Which of the following is a common effect of environmental law on businesses?

The correct answer highlights that a common effect of environmental law on businesses is an increase in operating costs. This phenomenon occurs for several reasons. When businesses have to comply with environmental regulations, they often face additional expenses related to implementing new technologies and processes to minimize pollution, properly dispose of waste, or manage resources sustainably. These regulations might require companies to invest in new equipment, undergo regular inspections, and implement training programs to ensure compliance with environmental standards.

Additionally, environmental laws can lead to increased costs due to potential fines or penalties for non-compliance, which can create a financial burden on businesses. Furthermore, the need to conduct environmental assessments and adhere to stricter compliance requirements can require additional staff or expert consultation, further adding to operating costs.

The other options present different scenarios that are unlikely within the context of environmental law's impact. For example, a decrease in operating costs is rarely a direct effect of these laws, as compliance typically requires investment. Similarly, stability in business profits is not a guaranteed outcome; the costs associated with complying with environmental laws can affect profitability. Lastly, a reduction of regulatory oversight contradicts the fundamental nature of environmental law, which typically imposes more stringent regulations rather than less.