Study: Structure of environmental policies determines benefit for businesses

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AUSTIN (KXAN) — Conventional thought might lead you to believe environmental policies and regulations might make it difficult for businesses to remain profitable. However, a new study from Cornell University economists found the structure of the environmental policies can actually make businesses more profitable, if done correctly.

The study focused on policies made in China to battle the high levels of pollution the country has been dealing with.

Four different approaches for making environmental policy were studied:

  • “Command and control” policies
  • Non-monetary awards
  • Monetary awards
  • Financial incentives

The “command and control” policies involved policy mandates with no business-specific benefits.

Non-monetary awards came from public recognition or thanks, but nothing more than that.

Those two types of policies seemed to benefit businesses the least and had a bigger negative impact on the companies’ production and bottom line.

Policies that involved monetary awards gave money to a company for reducing pollution and environmental impact. Policies that offered financial incentives included loans, subsidies or tax incentives.

Both of those policy types actually had a positive impact on businesses and actually promoted new technology and general innovation.

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