Environmental Policy Stringency Research Articles

Effects of geopolitical risk on environmental sustainability and the moderating role of environmental policy stringency

This study investigates the impact of geopolitical risk (GPR) on consumption-based carbon (CCO2) emissions as well as the moderating role of environmental policy stringency (EPS) on the above relationship. Based on data collected from 27 countries from 1990 to 2020, the basic results from the sample of the study indicate that GPR accelerates CCO2 emissions. Quantile regression results reveal that the effect of GPR is more pronounced in countries with higher CCO2 emissions. Moreover, EPS weakens the escalating effect of GPR on CCO2 emissions. The robust test results validate the findings reported in the basic regression model. The heterogeneity test indicates that the impact of GPR on CCO2 emissions is greater in developing countries compared in developed countries. The study also proposes these policy implications based on the findings: (1) countries should ensure a stable political environment, establish a robust legal system and promote energy transition; and (2) the scope of environmental taxes should be expanded where different tax rates should be imposed in order to be useful in reducing CCO2 emissions.

Environmental Management Technologies, Environmental Policy Stringency, Energy Productivity and Pollution Emission: Fresh Evidence from Indonesia under STIRPAT Framework

The rapid pace of climate change and global warming has become an ever growing challenge all over the world. Global warming and carbon concentrations can be mitigated by adopting strict environmental policies and effective management of the environment. Therefore, the study aims to empirically investigate the effect of environmental policy stringency (EPS), energy productivity and environmental management technologies (EMT) on pollution emission in Indonesia- one of the most polluting countries of the world. To this end, the study collects data over the 1990 to 2020 period. The study uses Autoregressive Distributed Lag Model (ARDL) approach to carry out empirical estimation. The findings reveal that environmental management technologies, energy productivity and environmental policy stringency had negative impact on CO2 emission. However, economic growth (GDP) and urbanization had positive role in increasing CO2 emission in the long run and the short run. On the basis of the outcomes, the study recommends that Indonesia should adopt strict environmental policies and legislations to mitigate environmental deterioration. Indonesian government is recommended to promote the adoption of environmental management technologies by providing substantial incentives and investment opportunities for businesses.

Navigating the green growth spectrum: Exploring the synergy between geopolitical risk, environmental policy stringency, and green production practices

The deepening understanding of the environment has heightened our perception of the causes of environmental damage, promoting a shift from combating pollution to preventing it with a core emphasis on environmental protection. Academicians and governance authorities have shifted their focus from traditional production practices to green production practices (GPP). The current body of literature has explored the impact of GPP on environmental quality. Whereas, the implications of geopolitical risk (GPR) and environmental policy stringency (EPS) on GPP are still unexplored. Keeping in view these gaps in existing research, this research is the earliest endeavor to examine the impact of GPR and EPS on GPP for the group of seven (G-7) countries from 1990 to 2020. In this regard, we have applied panel quantile regression (PQR) which allows for a more flexible treatment of heterogeneity and is robust to deal with outliers and skewed distributions compared to traditional panel data techniques. The empirical findings reveal that GPR has a significant destructive impact on GPP whereas, the EPS upsurge the GPP in G-7 countries. Founded on the factual outcomes, we recommend policy recommendations to achieve the objectives of SDG 07 (affordable and clean energy), SDG 08 (exports for decent economic growth), SDG 09 (industry innovation and infrastructure), SDG 11 (sustainable cities and societies), SDG 12 (responsible consumption and production), SDG 13 (environmental policies for climate action), and SDG 16 (conflict, peace, and justice strong institutions).

