US ECONOMIC-GROWTH VS ENVIRONMENTAL-CONDITIONS

A widely-held belief is that stricter environmental regulations stifle economic growth. To determine empirically the effect of environmental conditions and policies on state-level per capita income growth, a Ba rro-type economic growth model was estimated for the years 1982 to 199 1, which correspond to two consecutive troughs in the business cycle. States with better environmental conditions had significantly higher i ncome growth rates during this period. At the same time, stricter envi ronmental policies did not significantly depress income growth. Data u sed include recently developed, consistent measures of environmental p olicy and quality for individual states, as well as data from the 1980 U.S. Census and Bureau of Economic Analysis.