A new working paper from Runar Brännlund (Umeå University) examines evidence for the Porter hypothesis using long run data for Sweden. Any paper on the "to read pile".
I am a little concerned about the long time period - 1913 through to 1999 which involved some rather large world events like 2 world wars. Interestingly but perhaps not surprisingly little evidence is found. A closer read required. I suspect his final line of the abstract is the right one:
A rather robust conclusion is that there is no evident relationship between environmental regulations and productivity growth. One explanation is that regulations and productivity actually is unrelated. Another potential explanation is that the regulatory measure used does not capture perceived regulations in a correct way.
Productivity and environmental regulations - A long run analysis of the Swedish industry
Date: 2008-02-01
By: Brännlund, Runar (Department of Economics, Umeå University)
URL: http://d.repec.org/n?u=RePEc:hhs:umnees:0728&r=env [PDF]
The aim with this study is to evaluate the potential effects on productivity development in the Swedish manufacturing industry due to changes in environmental regulations over a long time period. The issue is closely related to the so called Porter hypothesis, i.e. whether environmental regulations (the right kind) that usually is associated with costs triggers mechanisms that enhances efficiency and productivity that finally outweighs the initial cost increase. To test our hypothesis we use historical data spanning over the period 1913-1999 for the Swedish manufacturing sector. The model used is a two stage model were the total factor productivity is calculated in the first stage, and is then used in a second stage as the dependent variable in a regression analysis where one of the independent variables is a measure of regulatory intensity. The results show that the productivity growth has varied considerably over time. The least productive period was the second world war period, whereas the period with the highest productivity growth was the period after the second world war until 1970. Development of emissions follows essentially the same path as productivity growth until 1970. After 1970, however, there is a decoupling in the sense that emissions are decreasing, both in absolute level and as emissions per unit of value added. A rather robust conclusion is that there is no evident relationship between environmental regulations and productivity growth. One explanation is that regulations and productivity actually is unrelated. Another potential explanation is that the regulatory measure used does not capture perceived regulations in a correct way.
Keywords: Environmental regulations; productivity; Porter hypothesis
JEL: Q52 Q55 Q56
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