Moving toward the sustainable environment of European Union countries: Investigating the effect of natural resources and green budgeting on environmental quality

Abstract

This study examines the relationship between ecological footprint, environmental protection expenditures, environmental taxes, natural resources rents, and economic growth for 20 European Union (EU) countries from 1995 to 2018 within the context of the environmental Kuznets curve (EKC) hypothesis. The panel cointegration test examines the long-run relationship between the variables. The results show that there is a cointegration in the model, and the EKC hypothesis is valid only for Austria, the Netherlands, Poland, and Slovenia. The long-run results are as follows: an increase in environmental protection expenditures leads to a decrease in the ecological footprint in Italy and Slovenia; in other words, it reduces environmental pollution. Environmental taxes reduce the ecological footprint in Romania, Slovakia, and Slovenia, while they increase in Poland. Moreover, it was found that as natural resource rents increase, environmental pollution also increases in Austria, Poland, and Slovakia. According to the results of the study, it is seen that the policies implemented to protect the environment in EU countries need to be revised.