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Examining the effects of pollution prevention practices on environmental innovation


abdoul g. sam, agricultural, environmental, and development economics Voluntary pollution prevention practices by businesses are an increasingly common feature of contemporary environmental policy, thanks in part to rising public concerns and the passage of the 1990 U.S. Pollution Prevention Act. Ohio is the fourth largest generator of toxic pollutants in the country. In response, the states Environmental Protection Agency (EPA) has promoted adoption of pollution control practices, including the 2007 Tox-Minus Initiative, a partnership program with Ohio businesses to achieve meaningful reductions in toxic releases across all media within five years. The purpose of this research was to explore what motivates Ohio businesses to adopt voluntary pollution prevention practices, and the effects of such practices on environmental innovation, which is regarded as the key source of environmental improvements. There is a lack of research exploring the effects of voluntary pollution prevention practices on a businesss ability to develop new environmental technologies. This proposal sought to test two competing hypotheses to gauge the effects of various pollution prevention practices on business-funded environmental innovation. The first hypothesis is that a firms adoption of pollution prevention practices yields increased incentives for environmental research and development with the aim of reducing costs, and thus leads to more environmental patents. However,
abdoul g. sam

a competing hypothesis would be that a firms adoption of more pollution prevention practices redirects resources away from environmental research and development toward short-lived environmental improvements, and thus leads to fewer environmental patents. The project gathered firm-level data over time from several sources and used appropriate statistical techniques to test these hypotheses. The key variables used were the number of voluntary pollution prevention (P2) practices and releases by Ohio businesses over time, and the number of environmental patents, also over time. Several other variables were also incorporated. The research teams statistical analysis indicates that the adoption of voluntary pollution prevention practices does stimulate environmental research and development. However, the estimated impact of mandatory pollution regulations is between ten and seventeen times stronger than that of voluntary adoption. The analysis therefore suggests that while the voluntary approach can produce significant environmental improvements by lowering emissions of mostly unregulated pollutants, it is far less effective than mandatory regulations in inducing firms to invest in environmental research that leads to the development of cleaner production technologies. The research team received a grant from the U.S. EPA to organize a workshop at The Ohio State University in 2012 to provide a forum for businesses, the Ohio EPA, and researchers in environmental policy-related disciplines to assess current knowledge and debate the effects and effectiveness of voluntary pollution reduction programs, with a particular focus on firm competitiveness.

There is a lack of research exploring the effects of voluntary pollution prevention practices on a businesss ability to develop new environmental technologies.

www.oardc.ohio-state.edu/seeds SEEDS: The OARDC Research Enhancement Competitive Grants Program

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