Environmental productivity in the European Union: A global Luenberger-metafrontier approach.

Abstract

This paper studies environmental productivity in the European Union-28 (EU-28) by extending the methodology proposed by Oh (2010) to an additive Luenberger-metafrontier framework. The main advantage of this approach is that it allows the analyst to account for cross-country heterogeneity. Using data on GDP, environmental pressures and inputs, the change in environmental productivity and its determinants between the years 2001 and 2016 is assessed in several scenarios; heterogeneity is accounted for by differentiating between the members of the former European Union-15 (EU-15) and the new members that joined the EU-28 from the 2000s onwards. Our results show an improvement in environmental productivity over the period, fuelled by both local and global innovation effects, with some EU-15 members advancing the global environmental technology. Conversely, efficiency change has almost always been negative, pointing to a worrying failure to catch up to the best environmental technologies. Accordingly, policy measures aimed at boosting the use of green technologies are urgently needed in the EU-28.