Is the Lithuanian economy approaching the goals of sustainable energy and climate change mitigation? Evidence from DEA-based environmental performance index

Abstract

Even though Lithuania has seen extensive social and political transformations, there is still a gap in the literature on environmental performance of Lithuanian economy. Specifically, the environmental pressures stemming from economic activities have never been analysed in lines with the principles of production economics. This paper, therefore, aims to estimate the environmental performance index (EPI) for Lithuanian economic sectors. The paper presents the underlying trends in greenhouse gas emissions in Lithuania. The environmental performance index is estimated by employing the data envelopment analysis in the spirit of the Hicks-Moorsteen indices. The present analysis is based on the data from the World Input-Output Database. Specifically, the environmental technology is defined in terms of the value added, carbon and nitrous oxide emissions, labour, capital and energy. Results of the analysis imply that the analysed economic sectors can be grouped into the four clusters with respect to the mean EPI and its rate of growth. Pulp, paper and agricultural sectors fall into the best-performing group, featuring the highest mean EPI and the highest growth rate. Petroleum production and air transport sectors are those featuring the lowest environmental performance. Therefore, the latter sectors should be given an especial importance when developing strategies for increase in sustainability.