Spatial probit analysis of factors affecting feed-in tariff policy adoption: Evidence from selected countries ^☆

This paper analyzes the factors affecting the adoption of the Feed-in Tariff (FiT) incentive policy, the most common regulatory policy implemented by countries to encourage the use of renewable energy sources (RES), using the spatial probit method. Since the spatial interaction effects differ from the standard spatial probit model when countries implement this incentive policy at different times, we applied the spatial probit method including temporal dependency by accounting for the years countries switched to the FiT. The results we obtained in the study using data from 54 countries for the period 1980–2018 revealed the existence of spatial effects. This model, with a binary dependent variable (0 = non-adoption, 1 = adoption), includes two different spatially lagged variables for similar population density (neighboring) countries that have not yet adopted the FiT policy and that have already transferred. The model reveals that the spatial effects of neighboring countries may differ depending on the FiT adoption status. Additionally, the results show that CO2 emissions from energy consumption, per capita GDP, and Kyoto Protocol participation have a positive and significant effect on FiT adoption. By highlighting the neighborhood effect of environmental policies, this study emphasizes the importance of integrating such policies into economy-wide public policies in developed and developing countries.