Since environmental quality became an important focus of government regulations in most in­ dustrialized countries in the early 1970s, many researchers have assessed the impact of these regulations on economic performance. For example, Leontief and Ford [11] and Pasurka [15] investigated the impact that environmental protection costs had on prices in the U.S.; Walter [24] calculated the effect of pollution abatement expenditures on U.S. trade; and Robinson [19] mea­ sured the distributional impact of the burden of industrial pollution abatement. A related issue involves the productivity consequences of environmental regulations. In this paper we address this issue by considering the impact of pollution abatement investment on productivity growth measures.