Abstract
The idea that properly designed environmental regulations can improve a firm’s competitiveness while simultaneously contributing to a cleaner environment through the development of so-called ‘win-win’ innovations (i.e., that reduce environmental damage while simultaneously increasing profits) is usually credited to Porter (1991). Numerous studies have since attempted to assess the validity of the concept, with mixed results. This paper contributes to this debate by surveying a nearly forgotten body of literature written in the late nineteenth and early twentieth century that discussed the impact of market incentives on the development of valuable by-products out of industrial waste. Based on the opinions held by several industrial chemists, engineers, technical journalists and economists, the development of ‘win-win’ manufacturing practices seems to have been primarily the result of the profit motive, although actual or potential legal actions based on private property rights and/or government regulations occasionally triggered this process. After reviewing some important historical writings on the latter issue, a suggestion is made that perhaps the best way to craft ‘well-designed’ environmental regulations is to return to a private property rights approach to mitigating pollution problems whenever possible.
Similar content being viewed by others
References
Anex RP (2000) Stimulating innovation in green technology. Am Behav Sci 44(2): 188–212
Anonymous (1911) Charles Louis de Saulces de Freycinet. Encyclopedia Britannica http://www.1911encyclopedia.org/Charles_Louis_de_Saulces_de_Freycinet
Anonymous (1953) Robert Murray Haig. Pol Sci Q 68(3):479–480
Anonymous (2001) Allen Kneese. The Economist (March 24):129
Asafu-Adjave J (2000) Environmental economics for non-economists. World Scientific Publishing Co., London
Ashford N (2000) An innovation-based strategy for a sustainable environment. In: Hemmelskamp J, Rennings K, Leone F (eds) Innovation-oriented environmental regulation. Theoretical approaches and empirical analysis. Physica-Verlag, New York, pp 67–107
Ausubel J (1998) The environment for future business. Efficiency will win. Pollut Prev Rev 8((1): 39–52
Ayres RU (2004) On the life cycle metaphor: where ecology and economics diverge. Ecol Econ 48(4): 425–438
Ayres RU, Ayres LW (2002) A handbook of industrial ecology. Edward Elgar, Cheltenham
Babbage C (1835/1832) On the economy of machinery and manufacture. Charles Knight, London 〈non-paginated version available at http://socserv.mcmaster.ca/econ/ugcm/3ll3/babbage/index.html〉
Barnett DE (undated) Zimmermann, Erich Walter (1888–1961). Handbook of Texas online 〈http://www.tsha.utexas.edu/handbook/online/articles/ZZ/fzi2.html〉
Baumgärtner S, Dyckhoff H, Faber M, Proops J, Schiller J (2001) The concept of joint production and ecological economics. Ecol Econ 36(3): 365–372
Bethnal Green Branch of the South Kensington Museum (1875) Descriptive catalogue of the collection illustrating the utilization of waste products. George E. Eyre and William Spottiswoode for Her Majesty’s Stationery Office, London
Breger M, Stewart RB, Elliott DE, Hawkins D (1991) Providing economic incentives in environmental regulation. Yale J Regul 8: 463–495
Brenner JF (1974) Nuisance law and the industrial revolution. J Legal Stud 3(2): 403–33
Bromley DW (ed) (1996) The handbook of environmental economics. Blackwell, Oxford
Brubaker E (1995) Property rights in the defence of nature. Earthscan Publications Limited, Toronto. Available at http://www.environmentprobe.org/enviroprobe/pridon/index.html
Brubaker E (1998) The common law and the environment: the Canadian experience. In: Hill PJ, Meiners RE (eds) Who owns the environment?. Rowman and Littlefield Publishers, Inc., New York, pp 87–118
Brubaker E (2007) Greener pastures: decentralizing the regulation of agricultural pollution. University of Toronto Centre for Public Management Monograph Series, Toronto
