Environmental regulation requires that substantial productive resources be diverted to efforts to improve environmental quality. Economic theory says that, all else being equal, regulation will consequently cause costs to rise with resulting losses in competitive advantage and a general weakening of economic performance as measured by indicators such as national or regional income. Empirical tests of this theory generally fail to find such consequences, however. This book sets out the reasons why empirical research and theory are at odds, suggests alternative formulations of the relationship between environmental regulation and economic performance, and presents related original research using Southern California as a case study of economic performance in the context of increasingly stringent and effective environmental controls promulgated over more than 30 years.