From policy stringency to environmental resilience: Unraveling the dose-response dynamics of environmental parameters in OECD countries

Abstract

In the pursuit of sustainable development and the mitigation of negative externalities arising from environmental stressors, a multitude of member countries within the Organization for Economic Co-operation and Development (OECD) have embraced various environmental policies. Nevertheless, previous empirical research has largely overlooked investigating the causal relationship between the Environmental Policy Stringency (EPS) and environmental indicators. To bridge this gap, we conduct an empirical study to examine the dose-response relationship between EPS, as a continuous treatment variable, and selected environmental indicators. Our findings reveal evidence of a mixed treatment effect of policy stringency on the environment. Notably, the implementation of EPS leads to a reduction in carbon emissions per capita and an overall decline in ecological footprint. However, despite OECD countries moving towards a negative trajectory to preserve the environment, carbon intensity remains steadfastly on a positive path. Moreover, the intensification of policy stringency demonstrates positive effects on total renewable energy production, encompassing solar, wind, and eco-innovation. Building upon these empirical results, we offer several policy implications for the adoption and implementation of environmental policies within OECD countries.