Environmental Innovation, Ecological Footprint, and Environmental Rebound Effects: A Solution for or a Cause of Environmental Degradation?

Abstract This paper investigates the effect of environmental innovation on ecological footprint using a PSTR model. To examine this impact, a large panel dataset covering 26 EU economies1 for the period 1990–2010 is exploited. The estimated findings point out that below the threshold level, environmental pressure on per capita ecological footprint increase with environmental innovation, after exceeding the threshold level, the rate of increase in pressure is still positive but tends to decrease. Existing empirical results point to a rebound effect, which refers to offsetting the gains from environmental innovation by channeling them into production and consumption. This paper suggests that policymakers take into account that environmental innovations alone do not reduce pressure on Earth's ecosystems and their life-supporting services, but can provide resources to reduce this pressure. [1] The list of 26 EU countries is in Table 1 in Appendix.