Internal trade and environmental policy effectiveness in developing countries: A binary endogenous growth model with regional Heterogeneity

The shift of environmental pollution from developed to developing countries is largely induced by global labor and trade trends. Unlike their developed counterparts, developing countries face more pronounced regional disparities in social development within the realm of environmental governance. This paper proposes a binary endogenous model to assess the implications of environmental policies on such developing nations with sizable regional disparities. The model enhances the precision in simulating real-world ramifications of environmental policy implementation. It reveals that the 'pollution haven' effect extends beyond just the relocation of pollutant-generating industries to less developed regions; it also leads to the shipment of products fabricated using environmentally-degrading processes from less developed to developed regions, thereby undermining environmental regulation. Furthermore, the model's results were juxtaposed with China's increasingly stringent national environmental protection policy, adopted since 2000. The study confirms that environmental degradation has a substantial spatial spillover effect positively correlated with internal trade volume. The paper's conclusions assist in offering a new evaluative framework for the ensuing examination of environmental policy practicality in developing countries. It also recommends policy-making tools for enhancing the effectiveness of environmental regulations in these regions, such as limiting internal trade of polluting products alongside environmental levies and subsidies.

Environmental policy stringency and carbon leakages: a case for carbon border adjustment mechanism in the European Union

AbstractThis study examines the link between the strictness of environmental policies and carbon leakage in the European Union (EU). It utilizes an econometric model to analyse how carbon leakage is influenced by environmental policies and other factors. A comprehensive dataset spanning from 1995 to 2020 for 20 EU member nations is employed. This study is ground-breaking, as it is the first to comprehensively assess the effect of aggregated environmental policies on carbon leakages in the EU. This study employs a range of econometric techniques to ensure the reliability of its findings, including the continuously updated fully modified approach, bias-adjusted ordinary least squares method, and bootstrap panel causality testing. The findings confirm that stringent environmental policies cause greater carbon leakage by increasing the quantity of foreign carbon emissions embodied in EU’s domestic final demand. Specifically, carbon leakage increases within the range 0.051–0.111% as environmental policy stringency rises by 1%. This outcome confirms that direct carbon leakage occurs through the international trade channel as domestic carbon emissions reduction is continuously being offset by greater emissions abroad. Country-specific reactions captured through causality tests further reveal that the predictive powers between environmental policy stringency and carbon leakage is widespread among the sampled EU countries. Thus, our conclusion is that stringent environmental policies put the region at a disadvantage in the international markets. The main recommendation therefore is that ample justification exists for the introduction of carbon border adjustment mechanism, as the positives associated with its imposition are likely to outweigh the negatives.

Impact of Green Financing on CSR and Environmental Policies and Procedures

Despite increasing global attention towards sustainable development, the empirical linkage between green financing and the enhancement of environmental and social governance (ESG) practices within industries remains underexplored. This study investigates the influence of green financing on Corporate Social Responsibility (CSR) and environmental policies and procedures in 40 Chinese industries from 2010 to 2020. By employing a baseline regression and a difference-in-differences methodology, this paper aims to quantify the extent to which green financing initiatives have impacted CSR activities and the adoption of rigorous environmental policies and procedures in the Chinese industrial sector. The results indicate that industries with access to green financing have shown significant improvements in their CSR engagements and the stringency of their environmental policies and procedures compared to those without such financial incentives. Specifically, the difference-in-differences analysis reveals a positive and statistically significant effect of green financing on the adoption of more stringent environmental policies and the enhancement of CSR practices. We identify the specific areas within CSR and environmental policies that are most influenced by green financing. We assess the effectiveness of green financing as a tool for promoting sustainable industrial practices. The analysis utilizes a comprehensive dataset, including industry-specific financing and ESG performance indicators, to conduct a longitudinal assessment over the decade in question. Based on these findings, the study concludes with a policy implication that emphasizes the critical role of green financing as a catalyst for improving CSR and environmental standards in industries. It suggests that policymakers and financial institutions should consider expanding green financing mechanisms to accelerate the transition towards more sustainable industrial practices.

