Estimating the impact of green ESIF in Romania using input-output model

Abstract

This study develops one of the first estimates of the effects of European Structural and Investment Funds (ESIF) in Romania, in the context of supporting the transition to a low carbon economy across sectors. Using the green Leontief Input-Output model for the Romanian economy, aggregated at the NACE Rev.2 economic sectors, the analysis decomposes the direct, indirect, and induced effects of ESIF on the reduction of greenhouse gas (GHG) emissions, following data related to both completed and contracted projects in the programming period 2014–2020. The empirical results reveal the minor, but positive, impact of ESIF on environmental degradation. Green funds under ESIF lead to a reduction of 1.14 million tonnes in the GHG emissions. Larger effects are expected due to the contribution of projects still under development, estimated to reduce GHG emissions by 4.48 million tonnes. Based on the results, the main policy implications were evidenced, given the important role that the state has to play in resource allocation and ensuring the efficiency of funds dedicated to green transition.

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