The Indicators of the Economic Burdens of Environmental Policy Design

Environmental policies seek to address market failures related to the protection of the environment. However, they may also increase barriers to entry and distort competition. If stringent environmental policies can be designed in a way that minimises such economic burdens, they can facilitate the achievement of economic and environmental goals and a cleaner growth model. This paper reports evidence on selected competition-relevant aspects of environmental policy design from a cross-country questionnaire. Information on administrative burdens related to environmental licenses, differential treatment among incumbents and new entrants and the procedures to evaluate economic effects of environmental policies are summarised in a set of indicators of the Burden on the Economy due to Environmental Policies (BEEP). The indicators allow for a set of tentative conclusions. Firstly, the BEEP captures information on anti-competitive regulations absent from the OECD’s product market regulation indicators (PMR). Secondly, though it is not yet possible to evaluate the economic impact of anti-competitive aspects of environmental policies, it is likely they impact well beyond the sectors directly concerned, hampering productivity growth, as shown for other product market regulations. Finally, the burdens of environmental policies are not related to their actual stringency, indicating that ambitious environmental targets can be pursued in ways that are more (or less) friendly to competition.