Empirical research has made progress in shedding light on links between environmental policies and socio-economic outcomes but more is still needed. Previous research has shown that more stringent environmental policy has achieved significant environmental benefits with little aggregate effect on economic performance. However, localised effects may generate winners and losers, with significant losses for certain sectors, firms or individuals and benefits for others.
Nonetheless, at present, the empirical evidence on these distributional aspects is still scarce, despite its crucial role in supporting good policy design. More than ever, regulators need better tools and insights to assess the consequences of environmental policies on the economy and on social outcomes. The sections below highlight recent OECD work on the interlinkages between environmental policies and socio-economic goals. The objective is to provide policy makers with clear guidance as they pursue the twin objectives of supporting inclusive and sustainable economic development and a healthier environment. The work summarised in this page was all produced with the financial assistance of the European Union. The content covers only a part of OECD work on the topic.
This study provides the first evidence that air pollution causes economy-wide reductions in market economic activity based on data for Europe. The analysis combines satellite-based measures of air pollution with statistics on regional economic activity at the NUTS-3 level throughout the European Union over the period 2000-15. The results suggest that public policies to reduce air pollution may contribute positively to economic growth.
The paper empirically assesses the effect of climate policy stringency on innovation and economic performance, both directly on regulated sectors and indirectly through supply chain relationships. The analysis is based on a combination of firm- and sector-level data, covering 19 countries and the period from 1990 to 2015. The paper shows that climate policies are effective at inducing innovation in low-carbon technologies in directly regulated sectors. This supports the evidence that past climate policies have not been major burdens on firms’ competitiveness, and that clean innovation may enable firms to compensate for the potential costs implied by new environmental regulations.
The paper investigates empirically the impact of green innovation on car manufacturers’ market share when fuel prices increase. In particular, it estimates the return to innovation in technologies that reduce vehicle fossil fuel use per distance travelled, or bypass fossil fuel use, in the years after knowledge is accumulated. The analysis estimates how these returns depend on fuel price signals. The paper investigates various time lags between innovation and economic returns (0 to 20 years) as well as different types of green innovation. The results suggest that consumers respond to fuel price increases on the extensive margin by switching to more fuel-efficient vehicles and to electric or hybrid vehicles.
This study empirically assesses the impact of energy prices and environmental policy stringency (EPS) on manufacturing employment in OECD countries over the period 2000- 2014. The analysis demonstrates that there exist transition costs in the short run to imposing stricter environmental policies, as some workers are forced to move away from affected firms and sectors, even if many of these job losses are unlikely to be permanent.
This report describes and gives a list of approaches developed across countries and by different stakeholders to support alternatives assessment and substitution of chemicals of concern.
The work summarised in this webpage was all produced with the financial assistance of the European Union. This does not cover all OECD work on this topic. For more information, see brochure.