An Empirical Analysis of the Interactions Between Environmental Regulations and Economic Growth

Chali Nondo, Peter Schaeffer, Tesfa Gebremedhin () and Jerald Fletcher ()
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Tesfa Gebremedhin: Division of Resource Management, West Virginia University
Jerald Fletcher: Division of Resource Management, West Virginia University

Working Papers from Regional Research Institute, West Virginia University

Abstract: The purpose of this research is to examine the relationship between environmental regulation and economic growth. A four-equation regional growth model is used to analyze the simultaneous relationships among changes in population, employment, per capita income, and environmental regulations for the 410 counties in Appalachia. Our results reveal that initial conditions for environmental regulation are negatively related to regional growth factors of change in population, per capita income, and total employment. From this, we infer that the diversion of resources from production and investment activities to pollution abatement is inadvertently transmitted to other sectors of the economy—thereby resulting in a slow-down of regional growth. We also find robust evidence that show that changes in environmental regulations positively influence changes in population, total employment, and per capita income. Thus, we parsimoniously conclude that in the long-run, environmental regulations are not detrimental to economic growth.

Keywords: environmental regulations; economic growth; regional growth model; Appalachia (search for similar items in EconPapers)
JEL-codes: Q56 R11 R52 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2010
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:rri:wpaper:2010wp13

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