Agricultural Trade, Eco-Efficiency, and Greenhouse-Gas Emissions in the EU-27: Evidence from a Dynamic Panel Analysis, 1991–2023

This study examines short-run associations among agricultural trade, production, and environmental performance across the 27 current European Union (EU) member states during 1991–2023. The unbalanced panel includes pre-accession observations; Common Agricultural Policy effects are not separately identified. Eco-efficiency is measured as the reciprocal of FAOSTAT agricultural greenhouse-gas (GHG) emissions per unit of production value, with total GHG emissions as an alternative outcome. Pesaran CD, CIPS, and Westerlund tests assess cross-sectional dependence, unit roots, and cointegration. As cointegration is not established, first-differenced dynamic common-correlated-effects mean-group and fixed-effects models with Driscoll–Kraay standard errors are estimated. Conditional on production and common-factor controls, total trade, imports, and exports show no statistically significant average association with eco-efficiency at the 5% level. Production is positively associated with eco-efficiency, although their shared production component warrants caution. In the alternative emissions model, the estimated production elasticity is 0.1325 (conventional 95% confidence interval: 0.0758–0.1893), indicating a positive but less-than-proportional emissions response, consistent with relative rather than absolute decoupling. The findings support evaluating agricultural trade alongside production and absolute emissions rather than treating trade expansion as evidence of environmental improvement.