Do Painless Environmental Policies Exist?

Authors: Smith V.K.¹; Walsh R.²

Source: Journal of Risk and Uncertainty, Volume 21, Number 1, July 2000 , pp. 73-94(22)

Publisher: Springer

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Abstract:

This paper reports an experimental test of the Porter Hypothesis that environmental regulations create innovation offsets that would not otherwise be undertaken. Using a process analysis framework to consistently account for non-separabilities in production and pollution abatement practices, the findings suggest productivity gains can appear to be greater with environmental regulations than without even though they are not. This result which would seem to support the Porter argument, is the result of inadequacies in the methods used to decompose the influences to productivity change. Thus, the experiments offer one explanation for why it has been difficult in practice to reject the hypothesis.

Keywords: environmental regulation; productivity; innovation

Language: English

Document Type: Regular paper

Affiliations: 1: University Distinguished Professor, Department of Agricultural & Resource Economics, North Carolina State University, Box 8109, Raleigh, NC 27695 2: Department of Economics, Duke University, Box 90093, Durham, NC 27709 and Resources For the Future, Washington, D.C. 20036

Publication date: 2000-07-01