This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

When and Why Does it Pay to be Green?

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Paul Lanoie ()
Stefan Ambec
Iain Scott

Additional information is available for the following registered author(s):

Abstract

According to widely held beliefs, environmental protection is associated with an increase in costs for businesses imposed by the government. Over the last decade, this view has been challenged by a number of analysts. They have identified many possibilities, from a conceptual or theoretical point of view, whereby firms could offset the costs of sustaining the environment with higher profits.
First, a better environmental performance can lead to an increase in revenues through the following channels: i) a better access to certain markets; ii) the possibility to differentiate products, and iii) the possibility to sell pollution-control technology. Second, a better environmental performance can lead to cost reductions in the following categories: iv) regulatory costs; v) cost of material, energy and services; vi) cost of capital, and vii) cost of labour.
The purpose of this report is to provide empirical evidence supporting the existence of these opportunities and to assess their magnitude. For each of the seven possibilities identified above, we provide a discussion of the mechanisms involved and a systematic view of the empirical evidence available. The objective of this paper is not to show that a reduction of pollution is always accompanied by a better financial performance, it is rather to argue that the expenses incurred to reduce pollution can sometimes be partly or completely compensated by gains made elsewhere. Through a systematic examination of all the possibilities, we want to identify the circumstances most likely to lead to a “winwin” situation, i.e., better environmental and financial performance.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.cirano.qc.ca/pdf/publication/2007RB-03.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by CIRANO in its series CIRANO Burgundy Reports with number 2007rb-03.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: 01 Nov 2007
Date of revision:
Handle: RePEc:cir:cirbur:2007rb-03

Contact details of provider:
Postal: 2020 rue University, 25e �tage, Montr�al, Qu�c, H3A 2A5
Phone: (514) 985-4000
Fax: (514) 985-4039
Email:
Web page: http://www.cirano.qc.ca/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Webmaster).

Related research
Keywords:

Other versions of this item:

