Pollution reduces welfare in different ways, e.g. by negatively affecting health or destabilising the climate. The aim of environmental policy is to ensure that the costs of pollution are factored into the decisions of private actors, be they firms or households. Whereas reducing pollution brings benefits in terms of avoiding negative effects on health, etc., it also typically entails costs for those who have to comply with the regulations. These costs should be taken into account by policymakers, and the costs and benefits of a given policy should be evaluated on a regular basis. The objective of the research area “Environmental Regulation, Pollution, and Impacts on Firms and Households” is to facilitate the cost-benefit evaluation of individual environmental policy measures, and to identify the factors that influence individual environmental performance.