Building back better: How big are green spending multipliers?

Nicoletta Batini, Mario Di Serio, Matteo Fragetta (), Giovanni Melina and Anthony Waldron

Ecological Economics, 2022, vol. 193, issue C

Abstract: Is there a trade-off between spending on the green economy and an economy's strength? This paper addresses this question by estimating output multipliers for spending in clean energy and biodiversity conservation, and by comparing these to multipliers of spending on non-ecofriendly energy and land use activities. Using a new international dataset, we arrive at two key results. First, we find that every dollar spent on key carbon-neutral or carbon-sink activities can generate more than a dollar's worth of economic activity, whereas non-green spending returns less than a dollar. Second, for categories of spending where formal comparisons are possible, like renewable versus fossil fuel energy, we find that multipliers on green spending are about twice as large as their non-green counterparts. The point estimates of the multipliers are 1.1–1.7 for renewable energy investment and 0.4–0.7 for fossil fuel energy investment, depending on horizon and specification. These findings survive several robustness checks and lend support to bottom-up analyses that find that stabilizing climate and reversing biodiversity loss go hand in hand with economic prosperity.

Keywords: Green multiplier; Green stimulus; Clean energy; Conservation spending; Nuclear energy; Biodiversity; Nature-based solutions; Agricultural subsidies; Fossil fuels (search for similar items in EconPapers)
JEL-codes: C11 H50 O44 P18 Q00 Q01 Q20 Q43 Q50 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0921800921003645
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Building Back Better: How Big Are Green Spending Multipliers? (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:193:y:2022:i:c:s0921800921003645

DOI: 10.1016/j.ecolecon.2021.107305

Access Statistics for this article

Ecological Economics is currently edited by C. J. Cleveland

More articles in Ecological Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().