How Does the National Key Ecological Function Areas Policy Affect High-Quality Economic Development?—Evidence from 243 Cities in China

Achieving a balance between environmental protection and high-quality economic development forms the cornerstone for fostering a harmonious coexistence between humanity and nature. Consequently, the interplay between these two domains has garnered extensive attention from various stakeholders. However, the current discourse on environmental policies tailored for high-quality economic development remains insufficiently robust. From a policy standpoint, we employ the difference-in-differences methodology to investigate whether China’s National Key Ecological Function Areas Policy, enacted in 2016, can catalyze high-quality economic development. Our findings reveal that this environmental policy has a notably positive influence on high-quality economic development. This effect is indirectly potentiated through increased investments in science and education, as well as the stimulation of consumer demand. Notably, the policy effect varies by region. To ensure a steady enhancement of the policy’s effectiveness, it is imperative to implement differentiated measures tailored to the unique characteristics of different regions, thereby fostering coordinated development. Furthermore, we anticipate that our study will offer empirical insights and data-driven examples for the implementation of environmental policies in developing countries.