What works? Evaluating environmental policy mixes through emissions-based impact indicators

This paper examines the impact of environmental policy stringency on a set of environmental impact indicators. Using a panel dataset of 19 European countries between 1995 and 2020, we find that more stringent environmental policy regimes are associated with significant reductions in potential harms to human health and the environment. Our estimates indicate reductions in environmental pressures ranging from 10% for global warming potential to 27% for aquatic toxicity potential. A disaggregated analysis of policy instruments reveals that market-based measures exert the strongest influence, followed by nonmarket-based regulations. In contrast, technology support policies - designed to stimulate innovation and investment in green technologies - yield the smallest gains. Such support can yield substantial environmental benefits, but only when provided at sufficiently high and sustained levels. It is worth-noting that our results are most representative of production-based environmental impact categories. Taking into account consumption-based emissions yields less positive results.