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Does Better Environmental Performance Come at the Cost of Growth? Evidence from EU-27 SDG Indicators

Year: 2026

Type: article

Abstract: While economic growth has often been linked to environmental degradation—particularly in early development stages, as suggested by the Environmental Kuznets Curve (EKC)—the reverse relationship, where environmental sustainability influences growth, remains less explored, especially in the EU context. This study examines annual panel data from EU-27 economies (2000–2023), incorporating selected European Sustainable Development Goal (SDG) indicators and employing fixed-effects panel models alongside instrumental-variable and dynamic panel estimators to address endogeneity. The findings show no evidence that improvements in environmental performance hinder economic growth; rather, for several indicators, better environmental performance is associated with higher real GDP per capita growth. These results are robust to alternative specifications and controls, supporting the policy conclusion that enhanced environmental quality does not constrain economic growth and may sustainably support economic development.

Source: Economies

DOI: 10.3390/economies14110531

Authors: Anastasios Pappas, Nikolaos Boukas

Institutions: National and Kapodistrian University of Athens, Philips University, European University Cyprus

Language: English

Topic: Energy, Environment, Economic Growth

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: gold

Estimated APC paid: $2,172