Measuring eco-efficiency in European regions: Evidence from a territorial perspective

Abstract

Eco-efficiency indicators represent a valuable instrument supporting policy decisions geared at sustainability. However, in order to provide effective guidance, eco-efficiency should be assessed considering the heterogeneous territorial settings, and thus the underlying economic structures that regions exhibit. Starting from the most common definition of eco-efficiency as the ratio of economic output to environmental input, this paper aims to investigate regional eco-efficiency patterns in Europe, paying particular attention to territorial heterogeneity. The study relies on the metafrontier Data Envelopment Analysis (DEA) to (1) assess the comparative evolution of eco-efficiency in 282 European regions between 2006 and 2014, and (2) estimate the technology and conditional efficiency gaps that regions display considering their dominant territorial features (i.e. urban, intermediate and rural). The results show an overall upward trend in eco-efficiency across European regions recorded between 2006 and 2014. However, there is no evidence that regions are converging equally to similar levels of eco-efficiency. On the contrary, a rather complex EU core-periphery pattern seems to be emerging. Most of the Eastern regions have made significant progress in reducing the technological divide. However, the same cannot be said for their resource management, which has become the main driver of inefficiency. On the other hand, the significant losses of human capital experienced by many Southern intermediate and rural regions seem to be the basis of their widening technological gap. These results suggest that future efforts to improve eco-efficiency should be aimed at encouraging an efficient use of productive factors within each region, going beyond generic urban/rural approaches and therefore implementing place-based policies building on a good understanding of the complex linkages between the physical, social and economic environments within individual regions. To the best of our knowledge, the analysis of regional eco-efficiency performance based on territorial structures represents a major contribution to previous literature in this field.