The Impact of Climate Risk on GDP Growth in European Countries
The Impact of Climate Risk on GDP Growth in European Countries

Author(s): Ardit Gjeci, Andromahi Kufo, Athina Tori, Marklei Xeka
Subject(s): Politics / Political Sciences, Politics, Economy, National Economy, Energy and Environmental Studies, Economic policy, Environmental and Energy policy, EU-Approach / EU-Accession / EU-Development, Socio-Economic Research, Green Transformation
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: CO2 emissions; GDP Growth; European Union; Western Balkans
Summary/Abstract: We examine the impact of CO2 emissions on economic growth across 27 EU member states and 3 Western Balkan countries that are EU candidate countries, from 2004 to 2023, using a robust fixed effect model. The results indicate a statistically significant positive relationship between carbon dioxide and economic growth, suggesting that the economic expansion in these countries, at least up to 2019, has been closely related to carbon-intensive industrial activities, transportation, and other factors. A complementary analysis focusing on the period before the EU Green Act from 2004 to 2019 confirms a positive association, emphasizing the dependence on heavy industries with limited environmental regulation. Our findings reveal a complex trade-off between economic development and environmental sustainability, highlighting that efforts to reduce carbon emissions may challenge traditional growth models. The study contributes to understanding the interconnection between environmental policies and economic growth. It provides valuable insights for policymakers seeking to balance these critical priorities by implementing further sustainable growth policies.

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