact that single people have a weaker sense of their physical and mental health status (August and Sorkin 2010), and they seek hospital checkups and treatment less frequently.

Heterogeneity effect
We investigate the heterogeneity of environmental regulation in reducing health costs for individuals with different socioeconomic characteristics.In terms of micro-socioeconomic characteristics, we first observe that the impact of environmental regulation on health costs diminishes as age increases.Older individuals typically engage in fewer outdoor activities, such as commuting, compared to younger individuals, thereby reducing their actual exposure to air pollution.However, environmental regulation primarily focuses more on the improvement of outdoor air quality, and older persons may not receive sufficient protection from environmental regulation measures (Liao et al. 2021).Besides, environmental regulation has a differential impact on health costs between genders, showing a lesser reduction in health costs for females compared to males.According to the differential vulnerability assumption, due to females' higher levels of health awareness and sensitivity toward factors that promote overall well-being, they tend to exhibit greater concern for their health and take relevant measures to protect themselves than males.Conversely, males lack self-protection awareness, and thus are more susceptible to the detrimental impacts of environmental pollution (Liao et al. 2023).Consequently, the impact of environmental regulation, which aims to mitigate environmental pollution, becomes more prominent in reducing health costs for males.In addition, the effectiveness of environmental regulation in decreasing health costs is attenuated among individuals with poorer health status.The reason may be that individuals in poorer physical condition also engage in fewer outdoor activities, accordingly, the effectiveness of environmental regulation is restricted.In terms of macro-socioeconomic characteristics, environmental regulation plays a more significant role in reducing health costs for individuals with lower GDP per capita than for those with higher GDP per capita.This observation can be attributed to the unfair damage resulting from pollution.Where GDP per capita is already relatively high, individuals possess greater financial capabilities to counteract the adverse effect of pollution through personal expenditures.Additionally, they are more likely to reside in regions characterized by superior environmental conditions (Morelli et al. 2016).Individuals living in areas with higher economic development level experience lower health costs caused by environmental pollution, mainly due to personal protection and reduced exposure to pollution.Therefore, although environmental improvement initiatives may still have an effect on the reduction in health costs of all individuals, the magnitude of this impact may be smaller among population with a higher GDP per capita.Moreover, individuals who have enhanced access to medical institutions may observe a diminished effect of environmental regulation in reducing their health costs.Populations equipped with better medical facilities tend to be able to improve their conditions in a timelier manner and can be protected from more far-reaching harmful pollution; as a result, the anticipated reduction in health costs associated with environmental regulation is diminished.
Additionally, we also examine the regional heterogeneity in the effectiveness of environmental regulation in reducing health costs.This paper reveals that the reduction in health costs attributed to environmental regulation is more pronounced among urban residents compared to rural residents.The environmental haven effect can explain why this difference arises.Due to the differing level of environmental regulation in rural and urban areas, environmental violations in rural areas are probably undetected or subject to minor penalties and rural areas become "pollution havens", thus rural residents face a higher burden of environmental risks (Dou and Han 2019).In addition, rural individuals frequently lack the awareness and financial means to undertake self-protection measures.All of which makes it more difficult to implement effective environmental regulation measures and leverage the health advantages derived from the policy.As a result, the reduction of health costs resulting from environmental regulation on rural residents' health costs is diminished.However, from our analysis, it appears that the impact of environmental regulation on reducing health costs does not vary significantly among the three regions in China.The result is different from previous studies, such as Lu et al. (2021) who found that environmental regulation does not have a significant inhibitory effect on healthcare expenditures per capita in the central region compared to the eastern region and the western region.This difference may be due to the difference in sample selection.Compared with existing studies that focus on macro health expenditures, we focus more on micro individual health expenditures, and individual health costs in particular tend to be related to factors such as the individual health status and the small-scale environment in which the individual lives (Huang et al. 2017;Liu et al. 2022;van den Brekel et al. 2024).As a result, the differences in the role of environmental regulation between the eastern, central, and western regions are weakened.Although our finding differs from existing studies, it provides a new direction for further research.
Furthermore, heterogeneity analysis of different types of regulation reveals that market-incentive environmental regulation is notably more effective than commandcontrolled types in reducing residents' health costs.The reason may be that market-incentive environmental regulation is more flexible and adaptive.Market incentives can encourage enterprises to adopt environmental protection measures and stimulate innovation in environmental protection technology, thus more directly and effectively promoting the optimization of resources and reduction of emissions to achieve better outcomes (Liu et al. 2023;Yang et al. 2021b;Zhou et al. 2021a).Moreover, one possible explanation for the positive connection between the intensity of spontaneous-public regulation and health costs could be attributed to the limited establishment of such regulation in China.The government often fails to promptly address and resolve pollution incidents raised by the public.The inadequate implementation of spontaneous-public regulation potentially undermines the intended outcomes (Tang and Li 2022;Zhang et al. 2020a).Therefore, the increased complaints accurately depict the serious pollution condition, which results in higher health costs.

