Frontier analysis of eco-efficiency gaps: Evidence from European countries

Abstract This study estimates and compares eco-efficiency across European countries from 2000–2018. The study derives eco-efficiencies from the ratio of gross domestic product to greenhouse gas emissions and identifies eco-efficient countries as those that maximize their production of goods and services per unit of greenhouse gas emissions. Specifically, it identifies Sweden, Denmark, Italy, Norway, and Luxembourg as the most eco-efficient countries. Moreover, the paper investigates technological and policy factors that explain variations in eco-efficiency across countries. Countries with stricter environmental policy and higher energy tax revenue per unit of greenhouse gas emissions tend to be more eco-efficient. However, gains in eco-efficiency diminish as policy stringency and taxes increase.