The Effect of Environmental Policy Instruments : -An empirical study of the OECD countries’ environmental performance

Sammanfattning: The concept of environmental performance is in this study regarded as either countries’ carbon dioxide (CO2) emissions per capita, or an index that considers not only reduction in emission levels but also produced output. Two environmental policies that are available for mitigating CO2 emissions will be discussed. First, the use of environmentally related taxes (ERT:s), where both a general measure and specific ozone tax is used when examining the effect of ERT:s on environmental performance. The results are ambiguous and in many cases not statistically significant. Second, the effect on countries’ environmental performance caused by participating in the EU ETS system is tested. A conclusion that can be made is, that participating in the EU ETS system reduces CO2 emissions per capita. Time lags of one and four years are used to evaluate the rigidity of these two policies. The results are unclear, but the effect of a four-year lag seems to be stronger for the EU ETS case.