This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Alpay, Ebru & Buccola, Steven & Kerkvliet, Joe, 2002. " Productivity Growth and Environmental Regulation in Mexican and U.S. Food Manufacturing," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 84(4), pages 887-901, November. [Downloadable!] (restricted)
  2. Konar, Shameek & Cohen, Mark A., 1997. "Information As Regulation: The Effect of Community Right to Know Laws on Toxic Emissions," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 109-124, January. [Downloadable!] (restricted)
  3. Ambec, Stefan & Barla, Philippe, 2005. "Quand la réglementation environmentale profite aux pollueurs. Survol des fondements théoriques de l'hypothèse de Porter," Cahiers de recherche 0504, Université Laval - Département d'économique. [Downloadable!]
    Other versions:
  4. John Hannigan, 2003. "Introduction," International Journal of Urban and Regional Research, Blackwell Publishing, vol. 27(2), pages 352-360, 06. [Downloadable!] (restricted)
  5. Carhart, Mark M, 1997. " On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March. [Downloadable!] (restricted)
  6. Barbera, Anthony J. & McConnell, Virginia D., 1990. "The impact of environmental regulations on industry productivity: Direct and indirect effects," Journal of Environmental Economics and Management, Elsevier, vol. 18(1), pages 50-65, January. [Downloadable!] (restricted)
  7. Blacconiere, Walter G. & Patten, Dennis M., 1994. "Environmental disclosures, regulatory costs, and changes in firm value," Journal of Accounting and Economics, Elsevier, vol. 18(3), pages 357-377, November. [Downloadable!] (restricted)
  8. Barla, Philippe, 2005. "ISO 14001 Certification and Environmental Performance in Quebec's Pulp and Paper Industry," Cahiers de recherche 0503, Université Laval - Département d'économique. [Downloadable!]
    Other versions:
  9. Burtraw, Dallas, 2000. "Innovation Under the Tradable Sulfur Dioxide Emission Permits Program in the U.S. Electricity Sector," Discussion Papers dp-00-38, Resources For the Future. [Downloadable!]
  10. Alan Gregory & John Matatko & Robert Luther, 1997. "Ethical Unit Trust Financial Performance: Small Company Effects and Fund Size Effects," Journal of Business Finance & Accounting, Blackwell Publishing, vol. 24(5), pages 705-725. [Downloadable!] (restricted)
  11. Bauer, Rob & Koedijk, Kees & Otten, Roger, 2005. "International evidence on ethical mutual fund performance and investment style," Journal of Banking & Finance, Elsevier, vol. 29(7), pages 1751-1767, July. [Downloadable!] (restricted)
  12. Gollop, Frank M & Roberts, Mark J, 1983. "Environmental Regulations and Productivity Growth: The Case of Fossil-Fueled Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 654-74, August. [Downloadable!] (restricted)
  13. Stavins, Robert & Jaffe, Adam & Newell, Richard, 2004. "A Tale of Two Market Failures: Technology and Environmental Policy," Discussion Papers dp-04-38, Resources For the Future. [Downloadable!]
    Other versions:
  14. Lanoie, Paul & Laplante, Benoit & Roy, Maite, 1998. "Can capital markets create incentives for pollution control?," Ecological Economics, Elsevier, vol. 26(1), pages 31-41, July. [Downloadable!] (restricted)
  15. Fama, Eugene F, et al, 1969. "The Adjustment of Stock Prices to New Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(1), pages 1-21, February. [Downloadable!] (restricted)
  16. Dasgupta, Susmita & Laplante, Benoit & Mamingi, Nlandu, 2001. "Pollution and Capital Markets in Developing Countries," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 310-335, November. [Downloadable!] (restricted)
  17. Adam B. Jaffe & Karen Palmer, 1996. "Environmental Regulation and Innovation: A Panel Data Study," NBER Working Papers 5545, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  18. Théophile AZOMAHOU & Phu NGUYEN VAN & Marcus WAGNER, 2001. "Determinants of Environmental and Economic Performance of Firms: An Empirical Analysis of the European Paper Industry," Working Papers of BETA 2001-22, Bureau d'Economie Théorique et Appliquée, ULP, Strasbourg. [Downloadable!]
  19. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March. [Downloadable!] (restricted)
  20. Catherine M. Paul & Donald Siegel, 2006. "Corporate social responsibility and economic performance," Journal of Productivity Analysis, Springer, vol. 26(3), pages 207-211, December. [Downloadable!] (restricted)
    Other versions:
  21. Isaksson, Lena Hoglund, 2005. "Abatement costs in response to the Swedish charge on nitrogen oxide emissions," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 102-120, July. [Downloadable!] (restricted)
  22. Gilles Grolleau & Naoufel Mzoughi & Alban Thomas, 2007. "What drives agrifood firms to register for an Environmental Management System?," European Review of Agricultural Economics, Oxford University Press for the Foundation for the European Review of Agricultural Economics, vol. 34(2), pages 233-255, June. [Downloadable!] (restricted)
  23. Cremer, Helmuth & Thisse, Jacques-Francois, 1999. "On the taxation of polluting products in a differentiated industry," European Economic Review, Elsevier, vol. 43(3), pages 575-594, March. [Downloadable!] (restricted)
  24. H. E. Frech III, 2003. "Introduction," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 10(2), pages 133-133, July. [Downloadable!] (restricted)
  25. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August. [Downloadable!] (restricted)
  26. Ambec, Stefan & Barla, Philippe, 2005. "Can Environmental Regulations be Good for Business? an Assessment of the Porter Hypothesis," Cahiers de recherche 0505, GREEN. [Downloadable!]
