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The importance of assessing the social and economic impacts of
environmental policies
Policymakers face the challenge of supporting both inclusive and
sustainable economic development and a healthy environment.
While the most desirable policy outcome is one that achieves the
greatest environmental benefits while also advancing socioeconomic goals, it is important for policymakers to fully
understand the possible trade-offs between these objectives. A
better understanding of the broader impacts of environmental
policies is crucial to mitigate their adverse effects on competing
goals, especially as countries are faced with the arduous task of
responding to mounting environmental challenges in economically
turbulent times.
Governments are under pressure to scale up and accelerate their
ambition on climate and environmental goals. But in taking such
action forward, they have to carefully navigate a number of
headwinds. These include the long-term impacts of the COVID-19
pandemic on both the economy and society, cost-of-living crisis,
political tensions and geopolitical crises such as the Russian
invasion of Ukraine. Low-income people and the poorest
economies are the hardest hit, primarily due to the steep increases
in the price of energy and food.
The level of environmental policy stringency can have an impact
on a variety of policy outcomes. Empirical research is crucial to
shed light on these interlinkages. Previous research has shown that
more stringent environmental policy has achieved significant
environmental benefits with little aggregate effect on economic
performance. However, localized effects may generate winners
and losers, with significant losses for certain sectors, firms or
individuals and benefits for others. Nonetheless, at present, the
empirical evidence on these distributional aspects is still scarce,
despite its crucial role in supporting good policy design. More than
ever, regulators need better tools and insights to assess the
consequences of environmental policies on the economy and on
social outcomes.
Adapted from the brochure downloaded from
https://www.oecd.org/en/topics/social-and-economic-impacts-ofenvironmental-policies.html