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Channels of transmission of environmental policy to economic growth

Author

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  • Francesco Ricci

    (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique)

Abstract

Economists generally hold that environmental regulations impose constraints on the production possibilities set and are therefore potentially harmful to economic growth. In recent years, however, it has been recognized that environmental regulation can enhance the prospects for growth if improved environmental quality increases the productivity of inputs or the efficiency of the education system. It is also held that environmental regulation promotes pollution abatement activity and can lead to the exploitation of increasing returns to scale in abatement. Furthermore, expectations of a better environment may encourage households to save. Finally, it has been conjectured that environmental regulations can stimulate innovation because R&D is a relatively clean activity and because the market share of clean innovations increases. Future empirical research should shed light on the relative importance of these different channels of transmission of environmental policy to the growth rate of the economy.

Suggested Citation

  • Francesco Ricci, 2007. "Channels of transmission of environmental policy to economic growth," Post-Print hal-03062228, HAL.
  • Handle: RePEc:hal:journl:hal-03062228
    DOI: 10.1016/j.ecolecon.2006.11.014
    as

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