Environmental regulation and productivity growth in the euro area: Testing the porter hypothesis

This paper examines the impact of changes in the stringency of environmental regulations on productivity growth. We exploit several data sources, including the OECD Environmental Policy Stringency Index and balance sheet information from ORBIS and iBACH, to test the Porter hypothesis, according to which firms’ productivity can benefit from more stringent environmental policies. We estimate the regulatory impact over a five-year horizon using panel local projections. To identify the direction of the effects, we estimate CO2 equivalent emissions for all firms in our sample using a machine learning algorithm. As suggested by the country-level analysis and confirmed by the firm-level analysis, policy tightening negatively affects productivity growth of high-polluting firms and to a larger extent than that of their low-polluting peers. Hence, we do not find support for the Porter hypothesis in general. However, not all policies have the same impact - non-market based policies are the most detrimental to productivity growth - and not all highly polluting firms are affected in the same way - the negative impact is mitigated for large firms, which may benefit from easier access to finance and greater innovativeness.

From policy stringency to environmental resilience: Unraveling the dose-response dynamics of environmental parameters in OECD countries

In the pursuit of sustainable development and the mitigation of negative externalities arising from environmental stressors, a multitude of member countries within the Organization for Economic Co-operation and Development (OECD) have embraced various environmental policies. Nevertheless, previous empirical research has largely overlooked investigating the causal relationship between the Environmental Policy Stringency (EPS) and environmental indicators. To bridge this gap, we conduct an empirical study to examine the dose-response relationship between EPS, as a continuous treatment variable, and selected environmental indicators. Our findings reveal evidence of a mixed treatment effect of policy stringency on the environment. Notably, the implementation of EPS leads to a reduction in carbon emissions per capita and an overall decline in ecological footprint. However, despite OECD countries moving towards a negative trajectory to preserve the environment, carbon intensity remains steadfastly on a positive path. Moreover, the intensification of policy stringency demonstrates positive effects on total renewable energy production, encompassing solar, wind, and eco-innovation. Building upon these empirical results, we offer several policy implications for the adoption and implementation of environmental policies within OECD countries.

Modelling CO2 Emissions from Vehicles Fuelled with Compressed Natural Gas Based on On-Road and Chassis Dynamometer Tests

In response to increasingly stringent global environmental policies, this study addresses the pressing need for accurate prediction models of CO2 emissions from vehicles powered by alternative fuels, such as compressed natural gas (CNG). Through experimentation and modelling, one of the pioneering CO2 emission models specifically designed for CNG-powered vehicles is presented. Using data from chassis dynamometer tests and road assessments conducted with a portable emission measurement system (PEMS), the study employs the XGBoost technique within the Optuna Python programming language framework. The validation of the models produced impressive results, with R2 values of 0.9 and 0.7 and RMSE values of 0.49 and 0.71 for chassis dynamometer and road test data, respectively. The robustness and precision of these models offer invaluable information to transportation decision-makers engaged in environmental analyses and policymaking for urban areas, facilitating informed strategies to mitigate vehicular emissions and foster sustainable transportation practices.

Impact of environmental policy stringency on sectoral GHG emissions: evidence from Finland and Sweden by nonlinear quantile-based methods

ABSTRACT The growing societal concern regarding environmental matters has led to the implementation of many environmental measures intended to protect the environment and address global warming by lessening emissions and mitigating climate change. In line with this movement, this study scrutinizes the impact of these environmental measures on greenhouse gas (GHG) emissions to analyze the cases of Finland and Sweden. More specifically, the study employs the Environmental Policy Stringency (EPS) index as a proxy for environmental measures, explores sector-specific GHG emissions by employing nonlinear quantile-based methodologies (including quantile-on-quantile regression and Granger causality-in-quantiles methods as the primary model and quantile regression for robustness checking) spanning the period from 1991/Q1 to 2020/Q4. The findings show that: (i) EPS lessens GHG emissions from fuel exploitation, industrial combustion, and the power industry sector at lower and middle quantiles in Finland and Sweden; (ii) EPS decreases GHG emissions from processes, transportation, and waste sectors in Finland but increases them in Sweden at higher quantiles; (iii) EPS leads to an increase in GHG emissions from the agriculture and construction sectors at higher quantiles; (iv) EPS has a causal effect on sector-specific GHG emissions across different quantiles; (v) the robustness of the findings is largely confirmed. Hence, the study underscores the varying impacts of EPS on sectoral GHG emissions based on quantiles, sectors, and countries, emphasizing the need for policymakers to adopt environmental policies to comprise these differences and adjust the policy framework accordingly.

