Between 1978 and 1985, municipal governments and private industry will spend about $111 billion dollars on construction of new facilities to reduce air and water pollution as mandated by the EPA. The report presents estimates of how these projected expenditures will affect the total level of construction and how employment, wages, interest rates, and other variables will respond to the change in construction output. Effects on employment in selected sub-classes of the construction industry were also estimated. The response of the construction industry to increased spending for pollution control was estimated by use of an econometric model of the industry. The model, developed for the study, was simulated to predict the effects of projected spending through 1985.