Over the past decades, governments have gradually adopted more rigorous environmental policies to tackle challenges associated with pressing environmental issues, such as climate change. The empirical evidence in this volume – covering a decade of OECD analysis – shows that environmental policies have had relatively small effects on economic outcomes such as employment, investment, trade and productivity. At the same time, they have been effective at reducing emissions from industry.
Curbing emissions and pollution is crucial in ensuring that the gains in growth and well-being are sustainable in the long term. Hence, environmental considerations are key in the setting of national and global reform priorities. Going for Growth 2019 takes steps to integrate environmental sustainability in the reform priority selection framework. This chapter presents the details of this integration, summarises its results in terms of country-specific Going for Growth priorities and recommendations and outlines the future steps.
There have been concerns that the EU ETS’ main policy to reduce emissions would weaken European industry competitiveness.
A clean and healthy environment is essential for supporting economic activity and well-being in the long-term. Practically every economic and leisure activity – as well as life itself - has broadly-defined environment as a key input and could not exist without it. However, the relationship between the environment and GDP growth per se is more complex.
With environmental threats on the rise, how can we attain both economic and environmental challenges in a global economy? Less stringent policies give an advantage to more pollution-intensive production, but at the expense of less polluting industries. Read more on whether stricter environmental policies hurt export competitiveness.
> Read the brochure on "How stringent are environmental policies" which presents new quantitative measures of environmental policy stringency (EPS) developed by the OECD.
The Growth, Investment and the Low-Carbon Transition project analyses how low-emission and climate-resilient development can be achieved without compromising economic growth, competitiveness, or well-being across the G20 group of countries and beyond.
> Read the report "Investing in Climate, Investing in Growth"
Greener growth requires stringent environmental policies that are flexible and minimise barriers to entry and competition. The choice and implementation of environmental policy instruments is likely to be crucial. Flexible, market based instruments such as taxes and trading schemes are found to be more friendly to productivity growth.
The Pollution Haven Hypothesis argues that firms will seek to avoid the cost of stringent environmental regulations (and high energy prices) by locating production in countries where environmental norms are laxer. Pollution havens? Energy prices are not key drivers of offshoring
> See also: Do environmental policies affect global value chains? A new perspective on the pollution haven hypothesis