The Green Engine of Growth: Assessing the Influence of Renewable Energy Consumption and Environmental Policy on China’s Economic Sustainability

Utilizing Fourier autoregressive distributed lag and Fourier Toda–Yamamoto causality methodologies, this research assesses the effects that renewable energy consumption and environmental policy had on the economic sustainability of China from 1991 to 2022. Our findings highlight the positive impacts of renewable energy use and stringent environmental policies on China’s economic growth, while also pinpointing the supportive roles played by foreign direct investment, trade openness, and financial sector evolution in fostering a sustainable economic environment. Conversely, a reliance on fossil fuels emerges as a significant barrier to sustainability. Causality tests confirm the essential roles of renewable energy and environmental policies in advancing China’s economic sustainability. This study underscores the critical need for integrating sustainable energy and environmental strategies within China’s economic development framework, advocating for a holistic policy approach that balances economic growth with environmental conservation. This research underscores the imperative for a sustainability-centered strategy for China’s economic advancement.

How Environmental Policy Stringency, Foreign Direct Investment, and Eco-Innovation Supplement the Energy Transition: New Evidence from NICs

Several researchers have studied the environmental policy stringency and ecological innovation regarding CO2 emissions and renewable energy consumption; however, the impact of environmental policy stringency, technological innovation, FDI, and ecological innovation on energy transition has not been studied in the case of NICs. For this purpose, panel quantile regression models are applied in the context of NICs from 2000 to 2021. Our empirical results show that the effect of foreign direct investment is positive and statistically significant on energy transition. On the other hand the variables environmental policy stringency, eco-innovation, and ICT-trade have an inverse effect on energy transition. Therefore, the findings of the study also provide policy implications that indicate NICs need to optimize their trade structure and re-innovate the latest innovation spillovers, and strict environmental policies should be introduced to facilitate energy transition in NICs.

Role of Environmental Policy Stringency on Sectoral CO2 Emissions in EU-5 Countries: Disaggregated Level Evidence by Novel Quantile-Based Approaches

Consistent with the increasing awareness of environmental problems, countries have applied various measures to combat climate change by preventing environmental degradation of the environment. In this context, a set of measures in different areas and sectors have been taken. Although it is possible to consider each of them, instead, using a more comprehensive index, such as the Environmental Policy Stringency Index, can be appropriate in examining the effects of environmental measures in curbing emissions. Accordingly, this research examines the effect of Environmental Policy Stringency Index on sectoral carbon dioxide (CO2) emissions in the European Union Five countries (namely, Germany, Spain, France, United Kingdom, and Italy) by using data for the period 1990/Q2-2020/Q4, performing novel quantile-based approaches. The outcomes show that at higher quantiles, Environmental Policy Stringency Index provides (a) a decrease in building sector CO2 emissions in France, the United Kingdom, and Italy; (b) a decline in industrial combustion sector CO2 emissions in France and Italy; (c) a curb power sector CO2 emissions in Germany, Spain, and France; (d) a decrease in transport sector CO2 emission in Germany and France; (e) there are causalities from Environmental Policy Stringency Index to sectoral CO2 emissions across quantiles except for some ones; (f) the outcomes are verified as robust. The outcomes prove the differentiating effects of Environmental Policy Stringency Index across sectors under the empirical examinations, quantiles, and countries. Thus, the study discusses various policy endeavors, such as consideration of the varying structure of environmental measures, application of nonlinear approaches, and focusing on some sectors to go fast in curbing sectoral CO2 emissions.

