Epsilon Archive for Student Projects

Abstract

Environmental taxes are widely used policy instruments to incentivize sustainable production, yet their specific impacts on agricultural eco-efficiency remain highly complex. This study examines the short- and long-run associations between environmental taxes and eco-efficiency in the agricultural sector across six European countries (Austria, Denmark, Ireland, Luxembourg, Malta, and the Netherlands) from 1995 to 2023. Utilizing an Autoregressive Distributed Lag (ARDL) model, this thesis evaluates Mean Group (MG), Pooled Mean Group (PMG), and Dynamic Fixed Effects (DFE) estimators. The results indicate that changes in environmental taxes do not yield immediate impacts in the short run, aligning with the gradual nature of agricultural structural adjustments. In the long run, the Hausman test favors the MG model, revealing a positive but statistically insignificant energy tax revenue association alongside substantial country-specific heterogeneity. Additionally, livestock density is found to have a consistently negative impact on eco-efficiency across the models. The findings suggest that environmental taxation alone may be insufficient to enhance eco-efficiency uniformly, highlighting the need for country-specific fiscal designs and targeted, complementary agricultural policies.