International Review of Environmental and Resource Economics > Vol 13 > Issue 1-2

Do Environmental and Economic Performance Go Together? A Review of Micro-level Empirical Evidence from the Past Decade or So

Antoine Dechezleprêtre, The Organisation for Economic Co-operation and Development (OECD), France, alain.deserres@oecd.org Tomasz Koźluk, The Organisation for Economic Co-operation and Development (OECD), France, Tobias Kruse, London School of Economics, U.K., Daniel Nachtigall, The Organisation for Economic Co-operation and Development (OECD), France, Alain de Serres, The Organisation for Economic Co-operation and Development (OECD), France,
 
Suggested Citation
Antoine Dechezleprêtre, Tomasz Koźluk, Tobias Kruse, Daniel Nachtigall and Alain de Serres (2019), "Do Environmental and Economic Performance Go Together? A Review of Micro-level Empirical Evidence from the Past Decade or So", International Review of Environmental and Resource Economics: Vol. 13: No. 1-2, pp 1-118. http://dx.doi.org/10.1561/101.00000106

Published: 26 Apr 2019
© 2019 A. Dechezleprêtre, T. Koźluk, T. Kruse, D. Nachtigall and A. de Serres
 
Subjects
Environmental Economics,  Environmental Economics:Climate Change,  Environmental Economics:Market-based Policy Instruments
 
Keywords
JEL Codes: O32Q52Q55Q58
Environmental performancefinancial performancePorter Hypothesisenvironmental regulationresearch synthesis
 

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In this article:
1. Introduction
2. Does It Really Pay to be Green? Micro-level Evidence on the Correlation between Environmental and Economic Performance
3. The Separate Impact of Environmental Policies on Economic Outcomes and Environmental Performance
4. Conclusions
Acknowledgments
Disclaimer
References

Abstract

This article reviews the empirical literature combining economic and environmental performance data at the micro-level, i.e. firm or facility level. The literature has generally found a positive and statistically significant correlation between economic performance, as measured by profitability indicators or stock market returns, and environmental performance, as measured by emissions of pollutants or adoption of international environmental standards. The main reason for this finding seems to be that firms that reduce their material and energy costs experience both better economic performance and lower emissions. Only a small and recent literature analyses the joint causal impact of environmental regulations on environmental and economic performance. Interestingly, this literature shows that environmental regulations tend to improve environmental performance while not weakening economic performance. However, the evidence so far is limited to a handful of environmental regulations that are not extremely stringent, so the result cannot be easily generalized. More research is needed to assess the joint effects of environmental regulations on environmental and economic performance, to explore the heterogeneity of these effects across sectors, countries and types of policies, and to understand which policy designs allow improving environmental quality while not coming at a cost in terms of economic performance of regulated businesses.

DOI:10.1561/101.00000106