The Impact of Environmental Subsidy on Adoption and R&D Environmental Investment

This article is an empirical evaluation of the effects of a public environmental subsidy for technology adoption on environmental adoption (direct effect) and R&D investment (indirect effect), in a sample of Dutch non-service private companies over the 2006-2009 period. Combining information from surveys on the firm production and environmental costs, and by means of a continuous treatment matching approach, we are able to identify, for several subsidy amounts, whether an increase in such amounts may raise the levels or first differences in environmental technology adoption and R&D investment. We find negligible or significant crowding-out effects for both types of environmental investment, when controlling for firm invariant unobservables. Thus, our findings appear to suggest a serious re-modulation of the public policy tool under analysis, in terms of both the amounts provided and the firms targeted.