Environmental Policies and Productivity Growth

Abstract

JT03348802Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2013) The economic effects of environmental policies are of central interest to policymakers. The traditional approach sees environmental policies as a burden on economic activity, at least in the short to medium term, as they raise costs without increasing output and restrict the set of production technologies and outputs. In contrast, the Porter Hypothesis claims that well-designed environmental policies can provide a 'free lunch' -encouraging innovation, bringing about gains in profitability and productivity that can outweigh the costs of the policy. This paper reviews the empirical evidence on the link between environmental policy stringency and productivity growth, and the various channels through which such effects can take place. The results are ambiguous, in particular as many of the studies are fragile and context-specific, impeding the generalisation of conclusions. Practical problems related to data, measurement and estimation strategies are discussed, leading to suggestions how they can be addressed in future research. These include: improving the measurement of environmental policy stringency; investigating into effects of different types of instruments and details of instrument design; exploiting cross-country variation; and the complementary use of different levels of aggregation. *********************************88 JEL classification codes Politiques environnementales et croissance de la productivité -un examen critique des résultats empiriquesLes effets économiques des politiques environnementales revêtent un intérêt crucial pour les responsables de l'action publique. Suivant l'approche classique, les politiques environnementales sont considérées comme un fardeau pour l'activité économique, au moins dans une perspective de court à moyen terme, étant donné qu'elles entraînent une hausse des coûts sans pour autant faire augmenter la production et qu'elles limitent l'éventail des technologies de production et des produits. À l'inverse, suivant l'hypothèse de Porter, des politiques environnementales judicieusement conçues peuvent procurer des avantages sans contrepartie, en encourageant l'innovation et en débouchant sur des gains de rentabilité et de productivité qui peuvent l'emporter sur les coûts des politiques considérées. Nous examinons dans ce document de travail les données empiriques relatives à la relation existant entre la rigueur des politiques environnementales et la croissance de la productivité, ainsi que les différents canaux via lesquels les effets considérés peuvent se produire. Les résultats de cet examen sont ambigus, notamment dans la mesure où de nombreuses études sont fragiles et spécifiquement liées à un contexte donné, ce qui ne permet pas d'en généraliser les conclusions. Des p...

Shedding light on the determinants of eco‐innovation: A meta‐analytic study

“…However, Jaffe and Palmer (1997) argued the opposite, that is, environmental regulation does not affect environmental innovation. So, the effect of environmental regulation on innovation activities depends on the level of study (Kozluk & Zipperer, 2013). Firm-specific factors mean companies start from different places in their environmental innovation activities (Rehfeld et al, 2007), which makes it important to consider firms' age and size as determinants of EI.…”

Green tangible investment strategies and export performance: A firm-level investigation

“…This controversy has been solved by theoretical arguments that point to the presence of market failures, behavioural and organizational constraints that prevent firms from recognising (and taking full advantage of) opportunities related to environmental practices with profit-increasing potential (Ambec and Barla, 2006;Ambec et al, 2013;Gabel and Sinclair-Desgagnè, 1998;Lanoie et al, 2011). 1 Within the PH framework, the relation among environmental regulation, environmental protection, innovation and economic competitiveness has been investigated by several empirical studies (Ambec and Barla, 2006;Ambec et al, 2013;Iraldo et al, 2011;Koźluk and Zipperer, 2013). Although they do not reach consensus, relatively to the strong version of the PH, extant contributions consider different types of effects, including the impacts on productivity and international competitiveness.…”

“…5 1 In addition to theoretical limitations, the PH literature has also been characterized by some methodological controversies, like use of inappropriate proxies, lack of temporal dynamics, selection bias and generalizability of results (e.g. Ambec et al, 2013;Koźluk and Zipperer, 2013;Lanoie et al, 2008Lanoie et al, , 2011 2 Recent extensions of the productivity measurement applied to macro-data analyses account for natural capital and "bad" outputs (Brandt et al, 2013(Brandt et al, , 2014. 3 With some exceptions (Hamamoto, 2006;Managi et al, 2005), PH-related studies largely use pollution abatement capital investment or operating costs to proxy for environmental regulation strategies.…”

Firm Surveys relating Environmental Policies, Environmental Performance and Innovation

“…In other cases a measure of environmental protection expenditure scaled by value added has been adopted (Costantini and Crespi, 2008;Ghisetti and Quatraro, 2013). However, Koźluk and Zipperer (2013) outlined that this measure suffers from poor comparability across countries and time, as well as of problems of lack counterfactuals situation that would allow for evaluating the policy. Furthermore, costs of abatement can be incompletely measured (Berman and Bui, 2001).…”