International Environmental Efficiency Trends and the Impact of the Paris Agreement

Abstract

This study estimates the environmental efficiency of 150 economies during the period of 2010–2017 to understand the environmental efficiency trend worldwide. This research adopts the meta-Malmquist approach to compare and capture the dynamic change in environmental efficiency among different income groups. The empirical results indicate that among the four income groups, only the low-income group suffers from regression in terms of environmental efficiency, while the high-income group achieves the greatest progress. For the high-income group, the source of improvement originates from the frontier shift rather than from efficiency change. By contrast, the improvement of the lower-income groups results from the catching-up effect. With regard to the effect of the Paris Agreement, only the lower middle-income group exhibits a statistical difference between the two periods, and environmental efficiency increases after the adoption of the Paris Agreement. The fight against global warming cannot succeed by relying only on specific countries. The whole world must cooperate and improve together, and thus, additional help must be devoted to the low-income group. The statistical results support that differences exist in terms of environmental efficiency among the four income groups. In particular, the low-income group is deteriorating.