Research Program Area: Economic Analysis
Topic Areas: Impacts
This study examined the relationship of air quality regulations and business location decisions in California. The evidence analyzed included studies of the California business climate, academic. literature on business location decisions, data on air pollution control costs, responses to an lEES (Institute for Economic and Environmental Studies) survey of rims subject to air quality regulations and trends in economic growth and business relocations in California for 1990-1993.
Based on this evidence, the following sets of findings have emerged:
1. There is a clear dichotomy between business perceptions and the actual cost of air quality regulations. While the business managers are clearly angry at government regulations and view them as costly to business, there is little reliable quantitative data which supports the conclusion that heavy costs are imposed on the economy by air quality regulations.
2. We did not find that air quality regulations created significantly higher costs for California industries compared to those in other states. Data showed that one-half to two-thirds of the total estimated expenditures on compliance are in two industries: electric utilities and petroleum products, which account for less than 1 percent of the state's job base.
3. We found that business executives view air quality regulations as unnecessarily burdensome. They expressed anger and frustration in dealing with the California air quality regulations. Their concerns dealt both with the direct compliance costs of air quality regulations and with the time and uncertainty costs involved in the permitting / regulatory process.
4. Recent California job losses were caused primarily by specific industry trends. The major causes were construction over-building, a sharp dropoff in civilian and military aerospace demand and a decline in real spending far beyond the decline in real income.
For questions regarding this research project, including available data and progress status, contact: Research Division staff at (916) 445-0753
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