Environmental Policy and Industry Location: The Case of the U.S. Livestock Industry

The relationship between state-level environmental regulations and firm location decisions in the U.S. livestock industry is explored. We focus on the overall size of the livestock industry by state and over time. We find that the effects of differences in productive input costs across states, for instance property tax and local slaughter capacity, are consistent with expectations. We differentiate between the written stringency of environmental policy and its actual enforcement. Enforcement of environmental regulations, as seen by a state's tendency to levy fines and the staff devoted to monitoring, seems to affect industry location negatively. However, the written regulatory stringency effects are positive, suggesting that a political response occurs when livestock operations grow, but only the choice to enforce actually alters the location decision of producers.