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Sustainability 2017, 9(12), 2323; doi:10.3390/su9122323

Effect of Environmental Regulation Stringency on the Pulp and Paper Industry

ETS/Economics Unit, Luleå University of Technology, SE-971 87 Luleå, Sweden
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Received: 21 November 2017 / Revised: 6 December 2017 / Accepted: 11 December 2017 / Published: 13 December 2017
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
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Abstract

The article investigates whether environmental regulations have affected productivity development and technological change in the European pulp and paper industry. A dynamic panel data approach is selected for analyzing a sample consisting of the pulp and paper industries in eight European countries. Industry total factor productivity for the period 1993–2009 is used as the dependent variable; it is explained by the intensities of environmental regulations for various types of pollutants, as well as by a number of other independent variables. The econometric results indicate that the regulation of nitrogen oxides is associated with productivity improvements with a one-year lag, whereas regulations regarding sulphur dioxide and carbon dioxide have not had any statistically significant impact. In line with the a priori expectations, the price of pulp is connected to a negative effect, while lagged R&D expenditures have had corresponding positive impacts. However, since stationary tests are asymptotic and the data series are quite short, strong conclusions regarding the actual causal effect of environmental policy could not be drawn. The results could therefore not be viewed as a proof of the so-called strong Porter hypothesis postulating that stringent well-designed environmental regulations increase productivity growth compared to a no-policy scenario. View Full-Text
Keywords: environmental regulation; sustainability; productivity; cross-country; Europe; pulp and paper industry environmental regulation; sustainability; productivity; cross-country; Europe; pulp and paper industry
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Brolund, J.; Lundmark, R. Effect of Environmental Regulation Stringency on the Pulp and Paper Industry. Sustainability 2017, 9, 2323.

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