How costly is environmental regulation? Some evidence from US manufacturing

This paper examines the impact of pollution abatement spending on U.S. manufacturing productivity. Examining data on 20 (2 digit SIC) manufacturing industries between 1973 and 1991, it is shown, in a production function framework, that pollution abatement capital expenditures significantly reduce real output, ceteris paribus (i.e, reduce productivity). In other words, this study demonstrates that pollution abatement costs more than the reported billions of dollars spent on it because real output is lower than it would have been without pollution abatement.