THE INFLUENCE OF ENVIRONMENTAL TAX AND TECHNOLOGY ON DIFFERENT AIR POLLUTION EMISSIONS IN OECD COUNTRIES

Abstract

Although countries continuously employ taxation and technological measures to control air pollution in the Organization for Economic Co-operation and Development, the results of these practices should be evaluated to determine whether they reach their intended outcomes. This study used panel autoregressive distributed lag model to establish how environmental taxes and technology affects the emission of air pollutants (nitrogen oxides, Carbon dioxide, and particulate matter 2.5). Using secondary data present in the OECD Database and The World Bank, EViews panel was derived to create 3 model in which each of the three variables would be sufficiently explained by environmental tax, abatement technology, patented technology, gross domestic product, and population. In these models, the carbon dioxide was found to exhibit a long-term relationship with these independent variables unlike the other two dependent variables. However, in all the cases, both environmental tax and technology significantly affected the emissions of air pollutant. Increments in the technology, annual growth rate, and taxes demonstrated positive relationships. In this regard, it was deduced that governments should take charge in enforcing stiffer taxation measures as population increases to account for economic growth and control existing pollution levels.