| Summary: | This project examines state environmental policy and its effect upon state economic growth. State policymakers actively pursue policies intended to positively impact state economic growth. A policy area surrounded by controversy regarding its affect upon economic performance is that of environmental regulation. Prior research indicates that policymakers believe state environmental regulations influence business decisions to invest in certain areas. In this research I seek to determine whether states which deliberately enact more lax environmental regulatory standards succeed in increasing state economic growth. State economic growth is modeled as a function of environmental policy variables and range of national economic and state demographic, policy, financial, and institutional variables. Variables used to measure environmental policy are critical to the results of the model estimations. When pollution abatement compliance costs of business and industry are used as the measure of environmental policy, state economies appear to suffer a detrimental impact as a result of more stringent environmental policies. When state spending on environmental and natural resource programs is used as the measure of environmental policies, state economies appear to receive a positive impact as a result of more stringent regulations.
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