Porter Hypothesis Meta-Analysis: Summary

Despite twenty years of intense research by policy makers and academics alike, there is little consensus on the extent to which (if at all) well-designed environmental regulation may spur technological innovation and enhance competitiveness. This lack of clarity presents a significant challenge to the formulation of environmental policy that safeguards both economic and environmental sustainability.

Responding to this challenge, Mark Cohen from Vanderbilt University and Adeline Tubb from the Institute of the Environment are conducting a rigorous meta-analysis, which will synthesise all of the existing empirical research on the relationship between environmental regulation, innovation and competitiveness in addition to answering questions surrounding the optimal design of environmental policy instruments.

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About the Project

The goal of this project is to shed light on the relationship between economic activity and the environment by exploring the linkages between changes in our natural capital and our measures of productivity generally, and through the construction of an environmentally adjusted measure of productivity specifically.

While it is now commonly accepted that economic activity and the state of our environment are linked, many economic measures still fail to incorporate the environment – both the things we draw from it and the pollution we release into it. By developing and calculating measures of productivity that include natural capital, Canada may be able to better understand these linkages. This, in turn, may lead to the identification of strategies that can help Canada become more efficient and innovative in the use and protection of natural capital, and thus more productive and more prosperous.

Using the forestry sector as a case study, this project aims to construct an environmentally adjusted measure of multifactor productivity. In doing so, we aim to add another layer of understanding to the environmental and economic performance of this sector. The proposed measure will have relevance to the Canadian economy as a whole.