    Other versions:
  27. Khanna, Madhu & Quimio, Wilma Rose H. & Bojilova, Dora, 1998. "Toxics Release Information: A Policy Tool for Environmental Protection," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 243-266, November. [Downloadable!] (restricted)
  28. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: International Perspectives," Rensselaer Working Papers in Economics 0604, Rensselaer Polytechnic Institute, Department of Economics. [Downloadable!]
  29. Greaker, Mads, 2003. "Strategic environmental policy; eco-dumping or a green strategy?," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 692-707, May. [Downloadable!] (restricted)
  30. Shameek Konar & Mark A. Cohen, 2001. "Does The Market Value Environmental Performance?," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 281-289, May. [Downloadable!] (restricted)
  31. Hamilton James T., 1995. "Pollution as News: Media and Stock Market Reactions to the Toxics Release Inventory Data," Journal of Environmental Economics and Management, Elsevier, vol. 28(1), pages 98-113, January. [Downloadable!] (restricted)
  32. Ambec, Stefan & Barla, Philippe, 2002. "A theoretical foundation of the Porter hypothesis," Economics Letters, Elsevier, vol. 75(3), pages 355-360, May. [Downloadable!] (restricted)
    Other versions:
  33. Fare, Rolf, et al, 1989. "Multilateral Productivity Comparisons When Some Outputs Are Undesirable: A Nonparametric Approach," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 90-98, February. [Downloadable!] (restricted)
  34. Bansal, Sangeeta & Gangopadhyay, Shubhashis, 2003. "Tax/subsidy policies in the presence of environmentally aware consumers," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 333-355, March. [Downloadable!] (restricted)
  35. Gray, Wayne B, 1987. "The Cost of Regulation: OSHA, EPA and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 77(5), pages 998-1006, December. [Downloadable!] (restricted)
  36. Eli Berman & Linda T. M. Bui, 2001. "Environmental Regulation And Productivity: Evidence From Oil Refineries," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 498-510, August. [Downloadable!] (restricted)
    Other versions:
  37. Mohr, Robert D., 2002. "Technical Change, External Economies, and the Porter Hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 158-168, January. [Downloadable!] (restricted)
  38. Brunnermeier, Smita B. & Cohen, Mark A., 2003. "Determinants of environmental innovation in US manufacturing industries," Journal of Environmental Economics and Management, Elsevier, vol. 45(2), pages 278-293, March. [Downloadable!] (restricted)
  39. J. Rajendran Pandian & Paul L. Robertson, 2003. "Introduction," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(4), pages 241-243. [Downloadable!]
  40. John King, 2003. "Introduction," Review of Political Economy, Taylor and Francis Journals, vol. 15(4), pages 453-456, October. [Downloadable!] (restricted)
  41. J.B. Smith & W A. Sims, 1985. "The Impact of Pollution Charges on Productivity Growth in Canadian Brewing," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 410-423, Autumn. [Downloadable!] (restricted)
  42. Gray, Wayne B & Shadbegian, Ronald J, 1998. "Environmental Regulation, Investment Timing, and Technology Choice," Journal of Industrial Economics, Blackwell Publishing, vol. 46(2), pages 235-56, June. [Downloadable!] (restricted)
    Other versions:
  43. Simpson, R. David & Bradford, Robert III, 1996. "Taxing Variable Cost: Environmental Regulation as Industrial Policy," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 282-300, May. [Downloadable!] (restricted)
  44. Nelson, Randy A & Tietenberg, Tom & Donihue, Michael R, 1993. "Differential Environmental Regulation: Effects on Electric Utility Capital Turnover and Emissions," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 368-73, May. [Downloadable!] (restricted)
  45. Heinkel, Robert & Kraus, Alan & Zechner, Josef, 2001. "The Effect of Green Investment on Corporate Behavior," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 36(04), pages 431-449, December. [Downloadable!]
  46. Gray, Wayne B. & Shadbegian, Ronald J., 2003. "Plant vintage, technology, and environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 384-402, November. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ziesemer, Thomas & Kriechel, Ben, 2007. "The Environmental Porter Hypothesis: Theory, Evidence and a Model of Timing of Adoption," UNU-MERIT Working Paper Series 024, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology. [Downloadable!]
    Other versions:
  2. Paul Lanoie & Daniel Llerena, 2007. "Des billets verts pour des entreprises agricoles vertes?," CIRANO Working Papers 2007s-17, CIRANO. [Downloadable!]
  3. Lanoie, P. & Llerena, D., 2007. "Des billets verts pour des entreprises agricoles vertes ?," Working Papers 200707, Grenoble Applied Economics Laboratory (GAEL). [Downloadable!]
  4. Lanoie, P. & Laurent-Lucchetti, L. & Johnstone, N. & Ambec, S., 2007. "Environmental policy, innovation and performance : new insights on the Porter hypothesis," Working Papers 200706, Grenoble Applied Economics Laboratory (GAEL). [Downloadable!]
    Other versions:
  5. Paul Lanoie & Daniel Llerena, 2007. "Des billets verts pour des entreprises agricoles vertes?," Cahiers de recherche 07-07, HEC Montréal, Institut d'économie appliquée. [Downloadable!]
Statistics
Access and download statistics

Did you know? IDEAS also covers the most complete directory of Economics departments and institutes, EDIRC.

This page was last updated on 2009-11-1.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.