Eco-efficiency and convergence in OECD countries

This paper assesses the convergence in eco-efficiency of a group of 22 OECD countries over the period 1980-2005. In doing so, three air-pollutants representing the impact on the environment of economic activities are considered, namely, carbon dioxide (CO2), nitrogen oxides (NOX) and sulphur oxides (SOX); furthermore, eco-efficiency scores at both country and air-pollutant-specific levels are computed using Data Envelopment Analysis techniques. Then, convergence is evaluated using the recent approach by Phillips and Sul (2007), which allows testing for the existence of convergence groups. First, we find that, with the exception of NOX emissions, eco-efficiency has improved over the period, the greatest progress corresponding to CO2 emissions. Second, Switzerland is the most eco-efficient country, followed by some Scandinavian economies such as Sweden, Norway, Iceland and Denmark. In contrast, European Mediterranean countries such as Portugal, Spain and Greece, in addition to Hungary, Turkey, Canada or the US, are among the worst performers. Finally, we find that both the most eco-efficient countries and the worst-performing countries also tend to form clubs of convergence among them.