The Scarcity Paradox in Eco-Innovation: Mechanisms, Boundary Conditions, and Environmental Outcomes

Eco-innovation is increasingly invoked as a pragmatic route to environmental protection and sustainable development, particularly where soil integrity, water quality, and public health are under pressure. However, much of the dominant literature implicitly assumes that meaningful eco-innovation depends on institutional maturity, financial slack, and high R&D intensity, creating a persistent paradox: the most acute climate and pollution burdens often occur in settings where governance capacity and innovation resources are weakest. The significance of this review lies in resolving that tension by clarifying when scarcity suppresses eco-innovation and when it catalyzes it across multiple sectors. Accordingly, this study aims to synthesize and reframe interdisciplinary evidence on eco-innovation under scarcity and sustainability constraints, drawing across agrarian systems, manufacturing, and service-oriented domains. Using a structured narrative review approach, peer-reviewed studies were screened and thematically integrated to identify core mechanisms, boundary conditions, and environmental outcomes. Across the evidence base, scarcity shapes eco-innovation primarily through three interconnected mechanisms: frugal innovation, institutional bricolage, and networked learning which enables locally serviceable solutions and accelerates adoption when minimal enabling infrastructure is present. The results reveal a consistent constraint-to-creativity pathway in which ecological stress and resource limits stimulate frugal, locally embedded, and restorative eco-innovations, particularly when reinforced by minimal but credible institutional scaffolding, incentives, and learning networks. At the same time, diffusion remains uneven where institutional voids, weak extension and support infrastructures, and limited risk governance constrain adoption quality and scaling. The review concludes by proposing an environmental-outcome-centered synthesis framework that evaluates eco-innovation by verifiable reductions in toxicity, emissions, waste, and ecosystem pressure rather than novelty alone, and by outlining targeted pathways for strengthening diffusion infrastructure, standardizing frugal solutions, and aligning circular strategies with measurable ecological gains.