Do Environmental Taxes and Standards Induce Innovation?

Abstract

Industrialization and modern-day technological development, plus increasingly intensive utilization of the environment as:

• a supplier of non-renewable and renewable natural resources,

• a direct recipient of pollutants from the production process, and

• an indirect recipient of distribution, utilization and disposal of the products manufactured

have created substantial problems for resources management and for the environment itself. Man’s interventions in the ecosystem have escalated to a point where the existential prerequisites for the environment are under threat, and we are coming up against the limits of resource availability and the environment’s capacity to assimilate any further emissions. In the future, the wider dissemination and use of modern-day technologies like the automobile, or the rising demand for energy in developing countries, will mean that increasingly severe environmental impact must be anticipated. It is thus hardly surprising that the problems arising from increasing environmental pollution and rising consumption of natural resources are one of the great challenges facing our era.