ENVIRONOMICS: Economic Approach To Environmental Issues

ENVIRONOMICS: Economic Approach to Environmental Issues Nora Grisáková, Radka Repiská, Veronika Miťková, Peter Štetka, Paulína Borovská
Nora Grisáková, Radka Repiská, Veronika Miťková,

Peter Štetka, and Paulína Borovská
ENVIRONOMICS: Economic Approach

to Environmental Issues
Josef KŘÍHA, Miroslav FELCAN, Jozef METEŇKO et al.
PROBLÉMOVÉ KONOTACE ODHALOVÁNÍ, DOKUMENTOVÁNÍ, DOKAZOVÁNÍ

A PREVENCE KRIMINALITY ČI JINÉ PROTISPOLEČENSKÉ ČINNOSTI
(RECENTNÍ DISKURS II)
VYSOKÁ ŠKOLA EVROPSKÝCH A REGIONÁLNÍCH STUDIÍ

VYSOKÁ ŠKOLA EVROPSKÝCH A REGIONÁLNÍCH STUDIÍ
2021
20
ISBN 978-80-7556-116-9
ISBN 978-80-7556-116-9
2022
9 788075 561169 2022

Nora Grisáková, Radka Repiská, Veronika Miťková, Peter Štetka,
and Paulína Borovská
ENVIRONOMICS
ECONOMIC APPROACH TO ENVIRONMENTAL ISSUES
THE COLLEGE OF EUROPEAN AND REGIONAL STUDIES

VSERS
2022
ENVIRONOMICS: Economic Approach to Environmental Issues  the first [1st] edition 
Scientific monograph  České Budějovice [Czech Republic]: The College of European and
Regional Studies [VŠERS], 2022
AUTHORS
Nora Grisáková, Radka Repiská, Veronika Miťková, Peter Štetka, and Paulína Borovská
Copyright © 2022 by authors. All rights reserved.
REVIEWERS
Lucia Bursíková, Robert Šlosár, and Vladimír Šebej
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by
any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted un-
der the Slovak Copyright Act, without either the prior permission of the authors, or authorization through
payment of the appropriate per-copy fee to the copyright owner.
The scientific monograph ENVIRONOMICS: Economic Approach to Environmental Issues was funded by the
Ministry of Education, Science, Research and Sport of the Slovak Republic and is a result of solving the VEGA
project no. 1/0646/20 entitled ‚Diffusion and consequences of green innovations in imperfect competition
markets‘ [project share 80%] and VEGA project no. 1/0668/22 entitled ‚Migration and the silver economy:
economic, political and legal Implications of addressing the problem of population aging and migration in EU
countries‘ [project share 20%].
The authors are responsible for the technical side of the text, the linguistic proofreading and the final version
of the publication. The manuscript has not been subjected to editorial and linguistic editing.
Printed in the Czech Republic.
ISBN 978-80-7556-116-9
ENVIRONOMICS Economic Approach to Environmental Issues
CONTENTS
LIST OF ABBREVIATIONS ............................................................................................... 5
INTRODUCTION............................................................................................................ 7
1 FOUNDATIONS OF ENVIRONOMICS ..................................................................... 9
1.1 Environment ................................................................................................ 9
1.1.1 The importance of the environment ........................................................................... 9
1.1.2 Climate changes and their impact ............................................................................. 10
1.1.3 Consequences of climate change in the European region ........................................ 10
1.2 The interconnection of the economy and the environment ......................... 14

1.2.1 Environmental and natural resource economics ....................................................... 17
1.2.2 Environmental economics and environment policy .................................................. 17
1.3 EU strategies in relation to the environmental economy ............................. 19

1.3.1 The European Green Deal – more sustainable EU economy ..................................... 21
1.3.2 The concept of Green Growth ................................................................................... 22
2 MEASURING GREEN GROWTH PROGRESS AND CLUSTER ANALYSIS .................... 25

2.1 Selected indicators of green growth ........................................................... 28
2.1.1 Human Development Index - HDI .............................................................................. 32
2.1.2 Environmental performance index - EPI .................................................................... 34
2.2 Cluster analysis – method of empirical classification ................................... 37

3 ENVIRONOMICS AS A COMPREHENSIVE METHODOLOGICAL APPROACH ............ 40
3.1 Indicators monitoring environmental and resource productivity ................. 40
3.2 Indicators monitoring the natural asset base .............................................. 53
3.3 Indicators monitoring the environmental quality of life .............................. 58
3.4 Indicators monitoring economic opportunities and policy responses ........... 64
3.5 Global Sustainability Indices ....................................................................... 67
3.5.1 HDI index and its components in Slovakia and the Netherlands ............................... 67
3.5.2 EPI index and its categories in Slovakia, in the Netherlands and within the EU countries
68
3.6 Hierarchical clustering procedures.............................................................. 70

3.6.1 Nearest Neighbour Method....................................................................................... 71
3.6.2 Median Method ......................................................................................................... 72
3.6.3 Ward’s Method .......................................................................................................... 73
3.7 Hierarchical clustering analysis of attitudes towards environment across

cultures ..................................................................................................... 74
3.7.1 Clustering design ....................................................................................................... 77
3.7.2 Segmentation, discrimination and classification result ............................................. 80
4 MODELING AIR POLLUTION AND CARBON DIOXIDE EMISSIONS WITH A

COMPUTABLE GENERAL EQUILIBRIUM MODEL .................................................. 90
4.1 Methodology and data............................................................................... 91
ENVIRONOMICS Economic Approach to Environmental Issues
4.2 Air pollutants and emissions ...................................................................... 93

4.3 The current status and the development in 10 years ................................... 97
4.4 The European Green Deal: Modeling the Impact of Reducing Greenhouse Gas
Emission Quotas ...................................................................................... 102
5 COMPARISON OF THE ECONOMIC AND ECOLOGICAL DEVELOPMENT OF SLOVAKIA
AND THE NETHERLANDS BASED ON THE DICE MODEL ...................................... 107
5.1 An analysis of the current state of the climate crisis.................................. 107
5.1.1 The change in air temperature ................................................................................ 107
5.1.2 Deforestation ........................................................................................................... 109
5.2 How does the climate crisis affect the development of the economy? ....... 109
5.3 DICE Model .............................................................................................. 111
5.3.1 The methodology of the DICE model ....................................................................... 111
5.3.2 The data and the model........................................................................................... 114
5.3.3 The Slovak Republic ................................................................................................. 115
5.3.4 The Netherlands ...................................................................................................... 117
CONCLUSION ........................................................................................................... 120

LIST OF TABLES......................................................................................................... 124
LIST OF FIGURES ....................................................................................................... 126
BIBLIOGRAPHY ......................................................................................................... 128
APPENDIX ..................................................................................................................... I
A. The impact of changes in individual European regions .......................................... I
B. EPI Index (Ranking of 180 countries) ................................................................... II
C. EPI, Environmental Health and Ecosystem Vitality Score ..................................... III
D. HDI Index, 2017 (Map of world and Europe) ........................................................ V
E. Air pollution and emissions ................................................................................ XI
F. Carbon dioxide emissions decomposition ......................................................... XVI
LIST OF ABBREVIATIONS
alloc contribution to regional EV of allocative effects,
atpdir power of tax on domestic i purchased by private household in r,
atpmir power of tax on imported i purchased by private household in r,
CIEP Composite Index of Environmental Performance,
CIESIN Center for International Earth Science Information Network,
COP Conference of the Parties
COVID-19 Coronavirus disease 2019
CO2 Carbon dioxide
CO2ri carbon dioxide emissions from firms´ usage, government consumption and
private households’ consumption of domestic product and imports i in re-
gion r (in millions of tons of CO2),
co2trd contribution to regional EV of carbon trading,
DICE model Dynamic Integrated Climate Economy model
DMC Domestic Material Consumption,
€/tC euro for a ton of carbon
EEA European Environment Agency,
EC European Commission,
EPI Environmental Performance Index,
ESD Effort Sharing Decision,
ETS Emissions Trading System,
EU European Union,
FMAQ Father/Mother Attachment Questionnaire (FMAQ),
gco2tr real carbon dioxide emissions in region r,
gco2fdijr carbon dioxide emissions from firms’ usage of domestic product,
gco2fmijr carbon dioxide emissions from firms’ usage of imports,
gco2gdir carbon dioxide emissions from government consumption of domestic prod-
uct,
gco2gmir carbon dioxide emissions from government consumption of imports,
gco2pdir carbon dioxide emissions from private consumption of domestic product,
gco2pmir carbon dioxide emissions from private consumption of imports,
gco2qr carbon dioxide emissions quota in region r,
GDP Gross Domestic Product,
HDI Human Development Index,
HDR Human Development Report,
IAMs Integrated group assessment models
IMF International Monetary Fund,
IND Indulgence
IPCC Intergovernmental Panel of Climate Change
IS contribution to regional EV of changes in the price of capital goods com-
modities
LTO Long Term Orientation
5
m.a.s.l. meters above sea level

