Do environmental and economic performance go together? A review of micro-level empirical evidence from the past decade or so

Dechezleprêtre, Antoine, Koźluk, Tomasz, Kruse, Tobias, Nachtigall, Daniel and De Serres, Alain (2019) Do environmental and economic performance go together? A review of micro-level empirical evidence from the past decade or so. International Review of Environmental and Resource Economics, 13 (1-2). pp. 1-118. ISSN 1932-1465

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Abstract

This article reviews the empirical literature combining economic and environmental performance data at the micro-level, i.e. firm or facility level. The literature has generally found a positive and statistically significant correlation between economic performance, as measured by profitability indicators or stock market returns, and environmental performance, as measured by emissions of pollutants or adoption of international environmental standards. The main reason for this finding seems to be that firms that reduce their material and energy costs experience both better economic performance and lower emissions. Only a small and recent literature analyses the joint causal impact of environmental regulations on environmental and economic performance. Interestingly, this literature shows that environmental regulations tend to improve environmental performance while not weakening economic performance. However, the evidence so far is limited to a handful of environmental regulations that are not extremely stringent, so the result cannot be easily generalized. More research is needed to assess the joint effects of environmental regulations on environmental and economic performance, to explore the heterogeneity of these effects across sectors, countries and types of policies, and to understand which policy designs allow improving environmental quality while not coming at a cost in terms of economic performance of regulated businesses.

Item Type:	Article
Divisions:	Grantham Research Institute Methodology
JEL classification:	O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O32 - Management of Technological Innovation and R&D Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Costs; Distributional Effects; Employment Effects Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q55 - Technological Innovation Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy
Date Deposited:	29 May 2019 14:45
Last Modified:	14 Nov 2024 22:15
URI:	http://eprints.lse.ac.uk/id/eprint/100900

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