How does environmental regulation affect haze pollution governance?-An empirical test based on Chinese provincial panel data.

Recently, haze pollution is the most serious air problem in China. In the process of haze pollution governance, environmental regulation not only has a direct impact on haze pollution but may also affects haze pollution indirectly through four transmission channels, which are coal consumption, foreign direct investment (FDI), industrial structure and technological innovation. The purpose of this paper is to clarify how environmental regulation affects haze pollution governance through both direct and indirect impacts. Based on the difference Generalized Method of Moments (GMM), this paper explores the direct and indirect impact of environmental regulation on haze pollution governance over the period 2006-2016. The results show that China's current environmental regulation had effectively inhibited the haze pollution and achieved the expected effects. For coal consumption, it significantly aggravated haze pollution, but the ER implemented or not. However, environmental regulation provided a force mechanism to promote transformation and upgrading of industrial structure, thus to reverse the impact direction of industrial structure on haze pollution and mitigated the haze pollution. Moreover, the results indicate that FDI in China turned out to have a "pollution halo" effect and reduced the degree of haze pollution, while technological innovation had the "compliance cost" effect and increased the degree of haze pollution. Additionally, we find that automobile exhaust emissions and economic development were also important reasons for the increase of haze. According to the results, some policy implications were provided for the future haze pollution governance.