MAS Masculine
NCTAXLEVr nominal carbon tax rate in region r (current USD per ton of CO2),
OECD Organisation for Economic Co-operation and Development,
OSN United Nations Organisation,
pempr power of emissions purchases in region r,
pimir market price of composite import i in region r,
pmir market price of commodity i in region r,
PPP Purchasing Power Parity,
qfdijr domestic good i demand by industry j in region r,
qfdijr imported good i demand by industry j in region r,
qgdir government demand for domestic i in region r,
qgmir government demand for imports of i in region r,
qpdir private household demand for domestic i in region r,
qpmir private household demand for imported i in region r,
SAS Statistical Analysis System,
SEA Slovak Environment Agency,
SSE sum of square error,
tfdijr tax on domestic i purchased by j in r,
tgdir tax on domestic i purchased by government in r,
tgmir tax on imported i purchased by government in r,
tfdijr tax on imported i purchased by j in r,
tot contribution to regional EV of changes in its terms of trade,
UNDP United Nations Development Programme,
UNEP United Nations Environment Programme,
VDGAir government consumption expenditure on domestic i in region r,
VDGANCir carbon-tax-exclusive value of government consumption of domestic prod-
uct i in region r,
VDFAijr purchases of domestic i for use by j in region r,
VDFANCijr carbon-tax-exclusive value of domestic i for use by j in region r,
VDPAir private consumption expenditure on domestic i in region r,
VDPANCir carbon-tax-exclusive value of private consumption of domestic product i in
region r,
VIGAir government consumption expenditure on imported i in region r,
VIGANCir carbon-tax-exclusive value of government consumption of imported prod-
uct i in region r,
VIFAijr purchases of imported i for use by j in region r,
VIFANCijr carbon-tax-exclusive value of imported i for use by j in region r,
VIPAir private consumption expenditure on imported i in region r,
VIPANCir carbon-tax-exclusive value of private consumption of imported product i in
region r,
WEF World Economic Forum,
WHO World Health Organization,
3R Recovery, Recycling, Reuse.
6
INTRODUCTION
INTRODUCTION
The state of the environment is currently a major global problem. Pollution is considered a
serious threat in industrialized countries, where the quality of life is measured by the
growth of material production. Meanwhile, the environment has become a serious
obstacle to economic development and poverty alleviation in developing countries.
Humanity's relationship with the environment has gone through several phases, starting
with primitive periods when people lived in a state of symbiosis with nature, followed by a
period of increasing dominance of nature until the industrial age, and culminating in a rapid
resource-consuming manner and the growth of the twentieth century, which affected
natural resources in several ways. More recently, humanity's attitude toward the
environment has evolved to include more active projects and policies to predict and
minimize environmental degradation. In this context, many experts consider the concept
of sustainable development and environmental economics as an evolving field of
economics. Prior to the 1970s, little attention was paid to the growth and development of
this field of knowledge in economics. The first oil crisis in 1973 and the subsequent
occurrence of relatively high environmental damage on a global scale prompted scholars
to apply economic tools to environmental science. Nowadays, people around the world
have realized that the environment is not just a study of flora and fauna, but a synthesis of
the study of different branches of knowledge, such as science, economics, philosophy,
ethics, and anthropology. Therefore, environmental economics requires a detailed
understanding of the various environmental factors, their impacts, and their functions for
the environment and for human life in the present and in the future.
The concept of sustainable development is an approach that allows for the
improvement of the quality of life at a lower intensity of resource use, leaving future
generations with an unchanged or even increased supply of natural resources and other
values. Sustainable development is a key factor in creating added value and innovation,
and at the same time can make a critical contribution to the economic development of
individuals and society as a whole. In a free market and a well-functioning economy, it could
strike a balance between economic prosperity, social cohesion, and the rational use of
natural resources. The general impetus has been renewed by the success of the "Agenda
2030" and the Paris Agreement. At the same time, people around the world are beginning
to worry about inequality, slow growth, job loss, and globalization, which is reflected in the
stimuli of socio-economic difficulties. The Organization for Economic Cooperation and
Development (OECD) aims to help countries sustain socio-economic growth through three
key aspects: green "ecological" growth, inclusive growth, and productivity growth. The
concept of green growth is able to provide a monitoring framework with a set of four broad
groups of indicators and the strategy of economic transformation. The aim of these policies
is to create a socio-economic and environmental system to assess the impact of economic
activity on the environment.
The publication you are about to recieve, as the name suggests, deals with the link
between the environment and the economy and is a partial output of two VEGA projects
entitled "Diffusion and consequences of green innovations in imperfect competition
markets" and "Migration and the silver economy: economic, political and legal implications
of tackling aging and population migration in EU countries". The aim of the publication is
to assess the global competitiveness of countries from the perspective of the
7
INTRODUCTION
environmental economy in the context of sustainable development, taking into account all
three levels: economic, social and environmental.
The first part of the book is an introduction, starting with the chapter on the
meaning of environmental economics, which is necessary to define the basic concepts. The
second chapter presents a green growth progress as a measure of the socio-economic
dimension using the Human Development Index (HDI) by health and education, and for the
environmental dimension using the Environmental Performance Index (EPI), which
monitors the behavior of countries in the protection of human health and ecosystems. In
the third chapter, the HDI index will require the use of the three dimensions and its
indicators, the comparison of results and the occupation of the Slovak Republic and the
Netherlands within the EU countries. The EPI index will present the international ranking
of the Slovak Republic and the Netherlands on 24 performance indicators related to
Environmental Health and Ecosystem Vitality within the 180 countries. This chapter
concludes with the cluster analysis, which compares countries on the human development
index and the environmental performance index using three models for a selected group
of 15 European Union countries to place them in administrative groups. This part of the
study focuses on the possibility of grouping countries using the clustering method to assess
the sustainable competitiveness of European countries, especially Slovakia and the
Netherlands. The question is whether there is a suitable model for the development of
these countries, which could help to reduce the differences between the average countries
and the average of the EU 27. The approach to this issue began with the question of
whether these countries that have high levels of economic growth also have high levels of
EPI or HDI. It will be examined whether there may be a gradual convergence of countries
belonging to the same group, and various methodologies will be used that address
environmental issues. In the fourth chapter, the methodology of the computable general
equilibrium model is presented and a brief development of selected indicators of air
pollution and emissions is presented. In the second part of this chapter, a simulation of the
European Green Deal agreement using the computable general equilibrium (CGE) model is
presented. The main advantage of this methodology is that it allows for large economic
structures without the need for long time series data, as it is based on spot data in each
research area. This makes it suitable for modeling environmental issues and predicting the
impact of various policies. A drawback of the CGE model is that it provides only a static
picture of dynamic processes. Therefore, in the last chapter, the dynamic integrated
climate economy model (DICE) is presented and used to predict the impact of the
greenhouse tax on macroeconomic aggregates in Slovakia and the Netherlands. This model
makes it possible to combine data from two or more research areas into a single result and
find an ideal combination of economic development and climate change mitigation.
Since the environment is a broad spectrum, this work represents the application of
an economic perspective to environmental management and protection. It is an
introduction to environmental economics, which is one of the ways to illustrate the steps
needed to halt and reverse the process of human-induced environmental degradation. It
describes how human choices affect the quality of the environment, how human values
and institutions shape our demands for improving environmental quality, and, most
importantly, how to design effective public policies to achieve these improvements.
8
FOUNDATIONS OF ENVIRONOMICS
1 FOUNDATIONS OF ENVIRONOMICS
In today's world of constant economic growth and a highly consumerist way of life in so-
ciety, where demand creates further demand, we are increasingly asking ourselves what to
do and how to proceed in order to leave society in the best possible condition for future
generations and to put the environment at as little risk as possible. Recently, we often come
across terms like climate change, global warming, European Green Deal ("Green Deal"),
sustainable development and a variety of issues in modern society and environmental eco-
nomics.
Economics, the everyday practical subject and discipline of our lives, is described as
a study of how and why individuals, groups and organisations make decisions about the
use and distribution of valuable human and inhuman resources. On the other hand, the
environment includes all living and non-living elements and their interactions. The environ-
ment is a platform for all human activities. Human activities affect the environment and
the environment in turn affects humans. Man and his environment are thus dialectically
interconnected. Therefore, it is not surprising that the quality of the environment has be-
come a major concern of the public and the world. The strength of environmental econo-
mics is that it is analytical and considers concepts such as efficiency, trade-offs, costs and
benefits (Marshall, G. R., 2005).
1.1 Environment
New concepts such as the circular economy, a sustainable lifestyle and investment in rene-
wable energy are becoming more important to improve economic efficiency and the qua-
lity of the environment, which requires basic research. A sustainable lifestyle is defined as
a way of life with a lower impact on the environment. It aims to reduce resource consum-
ption and increase the sustainability of the planet. For example, a low-protein (animal) diet
is preferred to reduce the environmental impact of livestock production, and consumers
are encouraged to use green energy from non-fossil fuels to replace traditional energy from
fossil fuels. Although we need to know that lifestyle change is not easy, it offers great
opportunities for the sustainable use of our world's resources (Rizos, V., Tuokko, K.,
Behrens, A., 2017).
1.1.1 The importance of the environment

