Environmental innovation across Sweden: The role of related variety in regional knowledgebases

Sustainable development has become a major goal of development policies across the globe and environmental innovation is commonly viewed as a means to fulfil this goal because it can create growth while simultaneously reducing environmental impact. Recent research in economic geography has provided evidence for a positive relationship between variety in local knowledgebases and innovativeness. Following this notion, the present study investigates Sweden’s performance in environmental innovations and the effect from related variety in the regional green knowledge stock. Patent data is used to analyse the environmental innovation output in 20 Swedish regions during 2000 to 2015. The study finds that while present across the entire country, the majority of environmental innovation is concentrated in Stockholm, Västra Götaland and Skåne. These regions do not only have the most patent families in climate change mitigation technologies but did also increase their output the most. Moreover, innovation in most green technology fields is dispersed but innovation in green technologies related to ICT and climate change adaptation technologies are concentrated in few regions. Additionally, entropy indicators present evidence for limited but expanding related variety in the green knowledge base of most regions, with only the most innovative regions exhibiting large degrees of related variety. Lastly, a beneficial, albeit lagged effect from related variety on the number of green patent families in a region is confirmed by an econometric model, which is based on the regional knowledge production function (RKPF). Consequently, the study identifies the distribution of environmental innovation and the level of related variety in Sweden. It, additionally, finds evidence for a positive relationship between related variety and environmental innovation