Quality of government for environmental wellbeing? Subnational evidence from European regions

Abstract

This study investigates the relationship between quality of government and environmental wellbeing in European regions at the NUTS-2 level. First, we find that subnational environmental data are spatially interdependent. Then, we construct a set of composite indicators of environmental wellbeing via Bayesian spatial factor analysis. Finally, by using these composite indicators in spatial regression analysis, we show that institutional quality is a key determinant of environmental wellbeing. We also find that the institutions-environment nexus varies across dimensions of environmental wellbeing–institutions matter especially for the quality of air and soil. Policymakers should be aware that environmental degradation can be tackled by building more effective and well-functioning regional public institutions.