All human interventions in the environment occur through close subset of causes that di-
rectly change aspects of the environment in ways that can have global impacts on the exis-
tence, development and human activities on Earth (Čermák, O., 2007).
The quality of our life is a global phenomenon that affects billions of people around
the world, both in developing and developed countries. Maslow's pyramid as a hierarchy
of human needs, developed in the 1960s, is considered the starting point in most studies.
As correctly stated in one of the publications on quality of life indicators by Plutchik
(Plutchik, R., 2002), Professor of Psychiatry and Psychology at Albert Einstein Medical
School. He states that this concept can be viewed from different angles. Besides philosophi-
cal, ethical and psychological aspects, human rights, health and environmental aspects also
play an important role.
9
The quality of the environment has always been one of the most important compo-
nents of quality of life. Although this reality is not met with a reaction, measuring a quali-
tative and effective environmental assessment has always been a major challenge for scien-
tists. Evaluating values such as beauty, fresh air, noise, exhaust fumes and traffic conges-
tion cannot be accurately determined because people themselves do not know very well
what they like and what they do not like.
In today's turbulent times, when negative effects on the environment are increa-
sing, especially due to the growth of the economy and society, it is important to protect
the environment. In order to maintain and control these negative impacts, it is necessary
to conduct several analyses of the current state and condition of the environment in indi-
vidual countries as well as in the world. The results of the analyses carried out should form
the basis for the formulation of an environmental policy leading to an overall improvement
in the quality of the environment.
The European Union is at the forefront of global efforts to protect the environment
and combat climate change. These are the most important and challenging areas of EU
policy as they directly affect the quality of life of all citizens. Sustainability is key to ensuring
that our future generations have access to natural resources. A number of environmental
issues still need to be addressed, while some have become even more urgent. Growing
demand for resources has led to faster degradation and loss of biodiversity, while depletion
and pollution of water resources is a serious problem and could affect up to one third of
the world's population by 2025.
1.1.2 Climate changes and their impact

As one of the many effects that have a negative impact on the environment, climate change
is also an increasingly discussed topic nowadays. Todorov defines climate and climate
change as follows: "The issue of climate change is probably the most complex and contro-
versial in the whole science of meteorology. There are no strict criteria for the number of
dry years that would justify the use of the term 'climate change'. There is no unanimous
opinion or agreement among climatologists on the definition of climate, nor on climate
change, climate trends or variations (Todorov, A. V., 1986).
The definition of climate change is given by the Institute for Global Environmental
Strategies as follows: "Climate change is a change in the usual weather in a given place.
This may be a change in the amount of rain that reaches a particular place each year. Cli-
mate change is also the earth's changing climate. It can be a change in the usual tempera-
ture on Earth or a change in the places where rain and snow usually fall. Weather can
change in a matter of hours, but climate change takes hundreds or even millions of years."
(Stillman, D., 2014)
1.1.3 Consequences of climate change in the European region

The effects of climate change are clearly felt in ecosystems, economic sectors and the he-
alth and well-being of people in Europe. All regions are affected, but not in the same way.
Climate change is expected to affect water availability in Europe, putting further pressure
on southern regions already suffering from water scarcity. Other parts of Europe are ex-
pected to experience more frequent flooding, with low-lying regions threatened by severe
storms and rising sea levels. The impacts are mostly negative, although in some cases there
are benefits, such as reduced heating needs and better conditions for agriculture in
10
northern Europe. The map below shows how climate change could affect different regions
in Europe. The data comes from a report by the European Environment Agency (EEA).
Figure 1.1 Consequences of climate change in the European region1

where:
Mediterranean region – large increase in heat extremes, expansion of habitats for southern disease vec-
Boreal region – increase in heavy precipitation events, increase in summer tourism
Continental region – increasing risk of forest fires, decrease in summer precipitation

Atlantic region – increasing damage risk from winter storms, heavy precipitation events
Coastal zones and regional seas – sea level rise, increase in ocean acidity
Arctic region – decrease in Arctic sea ice coverage, decrease in permafrost areas
Mountain regions – temperature rise larger than EU average, high risk of species extinctions
Figure 1.1 gives a detailed overview of what consequences can be expected from
climate change in the different regions of Europe and what effects this could have in each
area. The explanations include some examples of the impacts of climate change, but we
have presented a full table in Appendix A: The impacts of change in each European region.
On 26 October 2018, the European Environment Agency published a report on global
1
Source: Own processing according to the EEA Report (European Environment Agency, 2016)
11
greenhouse gas emissions achieved by the EU over several years. In 2017, the EU achieved
a 21.7% reduction in greenhouse gas emissions compared to 1990 levels. Rough emission
estimates for 2017 indicate a 0.6% increase in emissions compared to 2016. While emissi-
ons in the European Emissions Trading Scheme (ETS) remained relatively stable in 2017,
emissions in sectors covered by the Burden Sharing Decision (ESD) increased, especially in
road transport (European Environment Agency, 2018). Figure 1.2 shows a total of 22 Mem-
ber States that met their GHG emission targets in 2017.
Figure 1.2 EU climate and energy developments up to 20202
The colours indicate whether countries should achieve their climate and energy tar-
gets by 2020. In terms of greenhouse gases, this means that emissions in 2017 covered by
the Effort Sharing Decision (ESD) were above the national target for the ESD for 2017. In
terms of renewable energy, this means that the share of energy from renewable energy
sources (RES) in gross final energy consumption in 2017-2018 was below the indicative level
under the RES Directive. In terms of energy efficiency, this means that primary energy
consumption in 2017 was above a linear indicative level between the 2005 level and the
2
Source: Own processing according to the EEA Report (European Environment Agency, 2018a)
12
2020 national target. Compared to other regions, Europe has a well-established regulatory
framework with long-term policy targets and reliable data on a wide range of issues, from
greenhouse gas emissions and protected areas to air quality and municipal waste. The Eu-
ropean Environment Agency (EEA) works within the framework of this policy and expertise.
The EEA has skills and a network that enable it to have a broad geographical scope, produce
integrated and thematic assessments, and contribute to policy discussions at both EU and
national levels. Assessments from EEA Report No. 16/2018 -Trends and Projections in Eu-
rope 2018: Tracking Progress towards Europe's Climate and Energy Targets indicate prog-
ress in some areas, but also the worrying trends shown on the map in Figure 1.3 (European
Environment Agency, 2018a).
Figure 1.3 Expected progress of EU countries in the field of climate by 20303
In the field of climate change mitigation, for example, the Member States of the
European Union have succeeded in reducing greenhouse gas emissions, thus achieving
short-term goals. Long-term goals, however, require greater reductions at a much faster
pace. Despite our increased efforts, the environment continues to deteriorate and biodi-
versity is being lost. The long-term outlook is even worse. Consumption and production
systems continue to put unsustainable pressure on soils and aquatic ecosystems in Europe
and around the world. Another persistent problem is one of the results of these systems -
pollution. Various pollutants are released into and accumulate in the atmosphere, water
and soil, which can have significant impacts on ecosystems and human health. Although air
quality in Europe has improved significantly in recent decades, it is estimated that pollution
alone still causes more than 400,000 premature deaths in Europe each year. In addition,
some groups are more vulnerable to environmental and climate-related harm than others
(European Environment Agency, 2019c). Table 1.1 provides an overview of Member States'
3
13
progress towards the targets for greenhouse gas emissions, renewable energy and energy
efficiency.
Table 1.1 Member States' progress towards energy targets 4
1.2 The interconnection of the economy and the environment

