THE IMPACT OF THE PUBLIC AND PRIVATE SECTORS ON ENVIRONMENTAL QUALITY: THE CASE OF OECD

Beynaz Arı and Ali Balkı
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Beynaz Arı: AFYON KOCATEPE UNIVERSITY
Ali Balkı: AFYON KOCATEPE UNIVERSITY

Ekonomi Maliye Isletme Dergisi, 2025, vol. 8, issue 2, 152-166

Abstract: This study aims to investigate the impacts of the public and private sectors on environmental quality in an OECD sample for the period 1997-2021. The study utilizes the load capacity factor as an indicator of environmental quality, central government expenditures as a representative of the public sector, and the industrialization rate as a proxy for the private sector. Furthermore, the model is supported by variables such as per capita gross domestic product, renewable energy, and fossil fuel consumption. The unique value of this study lies in analyzing the impact of both the public and private sectors on environmental quality within a single model and an OECD sample. According to long-term coefficient estimates obtained using the PMG-ARDL method, increases in fossil fuel consumption, gross domestic product, and the industrialization rate all degrade environmental quality. Increases in renewable energy consumption and public expenditures, on the other hand, have a positive impact on environmental quality. Based on the study's findings, private sector investments in renewable energy should be encouraged through tax incentives or subsidies. Legal limits could be set to reduce firms' fossil fuel consumption, or government support provided to firms with high fossil fuel consumption could be reduced. To mitigate the detrimental effects of a market economy on environmental quality, the use of technologies that increase energy efficiency or investments in R&D in this area should be encouraged. Additionally, it would be prudent to continue public expenditures on environmental protection and implement public projects that enhance the environmental infrastructure.

Keywords: Load Capacity Factor; Public Sector; Private Sector; Energy Consumption. (search for similar items in EconPapers)
JEL-codes: H50 O44 Q56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:gnx:emid43:2025-8-2-1826502

DOI: 10.46737/emid.1826502

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