The　escalating　demand　for　resources　in　urban　and　rural　construction　development　raises　the　crucial　question　of　achieving　green　development　within　limited　resource　constraints.　This　study　delves　into　the　interplay　between　environmental　policy　and　green　development　in　urban　and　rural　construction.　Utilizing　the　spatial　Durbin　model　for　analysis,　findings　reveal　that　investment-oriented　environmental　regulation　significantly　impacts　green　development　and　positive　spillover　effects　in　neighboring　regions　when　considering　spatial　weight　matrices.　In　contrast,　cost-based　environmental　regulations　positively　affect　green　development　when　spatial　interactions　are　disregarded.　However,　they　exhibit　negative　effects　at　the　spatial　level,　potentially　leading　to　a　＂pollution　relocation＂　phenomenon.　Although　the　influence　of　R&　D　subsidy-based　environmental　regulations　on　green　development　is　not　significant,　their　impact　becomes　notable　upon　considering　spatial　interactions,　potentially　generating　positive　effects　across　regions　through　mechanisms　such　as　technology　diffusion　and　knowledge　transfer.　Furthermore,　from　an　endogeneity　perspective,　the　impact　of　environmental　regulatory　tools　on　green　development　exhibits　a　time　lag　effect.　Moreover,　investment-type　regulation　in　the　eastern　regions　significantly　fosters　green　development,　whereas　cost-based　regulation　shows　a　suppressive　effect;　investment-type　regulation　in　central　regions　has　a　positive　spillover　on　neighboring　areas;　and　R&D　subsidies　in　western　regions　negatively　impact　local　green　development.　Moreover,　the　quality　of　governmental　institutions,　market　integration,　and　technological　innovation　are　key　factors　influencing　green　development　in　China＇s　urban　and　rural　construction.　This　study　reveals　the　direct　and　indirect　effects　of　various　environmental　policy　tools　on　green　development　in　urban　and　rural　areas.　It　emphasizes　the　importance　of　considering　spatial　interactions　in　implementing　environmental　policies,　providing　a　theoretical　foundation　and　practical　guidance　for　optimizing　environmental　policies.