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

Author

Listed:
  • Chali Nondo

    (Division of Resource Management, West Virginia University)

  • Peter Schaeffer

    (Division of Resource Management, West Virginia University)

  • Tesfa Gebremedhin

    (Division of Resource Management, West Virginia University)

  • Jerald Fletcher

    (Division of Resource Management, 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.

Suggested Citation

  • Chali Nondo & Peter Schaeffer & Tesfa Gebremedhin & Jerald Fletcher, 2010. "An Empirical Analysis of the Interactions Between Environmental Regulations and Economic Growth," Working Papers Working Paper 2010-13, Regional Research Institute, West Virginia University.
    • Handle: RePEc:rri:wpaper:2010wp13
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    File URL: https://researchrepository.wvu.edu/rri_pubs/49/
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    environmental regulations; economic growth; regional growth model; Appalachia;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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