FEEM working papers "Note di lavoro" series
2004 .052

Channels of Transmission of Environmental Policy to Economic Growth: A Survey of the Theory


Authors: Francesco Ricci
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Journal
Keywords: Environmental policy, Endogenous growth
JEL n.: Q280,O410,O130,H230
JEL: Ecological Economics
Pages: Vol. 60, No. 4, pp. 688-699
Date: 02/2007

Abstract

Economists generally hold that environmental regulations impose constraints on the production possibilities set and are therefore potentially harmful to economic growth. In recent years, however, it has been recognized that environmental regulation can enhance the prospects for growth if improved environmental quality increases the productivity of inputs or the efficiency of the education system. It is also held that environmental regulation promotes pollution abatement activity and can lead to the exploitation of increasing returns to scale in abatement. Furthermore, expectations of a better environment may encourage households to save. Finally, it has been conjectured that environmental regulations can stimulate innovation because R&D s a relatively clean activity and because the market share of clean innovations increases.

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