This study examines the efficiency of European Union (EU) countries based on environmental expenditures, energy-related R&D budgets, and renewable energy investment efforts within the framework of the European Green Deal (EGD). The goal of the study is to investigate and compare the efficiencies of high and low-income EU countries from a financial input and environmental outcome perspective.
The analysis employs an undesirable, output-oriented, super-slack-based measurement data envelopment analysis model. Our empirical model uses three financial inputs and three environmental outputs, including greenhouse gas emissions as an undesirable output variable. The efficiencies of 26 EU countries have been analyzed from 2021 to 2023. The improvement ratios have also been determined to identify the adjustment needs for each variable.
Results reveal that higher public spending does not directly yield stronger environmental efficiency. Several high-income EU countries fall short of the efficiency frontier. Besides, several middle-income EU countries achieve superior scores despite having more limited budgets. The improvement ratios confirm that substantial emission reductions and more selective financial allocation are needed. In contrast, many middle-income countries operate closer to the efficient frontier, suggesting a more effective use of available resources.
The original contribution of the study is to investigate a comparative assessment of EU financial and environmental performance using an undesirable Super-SBM approach within the EGD. This research would give practical insights for policy alignment and resource prioritization during the climate transition.