Man cannot exist in isolation, for man's life is connected with other animate and inanimate
things. His life also depends on social, political, economic, ethical, philosophical and other
aspects of the social system. In fact, people's lives are shaped by their environment. Envi-
ronment means "all conditions, circumstances and influences surrounding and affecting
the development of an organism or group of organisms" (Schwarz, CH. F., Thor, E. C., Elsner,
G. H., 1976). It can be assumed that the complex of physical, chemical and biotic factors
acting on an organism or ecological community ultimately determines its form and survival.
The environment, environmentalists, environmental studies are terms that have
come into everyday use in recent years. Environmentalists are those who love and care for
the environment and are aware that any damage to the environment affects the lives of
living beings. The interests of environmentalists are varied and the former support the need
for environmental education and try to popularise it.
4
14
The words ecology and economy come from the same Greek root "Oikos", meaning
dwelling. Ecology is the study of the relationship or interdependence between living orga-
nisms and their environment. So the Greek root ecology is about "household and nature",
while economics deals with the "human household" (Karpagam, M., 2001). In a society
where all living organisms live in harmony, there is ecological balance. The problem, ho-
wever, is that humans, in their quest to live better, have disturbed the ecological balance,
endangering nature and themselves. We often find that there is a conflict between
"economy" and "ecology". Ecology explores the harmony between nature and humans,
while economics explains the inconsistency between humans and nature. The inconsis-
tency arises from the incompatibility of the basic ecological principle of stability as a prere-
quisite for the sustainability of the ecological system and the economic principles of corpo-
rate profitability (Callan, S. J., Thomas, J. M., 2010). To restore harmony, to reconcile the
interests of humans and nature, an ecological turnaround in the orientation of economic
policy is required. Environmental studies would help to create this awareness among
people.
The relationship between the economy and the environment is generally explained
in terms of "material balance models", originally developed by Kneese and Ayres in 1970.
Material balance models are based on the first and second laws of thermodynamics. These
models view the entire economic process as a physically balanced flow between inputs and
outputs (Kneese, A. V., Ayres, R. U., DÁrge, R. C., 1970). The inputs are endowed with the
physical properties of the energy obtained from the sun. The output resulting from the
input is endowed with the same level of energy. Similarly, waste from consumption activi-
ties. Materials and energy used for production and consumption activities are taken from
the environment and returned to the environment as waste. As long as this balance is ma-
intained, there are no environmental problems (Callan, S. J., Thomas, J. M., 2010). The
material balance model of the economy is shown in Figure 1.4.
Figure 1.4 Material balance model5
In the material balance figure, production residues represent the pollution that re-
mains in the environment after a process. They can be delayed but not prevented, not even
by regeneration (recovery), recycling and reuse, which are shown in the model as internal
flows. 3R - Recovery, Recycling and Reuse.
5
Source: Own processing according to Knees , Ayres , DÁrge (1970)
15
Figure 1.4 shows that the environment is a supplier of all types of resources, such
as renewable and non-renewable resources, and also serves as a sink for waste treatment.
Households and companies are connected to the environment with which they interact and
on whose resources they depend. They release the residues of consumption and pro-
duction to nature, which is capable of absorbing all forms of waste. As long as the Earth is
disturbed by excess waste, the Earth is able to clean up natural waste. When the Earth does
not respond to 3Rs (Recovery, Recycling, Reuse), signs of environmental damage appear.
So there is a rhythm to the use and reuse of resources for humanity. The land cannot res-
pond properly to the man-made waste or artificial waste that accumulates around us, and
therefore the rate of environmental damage is increasing. If the Earth is able to eliminate
pollution from waste, we will not have an environmental problem. However, the Earth has
reached a saturation point and is unable to clean up several types of waste, resulting in
serious environmental problems around the world.
The effect of the conversion of material inputs and energy into output is subject to
several changes in the biosphere. The transformation process can be better explained by
the laws of thermodynamics, and in this context thefirst two laws of thermodynamics need
to be mentioned.
1. The first law of thermodynamics, often referred to as the Law of Conservation of Mat-
ter and Energy, states that energy, like matter, can neither be created nor destroyed,
but at the same time it is possible to transform forms of energy. The law emphasises
that the total amount of energy created by production and consumption activities
must equal the total amount of original energy obtained from nature. The first law of
thermodynamics therefore assumes the accounting identities of the material balance
model (Pianka, E. R., 2019).
2. The second law of thermodynamics is also called the Law of Entropy. Entropy is usually
considered a measure of the unavailability of the utility of energy or simply waste.
When one form of energy is transformed into another (e.g. when thermal energy from
coal is converted into electricity), energy is wasted and the volume of waste depends
on the technological process. Entropy is low when materials and energy are well
structured and organised. When a piece of coal is kept idle, entropy is low, but when
it is burned, the same piece of coal is exposed to high entropy because the heat and
carbon dioxide are dispersed. The second law states that entropy is high when material
input and energy are used for production and consumption activities. Economic activi-
ties contribute to transforming low-energy resources and energy into waste with high
entropy, i.e. resources into waste. Economic activities cannot be stopped due to high
entropy, but at the same time it is possible to introduce a low value of entropy into the
economic system through recycling and waste management. The use of natural reso-
urces with minimal waste or environmental damage, is considered a key issue for
sustainable development. It is a development path that can meet the needs of the cur-
rent generation without compromising the needs of those to come (Makhijani, A.,
2001).
The environment fulfils the following economic functions:

1. The environment is the supplier of all forms of resources.
2. Waste is cleaned by the environment.
3. The environment preserves genetic diversity and stabilises the ecosystem.
16
The environmental functions mentioned above are interconnected. In the name of

economic activity, environmental resources are transformed into economic goods
(transforming low entropy resources into high entropy resources). Waste is generated in
this transformation process. Resources are also depleted through overuse. When the envi-
ronment is disturbed by overuse and a large amount of waste, it can no longer fulfil a third
function. This also affects the life and existence of flora and fauna. Therefore, an integrated
approach to the study of economics, ecology and the environment is necessary, as they are
all closely interconnected (Callan, S. J., Thomas, J. M., 2010).
1.2.1 Environmental and natural resource economics

Arun Balasubramanian stated that "economics is no longer a science of production and
distribution alone, but must also take into account the ecological consequences of econo-
mic activities, which may affect both production and distribution" (Balasubramaniam, A.,
1984). This means that the economy as an entity cannot exist in isolation, that it cannot
only examine how goods and services are produced, but that it must also consider the en-
vironmental impacts of resource use. These impacts can take the form of externalities, pol-
lution, depletion and much more. Environmental economics can therefore be defined as
"the part of economics that deals with the interrelationship between the environment and
economic development and examines the ways in which the environment or blocked eco-
nomic growth are disrupted." (Sankaran, R., 2012) It is thus an area of economics that deals
with the effects of human-nature interactions and finds human solutions to maintain har-
mony between humans and nature.
The study of environmental economics received little attention before the 1980s.
Instead, the theory that became popular among social scientists was called the Resource
Economics. Until the early 1950s, modern economists neglected the supply and conserva-
tion of natural resources. Orris C. Herfindahl was the first to go beyond descriptive explo-
ration and consider mineral resources as economic goods. Natural resource economics was
therefore concerned with the production and use of natural and mineral resources, both
renewable and non-renewable. The pollution aspect of resource use was not a problem for
natural resource economists because their aim was to observe resource economics as flows
with dynamic factors (Herfindahl, C. O., 1974).
The environmental economy deals with the impact of economic activities on the
environment, the importance of the ecosystem to the economy and suggests appropriate
ways to regulate economic activities to achieve equilibrium in society. The economy of na-
tural resources does not deal with the impact of production and consumption on the envi-
ronment. Economists point to the "right level of pollution" that society can maintain, and
in order for this "balanced" level of production and pollution to be achieved, economists
have recommended economic instruments such as the principles of the market mecha-
nism. The reason is that the market does not balance in the case of the environment and
the market fails because the environment is a public good. The allocation of actual values
to environmental goods is only possible through the application of market principles
(Hanley, N., Shogren, J. F., White, B., 2007).
1.2.2 Environmental economics and environment policy

