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Managing Environmental Policy Stringency to Ensure Sustainable Development in OECD Countries

Author

Listed:
  • Daniela Melania Mihai

    (Management and Business Administration Department, The National University of Science and Technology Politehnica Bucharest, Pitești University Centre, 110040 Pitesti, Romania)

  • Marius Dalian Doran

    (Faculty of Economics and Business Administration, Doctoral School of Economics and Business Administration, West University of Timisoara, 300223 Timisoara, Romania)

  • Silvia Puiu

    (Department of Management, Marketing and Business Administration, Faculty of Economics and Business Administration, University of Craiova, 200585 Craiova, Romania)

  • Nicoleta Mihaela Doran

    (Department of Finance, Banking and Economic Analysis, Faculty of Economics and Business Administration, University of Craiova, 13 A. I. Cuza, 200585 Craiova, Romania)

  • Elena Jianu

    (Management and Business Administration Department, The National University of Science and Technology Politehnica Bucharest, Pitești University Centre, 110040 Pitesti, Romania)

  • Teodor Marian Cojocaru

    (Department of Economics and Economic Modeling, West University of Timisoara, 300115 Timisoara, Romania)

Abstract

In response to climate change that threatens both economic and social sustainable development, governments adopt strict environmental policy measures to reduce greenhouse gas emissions and encourage the use of energy from renewable sources. The main purpose of this study is to investigate to what extent the strictness of environmental policy can influence the level of greenhouse gas emissions and the consumption of renewable energy in selected Organisation for Economic Co-operation and Development (OECD) countries. The Fully Modified Ordinary Least Squares (FMOLS) method and Granger causality test were employed in order to investigate the long-run relationship between the main components of the environmental policy stringency index and the evolution of greenhouse gas emissions and renewable energy consumption. The results indicate significant influences of the Market-based instruments sub-index and the Technology Support policies sub-index on greenhouse gas emissions reduction, while the Non-Market Based instruments index, which includes policies that impose emission limits and standards, does not exert any significant influence in this regard. Regarding the impact on renewable energy consumption, the results of this study indicate significant positive influences from the perspective of the three sub-indices used in the analysis. These results should send a signal to decision-makers on the effectiveness of policies that impose emission limits and standards, in the sense that their improvement will generate significant influences in mitigating climate change risks.

Suggested Citation

  • Daniela Melania Mihai & Marius Dalian Doran & Silvia Puiu & Nicoleta Mihaela Doran & Elena Jianu & Teodor Marian Cojocaru, 2023. "Managing Environmental Policy Stringency to Ensure Sustainable Development in OECD Countries," Sustainability, MDPI, vol. 15(21), pages 1-13, October.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:21:p:15427-:d:1270380
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    References listed on IDEAS

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