Environmental Performance and Profits

19 Pages Posted: 18 Feb 2012

See all articles by Tommy Lundgren

Tommy Lundgren

Swedish University of Agricultural Sciences (SLU) - Center for Environmental and Resource Economics (CERE); University of Umea - Centre for Environmental and Resource Economics

Per-Olov Marklund

University of Umea - Centre for Environmental and Resource Economics

Date Written: February 17, 2012

Abstract

In this study we investigate how firm level environmental performance (EP) affect firm level economic performance measured as profit efficiency (PE) in a stochastic profit frontier setting. Analyzing firms in Swedish manufacturing 1990-2004, results show that EP induced by environmental policy is not a determinant of PE, while voluntary or non-policy induced EP seem to have a significant (+) effect on firm PE in most sectors. The evidence generally supports the idea that good EP is also good for business, as long as EP is not brought on by policy measures, in this case a CO2 tax.

Keywords: CO2 tax, environmental performance index, profit efficiency, stochastic frontier analysis

JEL Classification: D20, H23

Suggested Citation

Lundgren, Tommy and Marklund, Per-Olov, Environmental Performance and Profits (February 17, 2012). CERE Working Paper No. 2012:8. Available at SSRN: https://ssrn.com/abstract=2006991 or http://dx.doi.org/10.2139/ssrn.2006991

Tommy Lundgren (Contact Author)

Swedish University of Agricultural Sciences (SLU) - Center for Environmental and Resource Economics (CERE) ( email )

Almas Allé 10
Umeå, 750 07
Sweden

University of Umea - Centre for Environmental and Resource Economics ( email )

Umeå, S-901 87
Sweden

Per-Olov Marklund

University of Umea - Centre for Environmental and Resource Economics ( email )

Umeå, S-901 87
Sweden

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