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

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. In this study, we use environmental data of 30 OECD countries between 2008 and 2020 employing a two-stage Data Envelopment Analysis (DEA) methodology. In the first stage, we utilize the super-efficiency DEA model. 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, we conduct a classical panel data analysis, 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 empirical 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. The study contributes to the literature by combining Super-Efficiency DEA with panel data analysis and by addressing a notable gap in empirical research on the efficiency of public environmental protection expenditures, specifically in OECD countries, offering policy-relevant insights for sustainable fiscal planning.