Work

The significance of climate policy stringency, environmental taxation, and public debt in addressing climate change challenges

Year: 2025

Type: article

Abstract: This study aims to explore the role of the three types of climate policies (sectoral, cross-sectoral, and international), public debt, and environmental taxation in reducing the greenhouse gases emissions in selected OECD countries between 1995 and 2023. The significance of the study stands in demonstrating the different effects of various instruments in mitigating the climate change. The methodological framework includes fully modified and dynamic OLS models (FMOLS-DOLS) and confirms the robustness of the findings using Driscoll-Kraay estimation regression and Lewbel two-stages least square estimator. In the context of SDG-13, the main results attest the significant influence environmental policy stringency have for mitigating climate change and argues for the usefulness of environmental fiscal instruments. Additionally, the results highlight a marginal effectiveness of public spending for environmental purposes and controls the whole picture by confirming the damaging role of economic growth and urbanization. Furthermore, the research offers novel insights into the environmentally harmful effects of public debt. Based on these original results, the policy recommendations lean towards stricter environmental regulations and carbon fees that can ultimately finance climate actions without affecting public debt, which is also seen as harmful for effectively mitigating environmental issues. • Sectoral, cross-sectoral, and international climate policies reduce greenhouse gas emissions. • FMOLS and DOLS models' results are confirmed by Driscoll-Kraay estimator. • Environmental taxation is a strong instrument for climate change mitigation. • Public debt has a negative impact on environmental quality.

Source: Journal of Environmental Management

DOI: 10.1016/j.jenvman.2025.126924

Author: Florian Marcel Nuta

Institutions: Ştefan cel Mare University of Suceava, Western Caspian University

Language: English

Topic: Energy, Environment, Economic Growth

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: hybrid

Estimated APC paid: $3,750