A Two-Stage DEA Model to Evaluate the Technical Eco-Efficiency Indicator in the EU Countries

This paper evaluates the evolution of eco-efficiency for the 27 European Union (EU) countries over the period 2008-2018, provided the traditional high concerns of the EU concerning the economic growth-environmental performance relationship. The EU has triggered several initiatives and regulations regarding environmental protection over the years, but as well the Sustainable Development Goals demand it. Under this setting, we conduct a two-stage analysis, which computes eco-efficiency scores in the first stage for each of the pairs EU 27-year, through the nonparametric method data envelopment analysis (DEA), considering the ratio GDP per capita and greenhouse gas emissions (GHG). In the second stage, scores are used as a dependent variable in the proposed fractional regression model (FRM), whose determinants considered were eight pollutants (three greenhouse gases and five atmospheric pollutants). CO₂/area and N₂O/area effects are negative and significant, improving the eco-efficiency of the EU 27 countries. When the efficient European countries are excluded from the estimations, the results evidence that CO₂/area and CH₄/area decrease the DEA score. The country with the lowest GHG emissions and pollutant gases was Ireland, being the country within the considered period that mostly reduced emissions, particularly SOx and PM10, increasing its score.