OECD: Strict green laws do not harm export economies

Rapid economic growth at all costs being the dominant political mantra since the beginning of the crisis, EU environmental legislation has been the target of unrelenting pressures for easing, on allegations that it prevents businesses from growing and thus hampers economic recovery. A recent study by the OECD however adds evidence to the opposite conclusion: strict environmental regulations and policies do not harm export competitiveness. This conclusion is consistent with the findings of previous OECD studies, which prove that a stringent regulatory framework for the protection of the environment has no negative impact on productivity – instead, they can work together.

According to the working paper, “Environmental policies are not found to be a major driver of international trade patterns, but have some significant effects on specialisation. More stringent domestic policies have no significant effect on overall trade in manufactured goods, but are linked to a comparative disadvantage in "dirty" industries, and a corresponding advantage in "cleaner" industries. The effects are stronger for the domestic component of exports than for gross exports, yet notably smaller than the effects of e.g. trade liberalisation.”


In December 2014, the OECD published another rebuttal to those alleging that green laws undermine competitiveness. According to the 2014 report, “environmental stringency policies do not have to hurt productivity. On the contrary, efforts to improve growth and achieve ambitious environmental goals can go together, and should be stepped up. Environmental policies can and should be shaped to spawn new ideas, mobilise cleaner technologies and encourage new business models that benefit both the economy and the environment”.

Environmental policies are simply not the major driver of international trade patterns,” said OECD Chief Economist Catherine L. Mann, presenting the study at the London School of Economics. “We find no evidence that a large gap between the environmental policies of two given countries significantly affects their overall trade in manufactured goods. Governments should stop working on the assumption that tighter regulations will hurt their export share and focus on the edge they can get from innovation.” 

Since the beginning of the economic crisis, strong pressures for relaxation of environmental laws target the European Commission. Key legislation on environmental impact assessment, industrial emissions, climate change and nature conservation has been attacked by certain business lobbies and governments. 

One notable example of this trend to ease environmental legislation is the Juncker Commission’s initiative to revise the two Natura 2000 directives: Habitats 92/43/EEC and Wild Birds 2009/147/EC. In 2012, the European Commission launched the REFIT (“REgulatory FITness” and Performance) programme. In its Communication, the Commission noted that the economic crisis (aka the “current economic situation”) demands “that EU legislation be even more effective and efficient in achieving its public policy objectives”; it must deliver “full benefits at minimum cost”, aiming at a “simple, clear, stable and predictable regulatory framework for businesses, workers and citizens.” In response to this policy crisis, over 100 environmental groups, including WWF, joined forces and launched the #NatureAlert campaign, with the aim of flooding the European Commission’s public consultation facility with pro-nature individual responses. The massive public response of 520,325 people to the consultation was heard by the European Parliament and governments across Europe.

In a report titled “From crisis to opportunity: five steps to European Sustainable Economies”, WWF has shown why a new economic path towards sustainability is both a necessity and a huge opportunity for Europe, and presents a concrete and ambitious policy roadmap to EU decision-makers. In this sustainability framework, a robust, clear, ambitious and coherent corpus of environmental regulations is absolutely vital.


Read more: OECD, OECD Insights, The Economist, Business Green.


Last modified onFriday, 20 May 2016 15:49
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