Semester

Fall

Date of Graduation

2009

Document Type

Dissertation

Degree Type

PhD

College

Davis College of Agriculture, Natural Resources and Design

Department

Forest Resource Management

Committee Chair

Peter V Schaeffer

Committee Co-Chair

Jerald J Fletcher

Abstract

This dissertation examines the relationship between environmental regulations and economic growth in the Appalachian Region. The study employs county attainment status data as a proxy for environmental regulations and allows the cross-sectional variation of the attainment variable. Cognizant of the fact that air pollution emanates from a variety of sources, the study assumes that per capita income, population, employment, and environmental regulations are jointly determined, which is the major distinction from previous studies which have assumed a unidirectional relationship between environmental regulations and economic growth.;Using endogenous growth theory, a theoretical model is developed that highlights the role of environmental regulations in economic growth. The major theoretical conclusions reached suggest that: enforcement of environmental regulations affects economic performance only in the short-term, while in the long-term, firms become more efficient in production and output increases. In the long-term, environmental regulations lead to improved environmental quality and this has a direct effect of stimulating growth in population, income, and employment.;In the empirical applications, two econometric techniques are employed. First, the structural equations are estimated using three stage least squares. Second, the Spatial Durbin Model (SDM) is applied in order to account for spatial spillovers that emanate from neighboring counties. Results from the three stage least squares and SDM model are robust. The statistical evidence supports the theoretical analyses that enforcement of environmental regulations only affects regional growth in the short-term. Additional evidence from empirical models support the 'jobs follow people' and 'people follow jobs' hypotheses. In addition, empirical estimations show that changes in population, per capita income, and employment, including socio-economic, political, and demographic characteristics influence the stringency of environmental regulations.;With regard to the SDM estimations, important findings are that a county's regional growth and environmental regulation stringency not only depend on own county characteristics, but are indirectly influenced by neighboring counties' characteristics. Furthermore, results from the SDM model indicate that there is some form of strategic interaction in environmental policymaking among some counties in the Appalachian Region in the form of a race to the top.;The research findings reinforce the need to design and implement environmental regulations that stimulate economic growth and enhance environmental quality. Another policy implication is that besides imposing stringent environmental regulations on major polluting industries, attention needs to be paid to other socio-economic and demographic forces that contribute to emission of pollutants.

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