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As environmentalist movements in the United States continue to win legislative victories for environmental preservation, other nations around the globe are still focused on economic gains, often at the cost of environmental degradation. We see a prime example of this in the timber industry in California, as the increasingly strict regulations placed upon timber harvest practices have caused the state's timber production to be unable to keep up with lumber consumption rates. To fill this gap, most lumber in California is now imported from locations such as Canada and the Pacific Northwest, where regulations to promote sustainable harvest practices are much less strict than in California. These imports must travel much greater distances than domestically produced lumber, which increases energy consumption and air pollution emissions. This study addresses the externalities of air pollution associated with California lumber imports by assigning monetary values to the environmental impacts of air pollutants from truck, rail, and boat shipments. Accounting for the environmental costs of air pollutants under current shipment patterns increases the total cost to the market by about 2%, or $10.7 million. In order to reduce this total cost, a reduction of the quantity of lumber imported from great distances has a greater effect than adjusting the type of transport used. Policies to promote import quantity reduction should focus on internalizing the environmental costs of transport and allowing increased lumber production from California forests. The free market should react to these policies by decreasing the use of environmentally costly imports.