Sustainability Transition Through Awareness to Promote Environmental Efficiency

The 17 Sustainable Development Goals, United Nations’ Agenda 2030, the Paris Agreement, the European Green Deal, and the current global policy momentum towards green efficiency, motivate the need for a better understanding of the determinants of environmental efficiency to tackle climate change. By adopting a non-parametric metafrontier framework, the productive performance and environmental efficiency through the Data Envelopment Analysis and Directional Distance Function for each of the 104 countries from 2006 through 2014 are calculated. We contribute to the understanding of environmental efficiency patterns through partitioning the metafrontier via a factor encapsulating 56 environmental indicators to give rise to heterogeneous environmental awareness regimes. By adopting fractional probit models, we show econometrically that productive performance appears to be a major driver of environmental efficiency only for the environmentally aware country economies whereas a direct rebound effect is also documented. This is a result with major “policy sequencing” implications. Absorptive capacity reflecting the ability and potentiality of the country to benefit from technological developments seems to play a crucial role as well. The less environmentally aware cluster does not seem to respond the same way to the set of factors considered, indicating that complexity and latent mechanisms affect green efficiency.