Environmental policy restrictions on economic development

Restrictions on industrial development due to environmental considerations

Nature

Economic development and preservation of the environment are often considered to pose a dilemma; environmental issues inevitably have their economic components. Environmental legislation and standards may cause inflation, increased costs and prices, generate unemployment, bring about plant closures, or discourage new investment. The growing pressure of public opinion in many industrialized countries has resulted in newly enacted environmental laws which have delayed a number of industrial projects.

Counter-claim

Environmental regulations are seen to confer substantial societal benefits including a healthier environment; employment is stimulated through the creation of jobs in the pollution control equipment industry and jobs for those who operate and maintain this equipment. The measured costs of pollution control are probably upwardly biased, because the input-output computation overstates the cost by not considering input coefficient changes in response to environmental control standards and costs. Moreover, studies include cost increases in major polluting industries, but exclude any cost savings conferred through increased industrial productivity. The negative effects of environmental regulations on rate of growth are likely to be small, and overall costs of pollution control measures in developed market economy countries are of the order of 0.75 - 2.0% of GNP.