Experimental investigation on nontoxic solvents for separation of vanillic acid

AbstractBACKGROUNDVanillic acid, an aromatic carboxylic acid and a derivative of vanillin, is used as an additive in consumer goods for its aroma. Previously, most vanillic acid was produced through a petrochemical route, but as a consequence of stringent environmental policies, it is now produced by the biotransformation of ferulic acid. Vanillic acid is also found in the wastewater streams of paper‐pulp industries and olive‐oil mills. So, recovering vanillic acid from fermentation broth, either during bioproduction or from a wastewater stream, while minimizing toxicity, is a difficult task. In order to reduce the toxicity substantially, bio‐based solvents such as sunflower, mustard and rice bran oils were employed as diluents along with tri‐n‐butyl phosphate (TBP) as extractant in order to recover vanillic acid by reactive extraction.RESULTSThe extraction performance was elucidated using terms such as distribution ratio, extraction efficiency, loading ratio and equilibrium complexation constant for different extractant–diluent combinations. The highest extraction efficiency and distribution ratio for the different solvents were in the following order: TBP + sunflower‐oil (72.02%–92.47%; 2.57–12.29) > TBP + rice bran‐oil (65.56%–90.55%; 1.90–9.58) > TBP + mustard‐oil(64.03%–89.87%; 1.78–8.87). The theoretical number of stages was determined as 4 to achieve a targeted extraction efficiency of 90%; these predictions were borne out experimentally.CONCLUSIONIn this study, vanillic acid was recovered from the aqueous phase using tri‐n‐butyl phosphate in sustainable, environmentally friendly, bio‐based solvents such as rice bran oil, sunflower oil and mustard oil. © 2024 Society of Chemical Industry (SCI).

Health and ecological risk of heavy metals in agricultural soils related to Tungsten mining in Southern Jiangxi Province, China.

Dayu County, a major tungsten producer in China, experiences severe heavy metal pollution. This study evaluated the pollution status, the accumulation characteristics in paddy rice, and the potential ecological risks of heavy metals in agricutural soils near tungsten mining areas of Dayu County. Furthermore, the impacts of soil properties on the accumulation of heavy metals in soil were explored. The geo-accumulation index (Igeo), the contamination factor (CF), and the pollution load index (PLI) were used to evaluate the pollution status of metals (As, Cd, Cu, Cr, Pb, Mo, W, and Zn) in soils. The ecological risk factor (RI) was used to assess the potential ecological risks of heavy metals in soil. The health risks and accumulation of heavy metals in paddy rice were evaluated using the health risk index and the translocation factor (TF), respectively. Pearson's correlation coefficient was used to discuss the influence of soil factors on heavy metal contents in soil. The concentrations of metals exceeded the respective average background values for soils (As: 10.4, Cd: 0.10, Cu: 20.8, Cr: 48.0, Pb: 32.1, Mo: 0.30, W: 4.93, Zn: 69.0, mg/kg). The levels of As, Cd, Mo, and tungsten(W) exceeded the risk screening values for Chinese agricultural soil contamination and the Dutch standard. The mean concentrations of the eight tested heavy metals followed the order FJ-S > QL > FJ-N > HL > CJ-E > CJ-W, with a significant distribution throughout the Zhangjiang River basin. Heavy metals, especially Cd, were enriched in paddy rice. The Igeo and CF assessment indicated that the soil was moderately to heavily polluted by Mo, W and Cd, and the PLI assessment indicated the the sites of FJ-S and QL were extremely severely polluted due to the contribution of Cd, Mo and W. The RI results indicated that Cd posed the highest risk near tungsten mining areas. The non-carcinogenic and total carcinogenic risks were above the threshold values (non-carcinogenic risk by HQ > 1, carcinogenic risks by CR > 1 × 10-4 a-1) for As and Cd. Correlation analysis indicated that K2O, Na2O, and CaO are main factors affecting the accumulation and migration of heavy metals in soils and plants. Our findings reveal significant contamination of soils and crops with heavy metals, especially Cd, Mo, and W, near mining areas, highlighting serious health risks. This emphasizes the need for immediate remedial actions and the implementation of stringent environmental policies to safeguard health and the environment.

