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The Impact of Water Quality Management Policies on Innovation in Nitrogen and Phosphorus Technology

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  • Tobias Häggmark

    (Department of Economics, Swedish University of Agricultural Sciences, Box 7013, SE-750 07 Uppsala, Sweden)

  • Katarina Elofsson

    (Department of Economics, Swedish University of Agricultural Sciences, Box 7013, SE-750 07 Uppsala, Sweden†Department of Environmental Sciences, Aarhus University, Frederiksbergsvej 399, DK-4000 Roskilde, Denmark‡Department of Social Sciences, Södertörn University, SE-141 89 Huddinge, Sweden)

Abstract

The purpose of this study is to examine the effects on innovation of environmental regulations aimed at reducing eutrophication. We focus on innovations in nitrogen and phosphorus management technology in the wastewater treatment sector and the agricultural sector. Patent data from Sweden over a 50-year period is used as a measure of innovation. We estimate a negative binomial regression model in a reduced form and by the use of control-functions, taking into account environmental regulation as well as more general determinants of innovation. Our results suggest that increased regulation has induced innovation in the wastewater treatment sector, both in the long and short run. The short-run effect was estimated to 40–70% in the years immediately following the introduction of new environmental regulations. A corresponding effect could not be identified in the agricultural sector. The difference between the sectors is likely explained by differences in policy design, where performance standards are applied in the wastewater sector, while design standards and technology-specific subsidies dominate in the agricultural sector.

Suggested Citation

  • Tobias Häggmark & Katarina Elofsson, 2021. "The Impact of Water Quality Management Policies on Innovation in Nitrogen and Phosphorus Technology," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-29, January.
    • Handle: RePEc:wsi:wepxxx:v:07:y:2021:i:01:n:s2382624x21500028
    DOI: 10.1142/S2382624X21500028
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