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We examine the impact of the political trade-off between rural economic development and environmental quality on the determination of environmental regulations in the U.S. intensive livestock industry. The political economy model, adapted from Fredriksson (1997) , is tested empirically, using state-level data on environmental regulation of the U.S. livestock sector. We find that state governments respond to greater potential for water pollution with more stringent environmental regulations. Consistent with our political economy model, we also find that states with lower recent growth in per capita income implement less stringent environmental regulations. [ABSTRACT FROM AUTHOR]