Environmental regulatory compliance costs are often cited as a factor in dairy location decisions,
but few studies estimate the impacts of regulation in this sector. This article uses California dairy
regulations to examine the pollution haven hypothesis in agriculture. Dairy industry regulation
has varied regionally within the state, with the more strictly regulated Southern California
region losing production and the more environmentally lenient Central Valley gaining production.
Results show that even after controlling for population density and property values, regulation had
significant negative effects on dairying in Southern California.
