Pollution Abatement Spending and Corporate Profitability: Texas Manufacturing

Manufacturing firms are generally on the front lines of environmental protection because most industrial pollution is a result of manufacturing activity. The problem is that firms do not have strong incentives for pollution abatement because they see it as an additional cost and investment in nonproductive activity. This article focuses on the Texas manufacturing sector, where PACE (pollution abatement costs and expenditures) spending, perhaps surprisingly, led the nation in 2005.