Spatial analysis of environmental policy stringency effect on the environmental performance of European countries: mitigation options through green growth and green technological innovation

Against a backdrop of worsening environmental problems, sustainable development and the conservation and protection of nature have become focal points of current debate. Because burning fossil fuels jeopardizes global sustainability, transitioning to green energy worldwide is recognized as a primary strategy to address climate change. Prior work has concentrated on the temporal dynamics of environmental deterioration. This study, by contrast, examines the drivers of ecological footprint (EFP) from a spatio-temporal perspective, focusing on the extent to which green growth (GG), green technological innovation (GTI), and environmental policies (EPS) influence ecological sustainability across 27 European Union (EU) member states over the 1996 to 2020 period. The results of the Wald and likelihood ratio tests confirm that the spatial autoregressive (SAR) model is most suitable for the analysis. The empirical findings indicate that GG, GTI, and EPS in a given country reduce EFP both domestically and in neighbouring countries. Moreover, we examine regional heterogeneity by splitting the sample into Eastern and Western European groups. The empirical findings of heterogeneity analysis reveal that GG exacerbates EFP in Eastern Europe but mitigates it in Western Europe. Policymakers need to take tangible steps to limit environmental harm, incentivize renewable energy, and diversify energy sources. These findings suggest that cross-border cooperation is essential for the sample economies to promote GG and GTI, implement sustainable growth strategies, and improve production efficiency, thereby supporting better environmental outcomes.