Abstract

To mitigate the negative effects of climate change on the environment, the Member States of the European Union implement fiscal measures and commit budgetary expenditures to ensure sustainable economic development. Romania, in line with the Union’s objectives, resorted to the application of a system of environmental taxes and provided in the budgetary policy government expenditures for environmental protection. The aim of the research is to highlight the effects of these measures on the environment by analysing the short-run and long-run causal relationships between greenhouse gas emissions, green taxes and government expenditures on environmental protection. Autoregressive Distributed Lag (ARDL) method and Granger causality tests were used to demonstrate the existence of these relationships and the intensity with which they manifest. Following the analysis, we identified a significant long-run influence of government spending on environmental protection on greenhouse gas emissions but also numerous short-run and long-run causal relationships between greenhouse gas emissions and green taxes, applied in Romania. The results of the research consider the impact of public expenses for environment protection, a variable not yet applied for Romania, on greenhouse gas emissions’ decrease, in correlation with environmental taxes per source of origin.

Highlights

  • Climate change is a reality that cannot be denied. This challenge should be seen from various perspectives: that of mitigation when governments try to reduce the dimension of climate change using different strategies and policies, adaptation when the harm is done but governments implement measures meant to reduce the impact of greenhouse gas (GHG) emissions on the environment and human life and risk management specific to disasters when the world should be prepared for the worst scenario

  • The level of greenhouse gas emissions is considered an important factor in this aspect

  • Emissions, the revenues from taxes on energy, transportation and pollution/resources and government expenditure on environment protection. This relationship is important because it offers a better understanding of the way GHG emissions can be reduced on both short and long run, using fiscal and budgetary policies

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Summary

Introduction

Climate change is a reality that cannot be denied. This challenge should be seen from various perspectives: that of mitigation when governments try to reduce the dimension of climate change using different strategies and policies, adaptation when the harm is done but governments implement measures meant to reduce the impact of greenhouse gas (GHG) emissions on the environment and human life and risk management specific to disasters when the world should be prepared for the worst scenario. According to World Meteorological Organization [1], in 2020, there was registered a record on the long-lasting ozone hole over the Atlantic A report of the same organization [2] mentions a few records in 2018 when

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