Sep 23, 2012

Costs of Environmental Regulations

The article below quantifies the economic costs of environmental regulations. There are real costs to regulations. Of course there are real benefits also, and it is very difficult to quantify the true costs and benefits.


The Effects of Environmental Regulation on the Competitiveness of U.S. Manufacturing

Michael GreenstoneJohn A. ListChad Syverson

NBER Working Paper No. 18392
Issued in September 2012
NBER Program(s):   EEE   IO   PR 

The economic costs of environmental regulations have been widely debated since the U.S. began to restrict pollution emissions more than four decades ago. Using detailed production data from nearly 1.2 million plant observations drawn from the 1972-1993 Annual Survey of Manufactures, we estimate the effects of air quality regulations on manufacturing plants’ total factor productivity (TFP) levels. We find that among surviving polluting plants, stricter air quality regulations are associated with a roughly 2.6 percent decline in TFP.

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