The political economy of environmental regulations in the U.S. intensive livestock industry

Abstract

When setting the stringency of environmental regulations of the intensive livestock industry, governments make a trade-off between rural economic development and environmental quality. This trade-off represents the weight the government places on social welfare relative to the profitability of the intensive livestock industry. The impact of the weight the government places on rural economic development on the formation of environmental regulations in the US intensive livestock industry is examined in this thesis. A political economy model explaining the formation of environmental regulations in the presence of a special interest lobby group is developed. The theoretical model finds that the incumbent government sets policy in response to the marginal disutility from pollution, the intensity of pollution damages, and according to the weight the government places on rural economic development. The theoretical model is tested using a cross-sectional analysis of 1997 intensive livestock industry environmental regulations across US states. Econometric results provide evidence that state governments implement more stringent regulations in response to the concerns of rural citizens and the intensity of pollution damages. The study finds that the pressure to pursue rural economic development has a positive relationship with the stringency of regulations.