Antinuclear

economists at the OECD have made a surprising discovery: green tape might not cost nearly as much as politicians and business leaders claim. The Organisation has created an index that calculates the explicit and implicit cost of environmental policies. Its economists used this index to assess the strictness of environmental regulations across 24 wealthy OECD members – including Australia – between 1990 and 2012 and to measure the effect of those regulations on productivity.

They found the strictness of environmental policies has “increased significantly” in all the countries over the past two decades. But that increased stringency has not harmed productivity growth or productivity levels. In fact, new green regulations “may translate into a permanent increase in productivity levels in some industries.”

How can this be? One possible explanation is that the new regulations have pushed firms to operate more efficiently than would otherwise have been case – the green tape has encouraged innovation and investment that has allowed firms to do things better. The improvements triggered by stricter environmental rules have more than offset the costs.

In other words, green tape is not necessarily detrimental to productivity if the regulations are well-designed. The economists stressed that stringent environmental policies can be implemented while promoting strong competition.

They also found market-based environmental policies, such as the scheme to price carbon dumped by the Abbott Government last year, “tend to have a more robust positive effect on productivity growth.”…….

The way some vested interests complain you’d think Australia’s green tape burden was terribly onerous by international standards. But the OECD’s international comparison of environmental stringency tells a different story………

While Australia’s environmental policies are far stricter than they were in 1995, they are more lax overall than the OECD average. Our environmental protection regime is more stringent than Italy, Hungary Belgium, Portugal, Ireland and Greece but is less stringent than many other nations we like to compare ourselves with, including the United States, the United Kingdom and Canada. According to the index, the burden of green tape in Australia is less than half that in Denmark, Netherlands and Finland which have the most stringent rules. http://www.theage.com.au/comment/oecd-says-green-tape-is-not-damaging-the-economy-20150131-132a98.html