Factors That Determine the Efficiency Of Public Environmental Protection Expenditures of OECD Countries: Super Efficiency DEA & Panel Data Analysis

Abstract

One of the most crucial tools used by governments in addressing environmental issues is public environmental protection expenditure. This study aims to assess the efficiency of public environmental protection expenditures and identify the factors influencing this efficiency. The analysis is based on environmental data from 30 OECD countries covering the period from 2008 to 2020. A two-stage Data Envelopment Analysis (DEA) methodology is employed. In the first stage, the super-efficiency DEA model is used. Public environmental protection expenditures are considered as inputs, while carbon dioxide emissions, renewable energy production, forest area percentage, and particulate matter concentration in the air are treated as outputs. In the second stage, a classical panel data analysis is conducted, using the efficiency scores obtained in the first stage as the dependent variable. Independent variables include population density, urbanization, industrialization, per capita national income, and primary energy intensity.  The findings reveal a negative relationship between efficiency scores and both population density and primary energy intensity. Conversely, urbanization and industrialization exhibit a positive relationship with efficiency scores. No significant relationship is found between per capita national income and efficiency scores. These results suggest that urbanization and industrialization may affect the efficiency of public environmental protection expenditures.