Cannan E (1901) Review of political economy by Charles S. Devas. Econ J 11(43): 379–382
Clapp BW (1994) An environmental history of Britain since the industrial revolution. Longman, London
Chertow MR (2000) Industrial symbiosis: literature and taxonomy. Annu Rev Energy Environ 25: 313–337
Clark JM (1930) By-product. In: Johnson AS, Seligman ERA (eds) Encyclopedia of the social sciences, vol 3. MacMillan, New York, pp 129–130
Clemen RA (1923) The American livestock and meat packing industry. Ronald Press Company, New York
Clemen RA (1927) By-products in the packing industry. University of Chicago Press, Chicago. Available at http://historical.library.cornell.edu/cgi-bin/cul.neh/docviewer?did=clemen
Commons JR (1904) Labor conditions in meat packing and the recent strike. Q J Econ 19(1): 1–32
Considine TJ, Jablonowsky C, Considine DMM (2001) The environment and new technology adoption in the US steel industry. Final report to the National Science Foundation and Lucent Technologies Industrial Ecology Research Fellowship. Available at http://www.personal.psu.edu/faculty/c/p/cpw/resume/NSFFinalReportBES9727297.pdf
Cross FB (1999) Common law conceits: a comment on Meiners and Yandle. George Mason Law Rev 7(4): 965–982
de Freycinet C (1870) Traité d’assainissement industriel, comprenant la description des principaux procédés employés dans les centres manufacturiers de l’Europe occidentale pour protéger la santé publique et l’agriculture contre les effets des travaux industriels. Dunod, Paris
de Freycinet C (1907) Souvenirs 1848–1878. Librairie Ch. Delagrave, Paris
Desrochers P (2002) Industrial ecology and the rediscovery of inter-firm recycling linkages: historical evidence and policy implications. Ind Corp Change 11(2): 1031–1057
Desrochers P (2007) How did the invisible hand handle solid waste? By-product development before the modern environmental era. Enterp Soc 8(2): 348–374
Devas CS (1901) Political economy, 2nd edn. Longmans, Green, and Co., London
Dingle AE (1982) The monster nuisance of all: landowners, alkali manufacturers, and air pollution, 1828–64. Econ Hist Rev 35(4): 529–548
Donnelly J (1994) Consultants, managers, testing slaves: changing roles for chemists in the British alkali industry, 1850–1920. Technol Cult 35(1): 100–28
Edmonds RH (1904) The utilization of southern wastes. Publ Am Econ Assoc, 3rd series 3(1): 162–175
Edwards TG (2001) Tradition in a turbulent age. Whitman College 1925–1975. Whitman College, Walla Walla, WA
Ethridge D (1973) The inclusion of wastes in the theory of the firm. J Polit Econ 81(6): 1430–1441
Fieldner AC (1925) Significant progress in research on fuels. Ann Am Acad Polit Social Sci 119: 13–23
Fiorino DJ (2006) The new environmental regulation. The MIT Press, Cambridge, MA
Fullerton D, Stavins R (1998) How economists see the environment. Nature 395(6701): 433–434
Garwood C (2004) Green crusaders or captives of industry? The British alkali inspectorate and the ethics of environmental decision making, 1864–95. Ann Sci 61(1): 99–117
Greysmith D (2004) Simmonds, Peter Lund (1814–1897). In: Oxford dictionary of national biography. Oxford University Press 〈http://www.oxforddnb.com/view/article/41011〉. Accessed 15 Dec 2006
Haig RM (1926) Toward an understanding of the metropolis. 1. Some speculation regarding the economic basis of urban concentration. Q J Econ 40(1): 179–208
Hardie DW, Pratt JD (1966) A history of the modern British chemical industry. Pergamon Press, Oxford
Heal G (2007) A celebration of environmental and resource economics. Rev Environ Econ Policy 1(1): 7–25
Hemmelskamp, J, Rennings, K, Leone, F (eds) (2000) Innovation-oriented environmental regulation. Theoretical approaches and empirical analysis. Physica-Verlag, New York
Hobson JA (1917) The evolution of modern capitalism. A study of machine production. Charles Scribner, New York
Jaffe AB, Newell RG, Stavins RN (2002) Environmental policy and technological change. Environ Resour Econ 22: 41–69
