Assessing the Economic Impacts of Environmental Policies

Evidence from a Decade of OECD Research

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 ambition of these policies is, however, often tempered by their perceived negative effects on the economy. 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. The policies can however generate winners and losers across firms, industries and regions: while the least productive firms from high-polluting sectors are adversely affected, more productive firms and low-pollution sectors benefit. Environmental policies can be designed and combined with other policies to compensate workers and industries that may lose and to emphasise their positive impacts.

Published on May 17, 2021


Executive Summary
The economic impacts of environmental policies: Key findings and policy implications
Productivity growth, environmental policies and the Porter Hypothesis
Firm employment, energy prices and environmental policy stringency
Induced investment through environmental policies
Foreign direct investment and energy prices
Global value chains, environmental policies, and the Pollution Haven hypothesis
The European Union Emissions Trading System and its economic and environmental impacts
The joint effects of energy prices and carbon taxes in the French manufacturing sector
Impacts of energy prices on economic and environmental performance in the Indonesian manufacturing sector
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