Environmental policy reconsidered: The role of technological innovation

Abstract

This paper discusses recent environmental policy wisdom in the light of technological and organizational innovation. Starting from empirical evidence, it argues that the main econometric models which are used in environmental policy analysis do not consider properly the determinants and effects of innovation, and offer unreliable estimates of policy effects. Some solutions to the latter problem show that the integration between environmental policy and industrial policy can be more efficient than traditional environmental policies in the protection of the environment. Technological cooperation, moreover, can be an important instrument to stabilize international environmental agreements.