Environmental regulation compliance costs are much less than companies think

Ottawa – As world leaders are about to gather in Paris to agree to new greenhouse gas emissions reduction efforts, Canada’s industry leaders shouldn’t fear compliance costs. It turns out that the costs of complying with environmental regulations is much lower than we think.

New evidence shows that industries and companies overestimate the cost of complying with environmental regulations, and that often these regulations can lead to beneficial innovation too. This means that our economy and environment can both win.

There are three reasons environmental regulations can be win-win:

  • They encourage innovation and resourceful thinking about operations and products, which can lead to economic returns
  • Compliance costs are not as high as anticipated by industry and governments (often overestimated by 10 times or more)
  • Improved, modern policies allow flexibility in meeting environmental regulations
  • In 2014, OECD researchers gathered the first-ever set of data on environmental regulations and found that “an increase in stringency of environmental policies does not harm productivity growth.” Times are changing. Industries and individual companies are showing significant interest in improved, modern policies and seek action from government and other decision-makers. Environmental regulations are not a trade-off at the expense of economic growth, but rather a win-win for the environment and our bottom line.

    Sustainable Prosperity has released a series of reports detailing these findings and suggested actions for government and other decision-makers: http://www.sustainableprosperity.ca/green-tape-measures-up

    For more information and to arrange interviews:

    Melanie Coulson
    (613) 462-3375 (cell)
    (613) 562-5800 ext. 1189 (office)

    Related Materials:

  • Issue summary: Green Tape Measures Up: Environmental Regulation Comes with Lower Compliance Costs and Greater Innovation than Previously Thought
  • Policy brief: Environmental Regulation and Innovation: Select Case Study Evidence of the Porter Hypothesis
  • Policy brief: Overestimating the Costs of Compliance with Environmental Regulations
  • Blog: 3 Reasons why Green Tape Measures Up to scrutiny
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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.