The Economic Impact of Environmental Regulation

Date Published: 
Sun, 01/01/1995

Stephen M. Meyer. Journal of Environmental Law & Practice. 1995.


"The economic impact of environmental regulation" is Meyer’s report on the findings of a study that analyzed the impact of environmental protection laws upon American economic performance. The national Clean Air Act, the Clean Water Act, and the Endangered Species Act are all named, although he uses a state-by-state analysis. The study analyzes job growth and business failure during the period of 1982-1992 (the height of American de-industrialization), and finds that “neither national nor state economic performance have been significantly or systematically affected by environmental regulation”.

Meyer’s study examines four economic indicators: “annual gross state product growth, annual non-farm employment growth, annual manufacturing employment growth, and annual business failure rates.” Most significantly, he finds that “Job growth – not job loss – is associated with stronger environmental policies. The ten states with the strongest environmental regulations experienced “annual employment growth rates almost 0.6%” above the ten states with the weakest standards (during 1982-1989). The environmentally strong states saw lower rates of business failure as well. His analysis of the 1990-1992 recession years supports the earlier findings. Meyer concludes that environmental costs are quite marginal in relation to other business cost factors, “well under 2% in most instances”.