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.
MISSED THE green talks live webinar? WATCH THE VIDEO RECORDING
On 17 May, OECD Chief Economist Laurence Boone presented evidence from a decade of OECD research and analysis, which looks at the relationship between environmental policies and economic outcomes such as employment, investment, trade and productivity. Over the years, governments have gradually adopted more rigorous environmental policies to tackle challenges associated with pressing environmental issues, such as climate change, air pollution, waste management or biodiversity loss. The ambition of these policies is, however, often tempered by their perceived negative effects on the economy.
In a world characterised by the rise in global value chains and capital flows, do differences in the stringency of environmental policies across countries alter firms’ competitiveness and cost jobs? Does taking the lead trigger a first-mover advantage? What are the differentiated impacts across firms, industries and regions? And are these policies effective in reducing emissions from industry?
We explored these questions in the context of the Covid-19 crisis and green recovery with insights on designing environmental policies to ensure the largest benefits and compensate workers and industries that may lose out. The presentation was followed by a panel discussion with guest speakers:
Introduction: Rodolfo Lacy, OECD Environment Director
Presentation of key findings: Laurence Boone, OECD Chief Economist
Panel discussion with:
Al McGartland, Director, National Center for Environmental Economics, United States Environmental Protection Agency
Clare Lombardelli, Chief Economic Adviser, HM Treasury, United Kingdom
Riccardo Barbieri, Chief Economist, Italian Treasury
Moderated by: Shardul Agrawala, Head of the OECD Environment and Economy Integration Division