Joint Economic and Environmental Efficiency. Empirical Analyses on the Italian NAMEA over 1993-2006

Abstract

The idea that gains in «environmental efficiency» may have opportunity costs in terms of «economic efficiency» has still a significant role in the environmental and industrial policy debate. In this paper we exploit a detailed NAMEA-based dataset to explore the evidence regarding the dynamic trade-off or «joint dynamics», between economic and environmental productivities in the Italian economy. The quite long period of observations (1993-2006) allows a robust ex post dynamic assessment. Sectoral heterogeneity and variance in emission-economic productivity relationships is fully captured; the panel is well balanced. We do not observe joint economic-environmental productivities in the case of CO2 emissions per unit of labour and relative delinking performance seem to worsen since the late 90's, as shown by elasticities and some structural breaks. This evidence gives food for thought, since the stagnation period experienced by Italy seems to have affected its environmental «efficiency» performances. CO2 per unit of value added instead correlates with labour productivity showing a joint dynamic efficiency improvement. SOx analyses again show the presence of relevant structural breaks that fully explain the reduction of SOx per unit of labour - or «technical» efficiency. A joint productivity dynamic relationship is observed for SOx on both value added and labour, with slightly larger elasticities. The analyzed period was characterized by a sharp increase of globalization trends. The economic globalization we consider through trade openness indicators interestingly appears to be a driver of emission efficiency with different effects for CO2 and SOx. Nevertheless, the trade-environment relationships at sector level need further examinations by means of decomposition and input-output frameworks that could fruitfully complement NAMEA-based analyses.