The concern about the environment is largely due to the coincidence of high income
and high population density. If there were only a few people in the world, the earth's envi-
ronment would be able to absorb most of the waste. The demand for the quality of the
17
environment depends on income, which is one of the reasons for the higher pollution and
environmental damage associated with developing countries, where it completely domina-
tes. Higher income groups consider the environment a luxury good. For marginalised
groups and the poor, the environment is a constant source of food and shelter. Concern
for the environment is in their blood and therefore they generally do not harm the envi-
ronment, but their main concern is to earn a living and put environmental issues last. In the
Third World countries, the unacceptable theory is popularised by the rich meaning the poor
are the cause of environmental damage because these economies have higher populations.
In response to this argument, leaders of Third World countries point out that the environ-
ment of these countries is being damaged by the overuse of resources to satisfy the de-
mands of the rich West.
It has been noted that there is a positive correlation between income and demand
for environmental quality. Higher demand for environmental quality is reflected in higher
environmental damage. That is, as income (Y) increases, environmental damage will also
increase. However, this theory is not considered appropriate for a developed economy. In
these countries, higher income levels support higher levels of environmental protection,
but this argument does not always hold. When rich countries grow significantly, they are
dependent on resources from other developing countries, so there is higher environmental
damage (Karpagam, M., 2001). The relationship between income and environmental
quality is shown in the following figure.
Figure 1.5 Relationship between income and demand for environmental quality6
Figure 1.5 shows that as uptake increases from Y to Y1 and then to Y2 , demand for
environmental quality increases from Q to Q1 and shifts to Q2. In fact, there is a positive
correlation between income and environmental quality. Income and environmental
damage are also positively correlated.
There are several methods by which environmental economy can intervene:
1. Allocating of environmental costs to the resources used.
2. Using price as a tool to avoid wasting resources.
3. Allocation of environmental resources based on actual costs and actual revenues.
4. Resource protection through environmental management.
6
Source: Own processing according to Karpagam (2001)
18
The methods mentioned above are essentially economic in nature. However, due
to internal and external factors or socio-political reasons, countries are forced to apply eco-
nomic principles when valuing resources. Environmental economics plays a key role in al-
locating real costs to limited resources as well as in popularising environmental manage-
ment (Helfand, G. E., Berck, P., 2018).
It follows from the above that specific environmental policies are needed to address
critical issues and that appropriate environmental policies should be formulated to cover
each country and address transnational environmental problems. For example, India has
several environmental laws that have been adopted by states and governments of the Eu-
ropean Union. This means that an appropriate environmental policies are needed to ad-
dress the recurring environmental problems and to avoid local or regional environmental
threats that are likely to occur. Each state and central government should declare its envi-
ronmental policy from time to time so that the level and extent of pollution can be minimi-
sed by law (Bell, R. G., Russel, C., 2002).
1.3 EU strategies in relation to the environmental economy

The European Union has not yet developed a common strategy focusing exclusively on the
green economy, but fundamental elements of the green economy concept are relatively
well integrated into the EU's main strategic documents, while they focus on achieving
green/sustainable growth rather than a green economy:
• A strategy for smart, sustainable and inclusive growth - Europe 2020,

• Roadmap for the transition to a competitive low-carbon economy in 2050,
• Our Environment, Our Natural Capital: an EU Biodiversity Strategy to 2020,
• A roadmap for a resource-efficient Europe
• EU Environment Action Programme (EAP) 2020 – Living well within the limits of our
planet.
The Europe 2020 strategy focuses mainly on 3 key priorities, the first of which des-
cribes the economy based on innovation and knowledge or smart growth. The second key
priority for Europe is more efficient use of resources to support a green and competitive
economy or sustainable growth. And the last third key priority is to support employment
in the economy as a whole to ensure social and territorial cohesion or inclusive growth
(European Commission, 2010).
As part of this strategy, the European Commission has proposed 7 flagship
initiatives to support progress in each priority area:
• Innovation Unioni - to improve the framework conditions and access to finance for
research and innovation to ensure that innovative ideas can be turned into products
and services that create growth and jobs.
• Youth on the Move - o improve the performance of education systems and facilitate
young people's entry into the labour market.
• A Digital Agenda for Europe - to accelerate the roll-out of high-speed internet and
reap the benefits of a digital single market for households and businesses.
• Resource Efficient Europe - to decouple economic growth from resource use, sup-
port the transition to a low-carbon economy, increase the use of renewable energy
sources, modernise our transport sector and promote energy efficiency.
19
• An Industrial Policy for the Globalisation Era - to improve the business environment,
especially for SMEs, and support the development of a strong and sustainable in-
dustrial base that can compete globally.
• An Agenda for New Skills and Jobs - to modernise labour markets and empower
people to develop their skills throughout the lifecycle, to increase labour force par-
ticipation and better match labour supply and demand, including through labour
mobility.
• European Platform Against Poverty - to ensure social and territorial cohesion so that
the benefits of growth and employment are widely shared and people experiencing
poverty and social exclusion are enabled to live in dignity and participate actively in
society (European Commission, 2010).
The roadmap for moving to a more competitive low-carbon economy prepares

carbon economy prepares the EU to reduce its internal emissions by 80% by 2050 compa-
red to 1990 levels, contributing to the near elimination of CO2 emissions and providing
alternative ways of using transport resources. or heating (European Commission, 2011).
The share of low-carbon technologies in the electricity mix is expected to increase
from around 45% today to around 60% in 2020, including through meeting the renewable
energy target, to 75 to 80% in 2030, and nearly 100% in 2050. Various forms of low carbon
energy sources, their supporting systems and infrastructure, including smart grids, passive
housing, carbon capture and storage, advanced industrial processes and electrification of
transport (including energy storage technologies) are key components which are starting
to form the backbone of efficient, low carbon energy and transport systems after 2020 (EC,
2011a).
In the EU, only 17 % of habitats and species and 11 % of key ecosystems protected
under EU legislation are in a favourable state . This is in spite of action taken to combat
biodiversity loss, particularly since the EU 2010 biodiversity target was set in 2001. The
benefits of these actions have been outweighed by continued and growing pressures on
Europe's biodiversity: land-use change, over-exploitation of biodiversity and its
components, the spread of invasive alien species, pollution and climate change have either
remained constant or are increasing. Indirect drivers, such as population growth, limited
awareness about biodiversity and the fact that biodiversity's economic value is not
reflected in decision making are also taking a heavy toll on biodiversity.
The main goal of our life insurance, our natural capital strategy is to halt the loss
of biodiversity and the degradation of ecosystem services in the EU by 2020, and restoring
them in so far as feasible, while stepping up the EU contribution to averting global
biodiversity loss. Reversing biodiversity loss and speeding up the EU's transition towards a
resource efficient and green economy.
The Roadmap to a Resource Efficient Europe was developed under the Europe 2020
flagship initiative. This Roadmap builds upon and complements the other initiatives under
the flagship, in particular the policy achievements towards a low carbon economy, and
takes into account progress made on the 2005 Thematic Strategy on the Sustainable Use
of Natural Resources and the EU's strategy on sustainable development. The Roadmap
should also be seen in the context of worldwide efforts to achieve a transition towards a
green economy.
Europe has enjoyed many decades of growth in wealth and wellbeing, based on
intensive use of resources. But today it faces the dual challenge of stimulating the growth
20
needed to provide jobs and well-being to its citizens, and of ensuring that the quality of this
growth leads to a sustainable future. To tackle these challenges and turn them into
opportunities our economy will require a fundamental transformation within a generation
– in energy, industry, agriculture, fisheries and transport systems, and in producer and
consumer behaviour.
The Vision of this plan is that by 2050 the EU's economy has grown in a way that
respects resource constraints and planetary boundaries, thus contributing to global
economic transformation. Our economy is competitive, inclusive and provides a high
standard of living with much lower environmental impacts. All resources are sustainably
managed, from raw materials to energy, water, air, land and soil. Climate change goals are
achieved while biodiversity and ecosystem services based on climatic conditions are
protected, valued and significantly restored (European Commission, 2011).
The main objective of the proposed seventh EU Environmental Action Program 2020
- Living well, within the limits of our planet is to strengthen the contribution of
environmental policy to the transition to a low-carbon, resource-efficient economy that
protects and enhances natural capital and promotes citizens' health and well-being. The
program provides an overarching framework for environmental policy up to 2020 and
identifies 9 priority objectives to be achieved by the EU and its Member States:
1. Protecting, conserving and enhancing the EU's natural capital.
2. Transforming the EU into a resource-efficient, green and competitive low-carbon
economy.
3. Protecting EU citizens from environmental pressures and risks to their health and
well-being.
4. Maximising the benefits of EU environmental legislation.
5. Improving the knowledge base for environmental policy.
6. Ensuring environmental and climate policy investment and adequacy of prices.
7. Improving environmental integration and policy coherence.
8. Strengthening the sustainability of EU cities.
9. Increasing the EU's effectiveness in tackling regional and global environmental chal-
lenges (European Commission, 2013).
1.3.1 The European Green Deal – more sustainable EU economy

