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Environmental Policies and Productivity Growth: A Critical Review of Empirical Findings

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  • Tomasz Koźluk
  • Vera Zipperer

Abstract

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. Politiques environnementales et croissance de la productivité : Un examen critique des résultats Les 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 problèmes pratiques liés aux données ainsi qu'aux stratégies de mesure et d'estimation sont examinés, et des propositions sont formulées en vue d'y remédier dans le cadre de futurs travaux de recherche. Il est notamment suggéré d'améliorer la mesure de la rigueur des politiques environnementales, d'analyser les effets des différents types d'instruments et d'examiner en détail leur conception, d'exploiter les variations observées entre pays, et d'utiliser de manière complémentaire différents niveaux d'agrégation.

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File URL: http://dx.doi.org/10.1787/5k3w725lhgf6-en
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 1096.

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Date of creation: 19 Nov 2013
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Handle: RePEc:oec:ecoaaa:1096-en

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Keywords: productivity; environmental policy; innovation; Porter hypothesis; politiques environnementales; innovation; hypothèse de Porter; productivité;

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