Environmental Protection and Industrial Location

Abstract

Abstract The National Environmental Policy Act and the pollution control powers of environmental protection agencies present a potentially significant new influence on the location of economic activity within the United States. This study examines whether traditional factors such as markets, labor, and materials remain predominant in manufacturing-location decision making, despite the recently added dimension of environmental regulations. Personal interviews and mailed questionnaires were used to identify the factors that were most important in the location of 162 new branch plants of large U.S. corporations. For most of the locational decisions investigated, environmental regulations did not rank among the most important factors considered; when such regulations were of some significance, uncertainties about when the necessary permits would be obtained were more important than spatial variations in direct costs. The results indicate that environmental regulations have had no consistent effect on the size of the search area, the number of sites considered, the sizes of facilities built, or the decision to expand existing plants versus building new plants. Environmental regulations will not lead to major shifts in the location of industry within the U.S. for the traditional location factors remain predominant.