Jaffe AB, Newell RG, Stavins RN (2005) A tale of two market failures: technology and environmental policy. Ecol Econ 54(2–3): 164–174
Keir M (1919) The localization of industry. Scientific Monthly 8(1): 32–48
Kershaw JBC (1928) The recovery and use of industrial and other waste. Ernest Benn Limited, London
Kjellingbro PM, Skotte M (2005) Environmentally harmful subsidies. Linkages between subsidies, the environment and the economy. Environmental Assessment Institute, Copenhagen (DK). Available at http://imv.net.dynamicweb.dk/Admin/Public/Download.aspx?file=files/filer/rapporter/diverse/harmful_subsidies.pdf
Kneese AV (1998) Industrial Ecology and ‘Getting the Prices Right.’ Resources (Winter):10–13. Available at 〈http://www.rff.org/Documents/RFF-Resources-130-price-right.pdf〉
Koller T (1918) The utilization of waste products: a treatise on the rational utilization, recovery, and treatment of waste products of all kinds, 3rd revised edition, translated from the 2nd revised German edition. D. Van Nostrand Company, New York
Kurz HD (1986) Classical and early neoclassical economists on joint production. Metroeconomica 38(1): 1–37
Kurz HD (2006) Goods and bads: sundry observations on joint production, waste disposal, and renewable and exhaustible resources. Prog Ind Ecol 3(4): 280–301
Levinson A, Rasmussen C, Stæhr K, Wrang K (2006) Framework paper: what are the linkages between environmental policies, economic growth and employment? Green roads to growth project. Danish Environmental Assessment Institute, Copenhagen. http://imv.net.dynamicweb.dk/Default.aspx?ID=579
Lipsett C (1963/1951) Industrial waste and salvage. Atlas Publishing Company, New York
Marshall A (1932/1919) Industry and trade. The MacMillan Company, New York
Marshall A (1950/1920) Principles of economics, 8th edn. The MacMillan Company, New York (Available at http://www.econlib.org/library/Marshall/marPtoc.html)
Marx K (1909/1894) Capital, volume III: the process of capitalist production as a whole (trans: Untermann E). Charles H. Kerr and Co., Chicago, 1909. 〈non paginated version available at http://www.econlib.org/library/YPDBooks/Marx/mrxCpC.html〉
McDonald SL (1995) Erich W. Zimmermann: the dynamics of resourceship. In: Philips RJ (ed) Economic mavericks: the Texas institutionalists. JAI Press Inc., Greenwich (CT), pp 151–183
Meiners RE, Morriss AP (eds) (2000) The common law and the environment. Rethinking the statutory basis for modern environmental law. Rowan & Littlefield Publishers, Inc., New York
Meiners RE, Yandle B (1999) Common law and the conceit of modern environmental policy. George Mason Law Rev 7(4): 923–963
Mohr RD (2002) Technical change, external economies, and the Porter hypothesis. J Environ Econ Manage 43(1): 158–168
Muravchik J (2002) Heaven on Earth: The rise and fall of socialism. Encounter Books, San Francisco
OECD (Organisation for Economic Co-operation and Development) (2006) Subsidy reform and sustainable development: economic, environmental and social aspects. OECD, Paris. Partly available at http://www.oecd.org/document/1/0,2340,en 26493742 5365 6691311137425,00.html
Palmer K, Oates WE, Portney PR (1995) Tightening environmental standards: the benefit-cost or the no-cost paradigm?. J Econ Persp 9(4): 119–132
Pearce D (2002) An intellectual history of environmental economics. Annu Rev Energy Environ 27: 57–81
Pearce DW, Turner RK (1990) Economics of natural resources and the environment. Johns Hopkins University Press, Baltimore
Playfair L (1852) On the chemical principles involved in the manufactures of the exhibition as indicating the necessity of industrial instruction. Royal Society for the Encouragement of Arts, Manufactures and Commerce, London
Pontin B (1998) Tort law and Victorian government growth: the historiographical significance of tort in the shadow of chemical pollution and factory safety regulation. Oxf J Leg Stud 18(4): 661–680