Environmental policy and audit pricing

AbstractThis paper examines the effect of environmental policy stringency (EPS) on audit pricing. By exploiting the exogenous variation in environmental policies across 26 countries, we find that firms in countries with more stringent environmental policies incur lower audit fees. The inverse association is more pronounced in common law countries, in countries with a higher level of public enforcement of regulations and in countries with more investor protection. The lower audit fees are also more prominent for firms that are followed by more analysts and firms that have a greater institutional ownership. Furthermore, we find that firms in countries with strong regulations are better and more innovative at managing environmental risk, which implies that better environmental performance of the firms following stronger regulations could lower business risks and thus decrease audit fees. Overall, our findings suggest that compliant firms benefit from EPS.

Effects of macroprudential policies on ecological footprint: the moderating role of environmental policy stringency in the top 11 largest countries

This study investigates the impact of macroprudential policies on ecological footprint (EF) in the top 11 largest countries. This study uses country-level panel data from these countries, covering the period from 1992 to 2020. Findings indicate that macroprudential policies alleviates ecological footprint in the sample. Macroprudential policies primarily reduce the ecological footprint before medium quantile (50%) while the environmental benefits of the policies end in the later quantiles. Moreover, environmental policy stringency (EPS) amplifies the positive influence of macroprudential policies on environmental sustainability. Estimate results stay the same with basic regression results in the post-global financial crisis (GFC) period while the impact is positive in the pre-GFC period. Finally, other robust tests validate the findings reported in basic regression model. This study suggests that governments should customize various types of macroprudential policies while also considering environmental concerns. The achievement of a sustainable environment can be facilitated by the combined effects of macroprudential policies and EPS.

Global economic policy uncertainty and renewable energy demand: Does environmental policy stringency matter? Evidence from OECD economies

Existing literature recommends the essential role of renewable energy consumption (REC) in achieving environmental sustainability. Although prior works have investigated the significant factors of REC, the effect of green environmental policies remains largely understudied, particularly in OECD countries. Therefore, this study specifically examines the role of environmental policy stringency (EPS) in enhancing (or diminishing) REC in 27 OECD economies between 2000 and 2019. Furthermore, we aim to specify the determinants of REC and investigate whether EPS could help moderate the relationship between global economic policy uncertainty (GEPU) and REC. To accomplish this, we employ both the fixed effects and panel quantile estimation methods. The findings underline that EPS has a positive and significant impact on REC, indicating that stricter green environmental policies lead to encouraging REC. Besides, the findings show that EPS has a beneficial role in lessening the negative effect of GEPU on REC, and its negative effect on REC is more moderated as moves from environments with low EPS to high EPS. The results also underscore that financial market development, FDI, remittances, technological innovation, and economic development positively promote REC whereas CO2 and natural resources rents have a detrimental impact. The findings are significant and a wide range of policy suggestions is recommended to governments, policymakers, and regulators to attain the energy and environmental sustainability targets set out in SDG 7 and SDG 13, respectively.

Corporate leverage and leverage speed of adjustment: Does environmental policy stringency matter?

This study examines the effects of environmental policy stringency on corporate leverage and speed of adjustment across 39 countries from 1994 to 2020. The primary empirical findings illustrate that environmental policy stringency is negatively related to leverage and leverage adjustment speed. Such effects are prominent for firms with financial constraints, in countries with significant climate-risk exposure and corruption, or in Asia. Based on our main findings, when policymakers implement environmental policies, corporate decisions regarding leverage and debt financing should be taken into account, as these policies can discourage firms from increasing leverage and slow down the speed of adjustment toward optimal leverage.

Retraction Note to: Interrelationship among environmental policy stringency, financial globalization in OECD countries, and CO2 emission with the role of technological innovation and financial development.

Retraction Note to: Interrelationship among environmental policy stringency, financial globalization in OECD countries, and CO2 emission with the role of technological innovation and financial development.