Ecological footprint spillover effects in Europe: New insights from dynamic spatial panel data model with common shocks.

This comprehensive study addresses the urgent global challenges of climate change and environmental degradation by focusing on the Ecological Footprint (EF). Unlike previous studies, it introduces a novel approach incorporating spatial spillover, temporal effects, and common shocks in panel data analysis. The spatial spillover effect highlights the influence of trade, pollution havens, and competition between neighboring countries on EF. The temporal effects emphasize the significance of historical production patterns and export strategies in shaping the current EF. The study also considers the impact of exogenous common shocks, such as international agreements and global events, on EF. Utilizing a dynamic spatial panel data model with common shocks, the research examines 40 European countries from 1992 to 2020, revealing the significant impact of biocapacity, energy consumption, industrialization, and globalization on EF. Findings indicate that spatial spillover effects contribute to EF transfer, emphasizing the need for collaborative global efforts. The study sheds light on the interconnectedness of environmental impacts and underscores the importance of considering both weak and strong forms of cross-sectional dependence in achieving accurate estimations. The research enriches our understanding of EF determinants and provides nuanced insights for policymakers striving to develop effective strategies for sustainable resource management and environmental conservation.