Porter M (1991) America’s green strategy. Sci Am 264(4): 168
Porter M, van der Linde C (1995) Towards a new conception of the environment-competitiveness relationship. J Econ Persp 9: 97–118
Press D (2007) Industry, environmental policy, and environmental outcomes. Annu Rev Environ Resour 32: 317–344
Prosser WL (1966) Private action for public nuisance. VA Law Rev 52(6): 997–1027
Richmond WH (1978) John A. Hobson: economic heretic. Am J Econ Sociol 37(3): 283–294
Roediger-Schluga T (2002) The stringency of environmental regulation and the ‘Porter hypothesis’. In: Marsiliani L, Rauscher M, Withagen C (eds) Environmental economics and the international economy. Kluwer Academic Publishers, Dordretch, pp 123–147
Rosen CM (2003) ‘Knowing’ industrial pollution: nuisance law and the power of tradition in a time of rapid economic change, 1840–1864. Environ Hist 8(4):565–597. http://www.historycooperative.org/journals/eh/8.4/rosen.html
Rosenberg N (1994a) Energy-efficient technologies: past and future perspectives. In: Rosenberg N (eds) Exploring the black box. Technology, economics, and history. Cambridge University Press, Cambridge, pp 161–189
Rosenberg N (1994b) Charles Babbage: pioneer economist. In: Rosenberg N (eds) Exploring the black box. Technology, economics and history. Cambridge University Press, Cambridge, pp 24–46
Ross EA (1896) The location of industries. Q J Econ 10(2): 247–268
Russell CA (ed) (2000) Chemistry, society and environment. A new history of the British chemical industry. Royal Society of Chemistry, Cambridge
Shute L (1997) John Maurice Clark. A social economics for the twenty-first century. Macmillan, London
Simmonds PL (1862) Waste products and undeveloped substances; or, hints for enterprise in neglected fields. Robert Hardwicke, London
Simmonds PL (1876/1873) Waste products and undeveloped substances: a synopsis of progress made in their economic utilisation during the last quarter of a century at home and abroad, 3rd edn. Hardwicke and Bogue, London
Simmonds PL (1883) The savings of science. Pop Sci Mon 28: 798–811
Simpson RD (ed) (1999) Productivity in natural resource industries: improvement through innovation. Resources for the Future, Washington, DC
Smith VK, Walsh R (2000) Do painless environmental policies exist?. J Risk Uncertain 21(1): 73–94
Spellman WE (1979) The economics of Edward Alsworth Ross. Am J Econ Sociol 38(2): 129–140
Stavins RN (2004) The myth of the universal market. Environ Forum 21(3): 12
Talbot FA (1920) Millions from waste. J. B. Lippincott Company, Philadelphia
Taussig FW (1920) Principles of economics, 2nd edn revised. The MacMillan Company, New York
Tietenberg T (1996) Environmental and natural resource economics, 4th edn. HarperCollins College Publishers, New York
Turner RK (2000) Waste management. In: Henk F, Gabel HL (eds) Principles of environmental and resource economics. Edward Elgar Publishing Limited, Cheltenham, UK, pp 700–744
van den Bergh JCJM, Janssen MA (2004) The interface between economics and industrial ecology: a survey. In: van den Bergh JCJM, Janssen MA (eds) (2004a) Economics of industrial ecology. Materials, structural change, and spatial scales. Cambridge: The MIT Press, pp 13–54
Wagner M (2003) The Porter hypothesis revisited: a literature review of theoretical models and empirical tests. Centre for Sustainability Management, Lünenburg University, CSM Working Paper, December
Zimmermann E (1933) World resources and industries. A functional appraisal of the availability of agricultural and industrial resources. Harper & Brothers Publishers, New York
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Desrochers, P. Did the Invisible Hand Need a Regulatory Glove to Develop a Green Thumb? Some Historical Perspective on Market Incentives, Win-Win Innovations and the Porter Hypothesis. Environ Resource Econ 41, 519–539 (2008). https://doi.org/10.1007/s10640-008-9208-x
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10640-008-9208-x