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The Porter Hypothesis relates the effects of environmental regulation on (a) technological innovation and (b) economic performance. Specifically, it asserts that innovation offsets can occur. These are a type of technological change that will "partially or more than fully offset the costs of complying with environmental regulation" (Porter and van der Linde, 1995, p. 98). The hypothesis has been highly debated, in part, because nomenclature has been careless. Also, the role of property rights in defining innovation offsets has been neglected. If the Porter Hypothesis has validity in agriculture, its policy implications are important. Recent changes in agro-environmental legislation provides an opportunity to more thoroughly investigate the hypothesis and its implications.