The European Green Deal for the European Union renews the Commission's commitment
to address climate, climate change and the environmental challenges that are at the heart
of this generation. The atmosphere is warming and the climate is changing every year,
threatening the loss of one million of the eight million species on the planet, while forests
and oceans are also being destroyed and polluted (European Commission, 2019). The
Green Deal for Europe serves as a response to these challenges and as a new growth
strategy that aims to transform the EU into a just and prosperous society with a modern,
competitive and resource-efficient economy. The Agreement also aims to protect, preserve
and increase the EU's natural capital and to protect the health and well-being of citizens
due to the risks and impacts of the environment. The Green Agreement is an integral part
of the draft strategy for the implementation of the " Agenda 2030" and the Sustainable
Development Goals (GLOBSEC, 2020). Figure 1.6 shows the elements of a "Green Deal":
21
Figure 1.6 European Ecological Convention7
1.3.2 The concept of Green Growth

With the success of the 2030 Agenda for Sustainable Development and the Paris
Agreement on climate change, the global momentum for sustainable development has
been renewed. At the same time, people around the world are concerned about lagging
growth, inequality, jobs and globalisation. Some fear that inconsistent environmental
regulation in a globalised economy could exacerbate socio-economic difficulties
Productivity growth, green growth and inclusive growth are three key aspects of the
OECD's efforts to help countries sustain economic growth and improve welfare in the
context of sustainable development. To assess the overall sustainability of the current
growth model, the links between these aspects will be re-examined in 2019-2020 (OECD,
2019a).
Figure 1.7 Three key aspects of the effort8
The Organisation for Economic Co-operation and Development (OECD) has issued a
report on organic growth for the years 2019-2020 that provides a policy framework that is
applicable and can be adapted to different national circumstances. It reflects the
horizontal, cross-cutting nature of cooperation and consultation in more than 20 OECD
committees to ensure the implementation of the Green Growth Strategy
7
Source: European Commission (2019)
8
Source: OECD (2019a)
22
Long-term forecasts suggest that continuing 'business as usual' growth without

policy changes will have serious impacts on the climate, natural resources and ecosystems
on which economic activities depend. This means that countries will have to move to a new
environment and the sustainable use of natural resources while achieving a significant
increase in living standards and a reduction in poverty.
"Green growth is a way to support economic growth
and development while protecting natural resources so that we have a chance to continue
to use these resources and the environmental services on which our prosperity depends."
(OECD, 2011a)
It is therefore necessary to support investment and innovation that will provide the
basis for sustainable green growth and thus open up new economic opportunities. In
economic terminology, the environment is also referred to as natural capital, as it is the
basis of our lives
Current patterns of economic growth continue to undermine this natural capital. If
the situation does not change, this will mean increasing water scarcity, deteriorating access
to resources, more pollution, climate change and loss of biodiversity. These tensions may
weaken future growth prospects for at least two reasons:
• It is increasingly costly to replace physical capital with natural capital. For instance,
when water becomes scarce or more polluted, we need more transport and tre-
atment infrastructure.
• Change is not necessarily smooth and predictable trajectory. For instance, some fish
stocks may suddenly collapse after years of slow decline (Piatrik, M., Rusko, M.,
Ferencz, V., 2016).
The overall goal of green growth is to contribute to increasing human prosperity by

promoting the efficient use of natural resources and economic activities that benefit
society in the long term.
In 2009, the OECD committed to a green growth strategy that promotes economic
growth and development while ensuring that natural resources continue to provide
ecosystem services for the benefit of our well-being. Achieving this goal requires greater
support for investment, competition and innovation which will support sustainable growth
and the emergence of new economic opportunities. Green Growth provides both a policy
strategy for economic change and a monitoring framework with a proposed set of
indicators, which we have divided into 4 main groups of indicators:
1. Indicators monitoring environmental and resource productivity,
2. Indicators monitoring the natural asset base,
3. Indicators monitoring the environmental quality of life,
4. Indicators monitoring economic opportunities and policy responses (OECD,
2020).
Identification and further specification of individual environmental indicators are
given in the following chapters of the publication.
23
Table 1.2 List of evaluated indicators and their development9

Indicator name Trend
evaluation
1. Environmental and resource productivity
CO2 productivity and energy CO2 productivity +/-
productivity Energy productivity +
Energy intensity in economic sectors +/-
Share of energy from RES in gross domestic energy +/-
consumption
Contribution of electricity produced from renewable +
energy sources
Resource productivity Material productivity +
Waste generation (excluding municipal waste) and +/-
the rate of their recovery
The amount of generated municipal waste and -
the rate of their recovery
Nitrogen and phosphorus balance +/-
Water productivity +/-
2. The base of natural wealth
Renewable resources Development of forest land areas +
Forest resources and the intensity of their use -
Intensity of using surface water resources -
Non-renewable resources DEU for minerals +
Biodiversity and ecosystem Endangerment of plant species N/A
Endangered species N/A
Changes in land use -
Soil erosion +/-
3. Environmental quality of life
Environmental health Exposure of the population to air pollution -
and risks by airborne dust (PM10)
Air quality in urban areas +
Access to environmental Life expectancy at birth +
services Connecting the population to public sewerage +/-
Connecting the population to the public water supply +/-
4. Economic instruments and policy reactions
Prices and taxes Share of environmental taxes in total tax revenues +/-
Share of environmental taxes in GDP +/-
Prices of electricity and natural gas for households +/-
Average price for production, distribution and supply +
of drinking water
Innovation Expenditure on research and development in selected +
sectors
where :
+ positive trend , +/- fluctuating or stable trend , - negative trend
N/A - unavailable or not applicable
9
Source: Own processing according to the OECD (2011b)
24
MEASURING GREEN GROWTH PROGRESS AND CLUSTER ANALYSIS
2 MEASURING GREEN GROWTH PROGRESS AND CLUSTER