Policy implication
Our findings have certain policy significance for enhancing residents' quality of life and boosting welfare worldwide.First of all, this paper offers a fresh perspective for measuring welfare generated by implementing environmental regulation, that is, effective environmental regulation can help mitigate the negative environmental externalities on individual health, potentially reducing residents' health costs.Therefore, the government should be mindful of the effectiveness of environmental governance in enhancing public health.Specifically, the environmental protection department should promote innovation and the widespread adoption of technologies for detecting and assessing individual pollution exposure levels.It should also enhance targeted detection of environmentally related diseases, continuously refine environmental health risk assessment models and indicators of the burden of environmentally related deaths, and conduct focused assessments and interventions for environmental media posing higher health risks.Moreover, the environmental protection department should also establish a joint working mechanism with the public health department to achieve an effective interface between environmental regulation and health protection.For instance, the government should establish a unified platform for pollution-related health testing, supervision, and information processing.With these measures, the health benefits derived from environmental regulation can be optimally realized.
Besides, at present, the environmental regulation system still takes the government as the main body and does not fully leverage the significant roles of both the market and the public in China.Initially, the government ought to effectively utilize market tools.For example, by incorporating environmental health factors into emissions permits and emissions trading approvals, market players will be guided to make technological innovations in the field of environmental health, so that environmental health management can be put into practice.In addition, the government should actively develop a communication mechanism that aims at facilitating the public's engagement with environmental pollution.The government should ensure comprehensive and transparent disclosure of information regarding environmental pollution, enabling the public to implement appropriate protective measures to mitigate the adverse effect of pollution.Simultaneously, public monitoring mechanisms should be expanded by conducting online opinion polls, organizing public hearings, and establishing platforms for public engagement.By doing so, the government can effectively monitor and evaluate the outcome of pollution control measures in various regions based on the valuable insights provided by the public.
Finally, consideration should also be given to the difference in environmental regulation benefits among distinct groups and areas.The government should prioritize groups that are more vulnerable to the damaging impacts of pollution to prevent them from falling into an environmental health poverty trap.Regular community environmental health awareness campaigns should be conducted, with a focus on providing management and support to groups with poor self-protection and health awareness.Meanwhile, regional economic level and medical infrastructure development differences should be considered, particularly in rural areas and western regions.The government should ensure coordination between economic strategies and healthcare policies to maximize synergies and outcomes.Tax incentives and financial support should be provided to encourage the development of local healthcare industries and supply chains to create employment opportunities and stimulate economic growth in these disadvantaged regions.

Conclusion
Facing the environmental degradation and the resulting health problems, a wide range of environmental policy measures aimed at addressing these issues have been taken by the Chinese government.Analyzing the outcome of environmental regulation has become a critical topic.Building on the nationally representative CFPS data, this paper matches the residents' health costs data with the macro data of environmental regulation to evaluate the effect, mechanism, and heterogeneity of environmental regulation on the reduction of residents' health costs.The key conclusions are as follows: (1) A significantly negative impact of environmental regulation on residents' health costs is observed.Specifically, when the total investment in environmental governance increases by 1%, residents' health costs will decrease by 0.189%.In addition, environmental regulation is also found to have an indirect effect on health costs.Environmental pollution and individual health status act as mediating variables on the residents' health cost reduction effect of environmental regulation.Put simply, the enhancement of environmental quality and the reduction of the prevalence of chronic illnesses generated by environmental regulation effectively mitigate residents' health costs.
(2) The results from the analysis of heterogeneity indicate the notable variations exist on the residents' health cost reduction effect of environmental regulation among different population groups.For the elderly, women, and individuals with poor self-perceived health, the beneficial influence of environmental regulation is weakened.Similar disparities are also evident among residents living in regions with higher economic development and better access to medical facilities, who consequently derive less benefit from environmental regulations.In terms of regional heterogeneity, the reduction of health costs achieved by environmental regulation is significantly smaller in the rural areas than in the urban areas.Nevertheless, this reducing effect does not exhibit significant variation across eastern, central, and western regions.Moreover, various types of environmental regulation have different effects.Market-incentive regulation has the largest effect of reducing health costs, followed by command-controlled regulation, while the level of spontaneous-public regulation has a positive relationship with health costs.

Table 1
Descriptive statistics of each variableThis table presents summary statistics for the main variables in the empirical analyses

Table 2
Effects of environmental regulation on residents' health costsThis table presents the estimated effects of environmental regulation and socioeconomic variables on residents' health costs.T-statistics in parentheses.***, **, and * denote statistical significance levels at 1%, 5%, and 10%, respectively.F.E.

Table 4
Bootstrap test for significance of mediating effectsThis table presents the further examined results of the mediating role of environment pollution and individual health status on the impact of environmental regulation on residents' health costs by using the Bootstrap method.SE denotes the standard error

Table 7
Heterogeneity analysis of different types of regulation This table presents the heterogeneous effects of three types of environmental regulation on residents' health costs.Control variables include gender, living areas, marital status, age, education level, the individual's perceived health, provincial GDP per capita, and the number of medical institutions.All regressions control for individual-fixed effect and regional fixed effect (including provincial fixed effect and county fixed effect).T-statistics in parentheses.***, **, and * denote statistical significance levels at 1%, 5%, and 10%, respectively.F.E. denotes fixed effect