A Dynamic Spatial Panel of Subnational GHG Emissions: Environmental Effectiveness of Emissions Taxes in Spanish Regions

In this paper we study the effectiveness of environmental taxes and policies of the regional level of government to reduce GHG emissions. We use panel data for the 17 Spanish regions in the period 1999-2017, controlling the spatial nexus between regions and using a dynamic Durbin model. The results show there is spatial dependence and spatio-temporal persistence of GHG emissions at the regional level in Spain, and that in this context, the taxes and policies intended to manage emissions introduce a slight disincentive to generating them. This fact, together with some relative decoupling which seems to exist between growth and emissions at the regional level, would suggest the need for tougher measures to combat environmental pollution in order to meet EU commitments.