Impacts of the environmental taxes on ecological footprint: Panel threshold Rregression analysis for G7 countries

Abstract

In this study, the effects of green investment, environmental tax, environmental-related technology, renewable energy consumption, and economic growth on the ecological footprint were examined with annual data for the G7 countries during the period of 2000-2021. In addition, the impact of green investments on the ecological footprint at a threshold of different environmental tax levels was investigated. For this purpose, OLS, Fixed Effect, Random Effect, FGLS, Driscoll-Kraay random effect, and Panel Threshold Regression Analysis were applied in the study. According to the results, increases in environmental-related technology, renewable energy, environmental taxes, and green investment reduce the ecological footprint. Therefore, these variables can be considered as the main drivers of reducing environmental degradation for G7 countries. A 100% increase in environmental taxes reduces the ecological footprint per capita by approximately 5%. Another implication of this study is that the impact of green investments on the ecological footprint increases at higher environmental tax levels. Therefore, the effective use of environmental taxes helps improve environmental quality by encouraging green investments. In this context, market regulatory instruments such as environmental tax is an important policy strategy to improve environmental quality.

Keywords

• Green investment
• Environmental taxes
• Renewable energy
• Ecological footprint
• G7

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