Environmental Innovations and Employment

Companies are coming under increasing pressure to take environmental and climate objectives into account in their activities. This entails additional burdens but also market opportunities. Environmental innovations differ from other innovations due to the problem of double externalities. This requires the combined use of environmental and innovation policy instruments to set the right incentives for such innovations to happen. In the past decades, the burdens on companies from environmental regulations and taxes and the environmental expenditures of the corporate sector have increased. Expenditure on environmental innovations, on the other hand, has not developed very dynamically in Austria. This subdued dynamic has probably contributed to the fact that environmental technologies developed in Austria have lost importance internationally. The economic importance of the environmental sector has nevertheless increased. The estimates in this study show that the development of environmental technologies in Austria is accompanied by positive employment effects at the company level. In view of the developments in Austria and the international market potential, this area should receive increased innovation policy attention.