Question

What is the implication of countries adopting stricter environmental policy to attracting businesses?

Please provide 200 words minimum.

Answer 1

Environmental regulations can reduce employment and productivity by small amounts, especially in pollution- and energy-intensive sectors, at least during the transitory period when the economy is moving away from polluting activities and towards cleaner production processes. Often, the benefits of environmental regulations far outweigh the costs. For example, even though job losses at polluting firms are taken into account, the projected health benefits from the implementation of the Clean Air Act in the United States in 1963, and subsequent amendments to it, are more than 100 times higher than the regulation's employment costs.

Environmental regulations raise manufacturing costs and reduce productivity by forcing businesses to build equipment to mitigate emissions and adjust production processes. Regulatory costs can affect the decisions by companies to locate new plants and move production between existing plants.

Stricter new plant regulations will deter new investment and keep dirtier plants running longer than originally expected. Stricter controls at polluted sites can result in increased emissions in once-clean areas.