ANALYSIS
In the next chapter, we came across the question of quantifying the broad concept of
environmental economics with a link to economic development and its sustainability. The
preliminary conclusion was that ubiquitous models promising prosperity and prosperity
would be insufficient in the absence of verifiable results. The analysis of our environmental
indicators in the following chapters confirms or disproves the assumption that the various
indicators are also unable to determine and assess their share or progress in achieving
environmental objectives in a comparable way. Therefore, we have decided for
sustainability indices that are compiled comprehensively and consistently from basic data.
This chapter of the publication deals with the methodological procedure and the
description of the objects of research as well as the justification of selected countries of
the European Union to which the cluster analysis is applied.
The main data sources are the OECD reports on green growth indicators, the CIESIN
database on sustainable development indices, the UNDP database on the HDI index and
the Yale, Columbia University and SEF cooperation reports on the EPI index.
The core of the analysis is the application of methods to examine selected green
growth indicators, the HDI and the EPI indices, as well as hierarchical clustering methods in
a set of 15 EU countries, including Slovakia and the Netherlands. For better orientation and
clarity of the data, they were processed in the form of tables and graphs. The spreadsheet
editor Microsoft Excel was used to create them, and the statistical software SAS Enterprise
Guide 4.2 was used to process the data for cluster analysis.
The application part of the publication is divided into three parts. The first is the
already mentioned cluster analysis and the analysis of measuring the progress of green
growth through selected indices. The second part presents the use of the computable
general equilibrium model for modelling CO2 emissions in different sectors of the economy.
The fourth chapter and the final, third part of the application is based on the model DICE
and again compares Slovakia and the Netherlands.
In the first part of the application we decided to study 2 European countries - the
Slovak Republic and the Netherlands, which are the main objects of the research. One
country is not a company, so it is more difficult to focus on the most important things that
might come out of our research. The reason why we chose to compare these countries is
their very similar distribution in terms of area. Slovakia is our home country and the
Netherlands as a European exchange country helped us to answer several questions,
especially the key aspects of sustainable development in our plans and how even a small
country can be successful and friendly to protect the environment and prevent or combat
the threats of climate change.
Europe (Figure 2.1), the second smallest of the 7 continents, consists of the Eurasian
Peninsulas which extend west (the large area shared with Asia) and occupying almost one-
fifteenth of the Earth's total area. It is bordered to the north by the Arctic Ocean, to the
west by the Atlantic Ocean and to the south (from west to east) by the Mediterranean Sea,
the Black Sea, the Tersko-Kumsk lowlands and the Caspian Sea. The eastern border of the
continent (from north to south) runs along the Ural Mountains and then southwest along
the Emba River, which ends at the northern Caspian coast.
25
Figure 2.1 Location of Europe on the world map 10
Europe includes 51 independent states and is one of the world's most economically
and socially developed regions with a total area of 10,180,000 km2 and a population of
747,522,700. Russia, Kazakhstan, Azerbaijan, Georgia and Turkey are transcontinental
countries partly located in Europe and Asia. Armenia and Cyprus are politically considered
European countries, although they are geographically located in West Asia. The largest
European country is Russia (37% of the total continental region) and the smallest country
is the Vatican, which occupies a small area in the centre of Rome (National Geographic,
2017). Table 2.1 shows the basic characteristics of Slovakia and the Netherlands.
Slovakia is a landlocked country in Central Europe, characterised by a mountainous
landscape in the north and lowlands in the south, with an area of 49,035 km2 and a
population of 5,458,968 who speak Slovak. There are 2,891 independent municipalities, of
which 138 are cities, representing a relatively dense network of settlements. The largest
city and also the capital is Bratislava, followed by Košice, Prešov, Žilina, Nitra, Banská
Bystrica and Trnava, with more than 57 percent of the total population living in cities.
Slovakia borders Poland to the north, Ukraine to the east, the Czech Republic to the west,
Hungary to the south and Austria to the southwest. In Slovakia, mountains occupy a
significantly larger part of the territory and up to 71.4% of the territory is part of the
Carpathian Mountains according to the geomorphological classification. Only the Danube,
the Záhorie and the Eastern Slovak lowlands are part of the Pannonian Basin, which
occupies 28.6 % of the territory of Slovakia (Wieckowski, M., Michniak, D., 2012). For
Slovakia, which is located in the mild northern zone, the alternation of four seasons is
typical, with continental and oceanic climate influences occurring without transition. Every
year, four different seasons alternate, starting with spring in March and continuing with
summer from 22 June. The Slovak autumn begins on 23 September, and the four seasons
end with the last cycle on 21 December, the day when the three-month winter season
begins.
As for Slovakia's history, it became an independent country after the peaceful
dissolution of Czechoslovakia on 1 January 1993, when it also gained state independence.
The Slovak Republic became one of the two complete successors of the Czechoslovak and
Slovak Federal Republics and followed the basic bilateral and multilateral contractual
10
Source: Own processing according to the Free world map (2005)
26
documents of its state predecessor. Slovakia thus became a new player on the international
scene and at the same time a new geopolitical factor in Central Europe. Due to its size and
population, it was included in the category of small European states. Ten years later, on 16
April 2003, it signed the Schengen Agreement. On 21 December 2007, the implementation
of this agreement began (Duleba, P. A., Wlachovský, L. M., 1998).
In 2018, Slovakia's GDP was 89.7 billion EUR and we calculated GDP per capita using
the following equation 11
    2018 89,700,000,000 
= = 16,431.68   
  2018 5,453,014 
The Slovak Republic is a country with a limited base of natural resources, an
important manufacturing sector and a growing consumption of materials. At present, the
Slovak economy is proud of its strong automotive industry and companies focused mainly
on exports to Germany, as well as the engineering industry and agricultural primary
production.
The Netherlands is a country located in Western Europe. It is bordered by the North
Sea in the north and west, bordered by Germany in the east and Belgium in the south. The
country also shares maritime boundaries with France and the United Kingdom. The
Netherlands is part of the Kingdom of the Netherlands, in fact one of
its constitutive countries, consisting of twelve Provinces of the Netherlands in north-
western Europe and three islands in the Caribbean: Aruba, Curaçao (and Bonaire) and
Sint Maarten. The geography of the Netherlands is unusual because its land was extracted
from the sea and is below sea level, protected by dikes. It is a small country with a total
area of 41,543 km2 and a population of 17,134,872, for which the mother tongue is
Dutch. The country is divided into 12 different provinces and 388 municipalities, where
each province has its own government, led by the governor and his assemblies. The
Netherlands is the low country, of which more than a quarter lies below sea level, and more
than half of the territory lies only 1 meter above sea level. In order to prevent floods at sea,
the Dutch have built an incredible system of dams (a total length of 2,400 km), which open
and close according to water levels and seasons. Many parts of the sea and wetlands have
also been dehydrated to protect the landscape from floods and increase the agricultural
area. An interesting fact about the Netherlands is that it is characterised by two capital
cities: Amsterdam and The Hague. In 1814, after the defeat of the French, Amsterdam
became the capital of an independent Netherlands, and The Hague is the administrative
centre of both the government and the court. Capital Amsterdam is considered the most
multicultural city in the world, where is over 150 nationalities from every corner of the
world (Fokkema, D., Grijzenhout, F., 2004).
The Netherlands has a mild maritime climate influenced by the North Sea and the
Atlantic Ocean, with cold summers and mild winters. The history of the Netherlands as a
country begins with the story of how it really became a country, because until the 19th
century, the Netherlands was only a river delta divided into different regions, most of which
had their own government. It was not until March 29, 1814, that the nation of the United
Kingdom of the Netherlands was born during the reign of the Orange-Nassau family
(Fokkema, D., Grijzenhout, F., 2004). In 2018, the GDP of the Netherlands was 890.942
billion Euros and GDP per capita were determined based on12:
11
Source: Own processing according to the OECD (2018a)
12
Source: Own processing according to the OECD Data. Gross domestic product (2018a)
27
ℎ     2018 890,942,470,000 

=
  2018 17,059.560 
= 52,225.41   
The Netherlands has a strong and stable economy, despite the constant fight
against the sea, which is threatening them with floods, thanks to the efficient and hard-
working nature of its population. The country has a modern maritime transport system and
an extensive navy. Agriculture, which is based primarily on the production of milk, flowers,
fruit and wheat, is one of the best in the world. Another traditional sector of the economy
is fishing, and the most important industries are steel, chemicals, food products, electronics
and microelectronics. The largest and fastest growing sector in the Netherlands are
services in which is almost 80 % of the workforce (OECD, 2016).
Table 2.1 Basic information: Slovakia and the Netherlands13
Country Area (km2) Population Climate 2018 GDP (billion Eur)

Slovakia 49,035 5,458,968 moderate 89.7
Netherlands 41,543 17,134,872 oceanic 890.942
2.1 Selected indicators of green growth

The next chapter provides an overview of the progress towards green growth in
OECD countries, which can be measured by a set of selected indicators describing
productivity and carbon material, environmental multifactor productivity, and population
exposure to air pollution. They are complemented by indicators on land use, environmental
innovation and taxes, as well as income levels and inequalities.
Today, most countries use the available natural resources and environmental
services productively. They have reduced their pollution and some of the environmental
risks to which their populations are exposed. Many countries have stabilised the extraction
of renewable natural resources (timber, fish, freshwater) and are moving towards more
sustainable management practises. Numerous examples illustrate that progress in green
growth is compatible with maintaining economic prosperity and can promote human well-
being. Interestingly, several countries are at the forefront of green growth, but no country
leads in all areas. Rather, they often make progress in one area while stagnating in other
areas. According to the OECD results, progress often appears to be insufficient, as
evidenced by the shrinking natural degradation base and its deterioration. The following
Figure 2.2 shows the analysis of 46 countries in terms of the balance of economic growth
and environmental pressures for 2015, possibly for another available year.
13
Source: Own processing according to National Geographic (2017) and OECD (2018a)
28
Environmentally Adjusted Multifactor

