International Review of Environmental and Resource Economics > Vol 13 > Issue 3-4

Environmental Policy and Innovation: A Decade of Research

David Popp, The Maxwell School, Syracuse University and National Bureau of Economic Research, USA,
Suggested Citation
David Popp (2019), "Environmental Policy and Innovation: A Decade of Research", International Review of Environmental and Resource Economics: Vol. 13: No. 3-4, pp 265-337.

Publication Date: 18 Sep 2019
© 2019 D. Popp
Environmental economics
JEL Codes: O31O38Q55
Green innovationinduced innovationpollutionclimate changerenewable energyenergy efficiencyresearch and developmenttechnology policy


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In this article:
1. Introduction 
2. Measurement Issues 
3. General Advances on Innovation and Environmental Policy 
4. Cross-Country Studies of Green Innovation 
5. Policy Instruments 
6. Should Policy be Technology-Neutral or Technology-Specific? 
7. Effectiveness of Government R&D 
8. What's Next? 
9. Conclusions 


Innovation is an important part of environmental policy, and encouraging innovation is often an explicit goal of policymakers. A large literature in environmental economics examines the links between environmental policy and innovation. Popp et al. (2010) provides an extensive review of the literature on environmental innovation. This paper updates that review, highlighting research published during the past decade, with a focus on empirical research examining links between environmental policy and environmentally friendly innovation. I highlight major trends in the literature, including an increased number of cross-country studies and a focus on the effect of different policy instruments on innovation. I include a discussion of the justifications and evidence for technology-specific policy incentives and present evidence on the effectiveness of government R&D spending. My review concludes with a discussion of three promising areas for new research on environmental innovation.