A multi-year research study was established under the environmental pillar of the Agriculture Policy Framework (APF) to evaluate the role and impact of existing farm level environmental regulations administered by local, provincial, federal governments. The Phase 1 study entitled "Inventory and Methodology for Assessing the Impacts of Environmental Regulations in the Agricultural Sector" was released in March 2006 on AAFC online. There is a growing concern about the impact and effectiveness of environmental regulations, specifically impact on the competitiveness of primary agriculture. Empirical analysis is required to better understand the exact role that agri-environmental regulations play in determining a farm's cost structure and to compare difference between provinces within Canada. With this purpose in mind, in Phase 2, Agriculture and Agri-Food Canada (AAFC), has commissioned potato case study to increase the policy makers' and industry's understanding of the impact and role of environmental regulations in the farming sector. Financial statements of revenues and costs were developed for a typical potato farm at the provincial level to compare against the compliance costs of environmental regulations. The results show that environmental regulation compliance costs were generally less than 1% of total annual production cost except PEI (1.3%).