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Linkages between Environmental Policy and Competitiveness

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    Abstract

    Debates exist between those who claim that environmental policy will impose additional burdens and costs on industries, thus impairing their competitiveness, and those who claim that improved environmental performance can spur competitiveness. These arguments often surface when new environmental policy regulation are considered, e.g. when the REACH Directive was introduced in Europe, or when a government is considering the introduction of a carbon tax. The report develops a conceptual framework to shed some light on this difficult debate. Competitiveness impacts of environmental policies may derive from the policy itself, or from the improvements of the environmental performance that derives from the policy. These impacts can be analysed at either firm or industry levels; they may differ over the short and long term. Globalisation, with the increasing role of MNEs and mobile capital and labour, is adding more complexity. This framework is used to decipher some of the messages that come out of empirical studies on these issues. Empirical evidence is mixed, and the paper identifies methodological and substantive reasons why empirical research fails to determine the relationship between environmental policy and competitiveness. Lessons derive from this literature review. Typically, even when implementing the environmental policy is clearly in the overall interest of society, the costs and benefits of the policy are unlikely to be equally shared among economic agents. While some win, individual firms or industries may stand to lose. Policy design should make sure that the adverse competitiveness impacts are not unnecessarily large, for example by paying attention to predictability, transition periods, and transaction costs. Specific measures to support the losers in their adjustment can also be developed. Sometimes measures to mitigate the adverse competitiveness impacts of an environmental policy are necessary to achieve political support for the policy. In those instances, the planned measures should be carefully analysed from several angles to ensure that they do not inadvertently hurt the efficiency and effectiveness of the original policy. More work is required to further explore these issues, which are consequential for the design, the implementation and the enforcement of environmental policies. Il y a souvent débat entre ceux qui pensent que les politiques environnementales vont imposer des charges supplémentaires aux entreprises et ainsi détériorer leur compétitivité, et d’autres qui pensent qu’une meilleure performance environnementale est un facteur de compétitivité. Ces débats affleurent en particulier quand de nouvelles réglementations environnementales sont débattues, par exemple lorsque la directive REACH a été mise en œuvre en Europe, ou quand des gouvernements réfléchissent à l’introduction d’une taxe carbone. Dans ce rapport, un cadre conceptuel est proposé, pour tirer des enseignements de ces débats. Les impacts d’une politique environnementale sur la compétitivité peuvent découler de la politique elle-même, ou des conséquences de la politique sur les performances environnementales. Ces impacts se mesurent au niveau des firmes ou des secteurs économiques ; ils peuvent être différents à court ou à long terme. La globalisation rend ces mécanismes encore plus complexes, avec le rôle accru des multinationales et la mobilité du capital et de l’emploi. Le cadre conceptuel est utilisé pour donner un sens aux résultats des études empiriques sur ces thèmes. Ces résultats sont ambigus et le rapport propose des raisons à la fois méthodologiques et de fond qui expliquent pourquoi les recherches empiriques ne parviennent pas à comprendre la relation entre les politiques environnementales et la compétitivité. L’analyse des sources documentaires fait ressortir quelques messages. Par exemple, même quand une politique environnementale a des effets positifs clairs sur l’ensemble de la collectivité, il est probable que les coûts et les bénéfices de cette politique soient inégalement répartis entre les agents économiques. Il se peut que certaines entreprises ou certains secteurs gagnent alors que d’autres perdent. La politique doit être conçue de sorte que les coûts ne soient pas indûment élevés, par exemple en annonçant à l’avance, en prévoyant des périodes de transition, et en étant attentifs aux coûts de transaction. Il est possible de prévoir des mesures dédiées aux perdants afin d’accompagner leurs ajustements. Dans certains cas, des mesures qui limitent les impacts négatifs d’une politique sur la compétitivité sont utiles pour susciter une adhésion à cette politique. Dans ces cas, les mesures envisagées doivent être analysées sous différents angles pour s’assurer qu’elles ne restreignent pas l’efficacité et l’efficience du projet initial. Des travaux complémentaires sont nécessaires pour étudier ces sujets qui sont importants pour la conception, la mise en œuvre et le respect des politiques environnementales.

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    Bibliographic Info

    Paper provided by OECD Publishing in its series OECD Environment Working Papers with number 13.

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    Date of creation: 11 Jan 2010
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    Handle: RePEc:oec:envaaa:13-en

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    Keywords: globalisation; environmental policy; competitiveness; Porter hypothesis; resource efficiency; eco-innovation; supply chain; pollution haven; éco-innovation; hypothèse de Porter; circuits d’approvisionnement; efficacité en ressources; compétitivité; mondialisation;

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    Cited by:
    1. Ambec, Stefan & Cohen, Mark & Elgie, Stewart & Lanoie, Paul, 2010. "The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?," LERNA Working Papers 10.14.320, LERNA, University of Toulouse.
    2. Böhringer, Christoph & Moslener, Ulf & Oberndorfer, Ulrich & Ziegler, Andreas, 2012. "Clean and productive? Empirical evidence from the German manufacturing industry," Research Policy, Elsevier, vol. 41(2), pages 442-451.

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