On the economic returns of Eco-Innovation: where do we stand?

Of paramount importance for policymakers is to properly assess the economic consequences of sustainable production choices aimed at reducing environmental negative externalities. Such an assessment is relevant at different levels of aggregation, starting from the firm level analysis, to understand whether “going green” brings about certain economic gains or instead it is counterproductive, and moving to the meso (sectors) or macro (country) levels of analysis, to understand whether any aggregate effects are at stake and to which direction they point. Overall, this understanding would call (or not call) for the need of designing proper industrial or innovation policies that include specific environment-oriented components. This understanding has to be combined with clear evidence on the underlying determinants of greener production choices (e.g. Horbach et al. 2012), which are stated to differ from standard technological innovations as they are subject to a knowledge and an environmental externality, a so-called double externality (Jaffe et al. 2005; Rennings 2000; Popp et al. 2010). More importantly, this has to be combined with evidence on how to properly stimulate environmental innovations (see for a review Ghisetti and Pontoni 2015), which policy instruments are effective for this regulatory push-pull (e.g. Ghisetti 2017) and how to remove barriers that are detrimental to their uptake (Marin et al. 2015). The current chapter draws on existing literature on the topic which is certainly crucial and at the bases of the current work (e.g. definitions, determinants, barriers, policy-stimulus, relation standard innovation and “crowding-out” of eco-innovations) and it focuses mainly (and only) on the expected economic effects of the adoption of environmental innovations, or eco-innovations