Environmental policy of the EU: insights for further development

Abstract

The article focuses on researching the cost-effectiveness of environmental policy in the EU and the relationship between the diversity of the system of environmental policy instruments and the economic development of the EU. The cost-effectiveness of environmental policy in the EU is based on the analysis of ex-ante CEAs (CostEffectiveness Assessment), price of activity, use of market-based instruments, the CEA as part of a policy/directive and environmental expenditures. Cost-effectiveness is mainly influenced by policy instrument choice and operational efficiency. The analysis of environmental expenditures in the EU countries as one of the main focuses of cost-effectiveness has shown that, despite increasing standards of environmental regulation, environmental protection expenditures do not place a heavy burden on the economies that is explained by the increased efficiency of sectors in responding to more stringent environmental legislation. We have tested the hypothesis that the system of environmental instruments applied in the developed EU countries is more diverse than in developing and transition economies since developed countries have long established laws and formal governmental structures to address their serious environmental problems. Our finding is that the degree of variety of environmental policy instruments among the EU members is dependent, not only on production development and actual environmental issues, but also on other factors of development, as in not all the countries with a high number of production enterprises is the system of environmental policy instruments diverse. Only in Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Luxembourg, Netherlands, Sweden and the United Kingdom is the system of environmental policy instruments the most diverse. These countries joined the EU much earlier than many other member states, thus, they have a sounder institutional framework.