Does Government Environmental Expenditure Reduce Residential Energy Consumption in Canada? Evidence from Provincial Panel Data

Belayet Hossain ()
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Belayet Hossain: Department of Economics, Bob Gaglardi School of Business and Economics, Thompson Rivers University, Kamloops, BC V2C 0C8, Canada

Sustainability, 2025, vol. 17, issue 13, 1-19

Abstract: The residential sector has the potential to significantly impact overall energy consumption and emissions due to the long lifespan of residential buildings and the difficulty of outsourcing residential emissions to other nations. This research primarily aimed to investigate the impact of government expenditure on environmental protection in reducing household energy consumption, thus contributing to Canada’s environmental quality. We utilized panel data from ten Canadian provinces covering the period from 1995 to 2020. To estimate household energy demand, both conceptual and empirical models were developed. Advanced second-generation econometric techniques were applied, including appropriate unit root and co-integration tests. Long-term relationships were analyzed using the fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) methodologies. The long-term estimates indicate that all explanatory variables align with theoretical expectations and are highly significant. The findings reveal that government funding for environmental protection, along with province-specific environmental policies, contributes to reducing per capita residential energy consumption, which is essential for enhancing energy efficiency. Additionally, factors such as weather, income, demographic shifts, and energy prices are found to influence household energy consumption trends. These outcomes highlight the importance of increased government funding for environmental protection and underscore the need for provinces to implement context-specific environmental policies. This approach is essential in the effort to reduce household energy consumption across Canada.

Keywords: residential energy consumption; environmental quality; environmental policies; Canada (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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