Environmental Efficiency, Productive Performance and Spillover Effects under heterogeneous Environmental Awareness Regimes

In this paper we explore whether environmental efficiency at a global scale is affected by the existence of heterogeneous environmental awareness and implementation regimes. By adopting a first stage non parametric metafrontier framework to handle technological heterogeneity the bias corrected productive performance of each country economy as well as the environmental efficiency via the Directional Distance Functions approach are calculated for each of the 104 country economies considered from 2006 through 2014, on an annual basis. In the second stage, we employ a fractional probit model to investigate the variability of environmental efficiency. Findings indicate that productive performance appears to be a driver of environmental efficiency only for the environmentally aware country economies. Absorptive capacity seems to play a crucial role too. A rebound effect is also observed for the universal technology as well as for the environmentally aware country economies. The less environmentally aware country economies do not seem to respond the same way to the same set of factors, indicating that there exist mechanisms that cannot be captured by observed characteristics.