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Environmental rules 'no great impact' on business, study finds

The benefits of environmental regulations “vastly outweigh” the costs, an international study has concluded.

Researchers at the London School of Economics and the Seoul-based Global Green Growth Institute tested the traditional argument that green legislation adds costs to companies and slows down productivity.

They have produced a policy paper which argues that environmental regulations make a smaller than expected difference.

“The recent evidence shows that environmental regulations can hit employment and productivity, in particular in pollution- and energy-intensive sectors. However, these effects appear to be small and transitory,” the study found.

The researchers suggested governments can mitigate the effect of regulations by introducing policies encouraging labour mobility, such as flexible labour markets, affordable housing and lifelong training. These further reduce the impact of legislation in the long run.

Environmental regulations also only marginally affect international competitiveness, the study concluded. “[Their impact] on where trade and investment take place has been shown to be negligible compared to other factors such as market conditions and the quality of the local workforce,” it said.

Overall, the researchers argued that the benefits of legislation, for example in terms of protecting the environment and human health, are much larger than their costs to businesses and are mostly underestimated.

In particular, the researchers highlighted how regulations induce innovation in clean technologies and discourage research and development in conventional polluting production methods.

Readers' comments (2)

  • In common with many of these types of studies, I bet the evidence upon which they based their conclusions came from individuals and/or organisations who first of all had the time to respond and secondly whose jobs depend on the implementation and or policing of yet more legislation, so they would say that wouldn't they? Meanwhile, the rest of us are too busy trying to run our businesses and comply with what's already out there!

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  • They must have conducted this survey in Outer Mongolia. The cost of Environmental regulations FAR outstrips the benefits. All over the country small family firms are struggling to understand Environmental exams like Wamitab. Our forefathers would be jumping in their graves if they had to put up with the modern environment laws.. Have you noticed that politicians who are pro-active during the introduction of these laws soon disappear after they have done the damage.

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