How environmental regulation can drive innovation: Lessons learned from a systematic review

Regulation is often seen as a barrier to innovation. However, if done properly, it can actually serve as a driver of innovation. To understand how environmental regulation can be designed to stimulate innovation, we scrutinise the scientific literature related to regulation, innovation and the environment. Fifty one carefully selected studies are examined with regard to their scope, results and geographical affiliation, and their findings were distilled into ten lessons on how to design environmental regulation to stimulate innovation. Subsequently, we discuss the validity and implications of the lessons. We find that the lessons are overarching concepts of principal nature that are applicable for most regulatory settings. We also find that recent EU regulations on plastics, nanomaterials and waste support many of the lessons learned, while some are completely neglected. The lessons offer important guidance and can be seen as a checklist of what regulators must consider when designing new regulation.