Regional Effects of the Pollution Control Industry in the Federal Republic of Germany

Almost all government policies have spatially differentiated impacts that are usually rather unintentional and often in conflict with the goals of spatial policies. Calculations based on data from an empirical study of 693 firms belonging to the pollution control industry in the Federal Republic of Germany show that industrial environmental policy exerts some significant influences on different types of regions, especially favoring ‘structurally sound regions’. A benefit tax/transfer scheme is designed to reconcile environmental and regional policy goals, to meet environmental targets, and at the same time to maintain the differential levels of financial assistance allocated to the dissimilar types of regions. Since the goals and instruments of environmental and regional policy are overlapping to an ever-greater extent, such problems (and perhaps such solutions) should be seriously considered in order to avoid inconsistencies between closely related environmental and regional policies.