Productivity
Material Productivity
Loss of Land Use
(based on Production)
CO₂ Productivity
Low Exposure to Air Pollution
(based on Demand)
CO₂ Productivity
Environmentally Oriented Innovations
Loss of Income Inequality Environmentally Oriented Taxation

GDP Per Capita
Luxembourg Iceland Denmark Norway Netherlands
Figure 2.2 Overall highest results in the field of green growth in 201514
Where: Each axis represents the range of observed results among the 46 studied countries. The best result
(leader) is located on the outer border of each axis, the worst result is in the origin. For each indicator, the
performance of each country is then evaluated as the "distance from the leader". The overall result
represents the average of all selected indicators.
Based on Figure 2.2 and its remarks, the lines show that Luxembourg, Iceland,
Denmark, Norway and the Netherlands have achieved the best overall results at the top of
green growth. These countries are in positive territory on most of the green growth
indicators assessed. Denmark, for example, is a leader in environmental technology and
innovation and has high level of environmental taxation. However, its inhabitants are
exposed to higher levels of air pollution than in Norway and Iceland. Luxembourg's
economy has higher material productivity and the country has a higher standard of living,
but shows less positive results in income distribution. On the other hand, the Netherlands
stands out for its low level of income inequality, which could confirm that as the level of
the rate of income inequality tends to decrease (Fifeková, E., 2017).
Figure 2.3 aims to highlight the countries that have achieved the greatest overall
improvement in green growth between 2000 and 2015. These countries include Denmark,
Estonia, the United Kingdom, Italy and Slovakia. Among these countries, the United
Kingdom and Italy have made the greatest improvements in material productivity, the
Slovak Republic and Denmark in the area of carbon productivity, Italy and Estonia in the
area of environmental taxes, and Denmark and Estonia in the area of Environmental
innovation. The most efficient countries differ according to each of the indicators, while
most countries have made improvements in at least some green growth indicators. This
diversity of achievements between countries underlines the need to assess progress
towards green growth using a set of multiple indicators.
14
Source: Own processing according to the OECD (2017), European Commission (2017), Solt (2009), World
development indicators (World Bank Group, 2016)
29
Environmentally Adjusted
Multifactor Productivity
Material Productivity
Loss of Land Use
CO₂ Productivity Low Exposure to Air
(based on Demand) Pollution
CO₂ Productivity Environmentally Oriented

(based on Production) Innovations
Environmentally Oriented
Loss of Income Inequality
Taxation
GDP Per Capita
Denmark Estonia United Kingdom Italy Slovakia
Figure 2.3 Overall largest improvement in green growth (2000 – 2015)15

Where : These improvements are determined by comparing the results from 2015 to 2000 (as a change in
"distance from the leader"). The black dashed line indicates no changes; values below this level indicate a
deterioration.
The developed set of relevant, internationally comparable indicators should serve
as a benchmark when considering further steps in the implementation of green growth and
a comprehensive assessment of the future direction of the economy. The selection and
methodology of the indicator assessment is based on a set of indicators proposed by the
OECD and elaborated in the report "Towards Green Growth" of February 2011: The
Organisation for Economic Co-operation and Development recommends that countries
select key indicators that can be representative of the main areas of the green economy.
Table 2.2 Groups of indicators and evaluated areas of green growth16
Group of indicators Evaluated area

1) Indicators monitoring environmental Carbon and energy productivity
and resource productivity Productivity of resources: materials, nutrients, water
Multifactor productivity
2) Indicators monitoring the natural Renewable resources: water, forests, fish
asset base Stocks of non-renewable raw materials: rocks, minerals
Biodiversity and ecosystems
3) Indicators monitoring the Environmental health and risks
environmental quality of life Environmental services and equipment
4) Indicators monitoring economic Technology and innovation
opportunities and policy responses Environmental goods and services
International financial flows, prices and turnover
Skills and training, Management
Socio- economic aspects of growth Economic growth and structure
Labour productivity and trade
Labour market , education and income
Socio- demographic trends
15
Source: Own processing according to the OECD (2017), European Commission (2017), Solt (2009), World
development indicators (World Bank Group, 2016),
16
Own processing according to the OECD (2011b)
30
Table 2.2 presents the main areas of monitoring and the four main groups of indicators
suitable for assessing the achievement of green growth objectives (OECD, 2011b).
Figure 2.4 shows a group of indicators and evaluated areas of green growth supplemented
by general indicators that describe the socio-economic context and characteristics of green
growth.
Figure 2.4 Socio-economic relations and groups of green growth indicators 17

Where:
1. Indicators monitoring environmental and resource productivity,
2. Indicators monitoring the natural asset base,
3. Indicators monitoring the environmental quality of life,
4. Indicators monitoring economic opportunities and policy responses.
The pre-selection of indicators was based on existing work in the OECD, other
international organisations, member and partner countries. The indicators were selected
according to their policy relevance, analytical reliability and measurability. The proposed
file is considered a basis and not as a result. Therefore, it is flexible enough to be adapted
by countries to different national contexts.
OECD member countries have developed their national green growth indicators as
a need,based on the summary of the 2011 National Green Growth Seminar, which are used
to meet the OECD's recommendations in environmental performance assessment. The
Slovak Republic is also one of the OECD member countries mentioned. The first country to
present its indicators was the Netherlands, followed by the Czech Republic and South Korea
(OECD, 2011c).
In Slovakia, the Office of Environmental Analysis (OEA), which is directly managed
by the Slovak Environment Agency (SEA), a specialised organisation of the Ministry of
Environment of the Slovak Republic (OECD, 2013), was responsible for processing the green
growth indicators.
The main goal of green growth indicators is primarily the specification of means for
measuring, mapping and monitoring progress towards green growth. The global economic
17
Own processing according to the Slovak Environment Agency (2013)
31
environment is conditioned by several resources, including natural ones, and their

sustainable use can lead to economic recovery, environmentally and socially sustainable
growth.
Policies that promote green growth must be based on a good understanding of the
determinants of green growth and related trade-offs or synergies. They must be supported
by appropriate information so that they can monitor progress and measure
results. Monitoring progress towards green growth requires indicators based on
internationally comparable data. They must be integrated into a conceptual framework
and selected according to well-defined criteria and , ultimately, they must be able to send
clear messages to the policymakers and the general public. Four areas have been selected
to capture the main features of green growth (OECD, 2011b):
• Environmental and resource productivity to capture the need for efficient use of
natural capital and to capture aspects of production that are rarely quantified in
economic models and accounting frameworks.
• The natural resource base, declining asset base poses risks to growth, and
sustainable growth requires the asset base to be maintained.
• Environmental quality of life, which captures the direct effects of the environment
on people's lives, e.g., access to water or air pollution.
• Economic instruments and policy responses that can be used to assess the
effectiveness of policies when achieving green growth.
We are currently collecting a set of green growth indicators consisting of 33
indicators that are also relevant to conditions in the Slovak Republic. In the first part of the
publication, we completed Table 1.2 "List of evaluated indicators and their development"
with four main areas representing national indicators describing voluntary instruments of
environmental policy, together with a trend evaluation.
2.1.1 Human Development Index - HDI

The comprehensive approach to measuring sustainable development includes the Human
Development Index (HDI), the tool that directly raises environmental awareness.
The Human Development Index (HDI) measures achievements in three areas of
human development: health, education and living standards. Global HDI, first introduced
in Human Development Report 1990 (HDR - "Human Development Report" ), measures the
success of the country in the human development of its citizens: a long and healthy life
(through health data), access to knowledge (through education data) and a decent
standard of living (through per capita income) (United Nations Development Programme
team, 1990). The HDI was introduced as an alternative to traditional measures of economic
development, such as per capita income and economic growth rates. While income has the
potential to expand people's opportunities, it is also an imperfect indicator of human
development in a given country or region. In many cases, countries with higher average
incomes also have better health and education outcomes and thus a higher HDI. Although
there is a clear correlation between income and human well-being, this relationship falls
apart in many societies and in cross-border comparisons. For instance, some countries have
high level of per capita income but low levels of other human development indicators (and
vice versa), while some countries with similar average incomes have significantly different
levels of human development. Therefore, how income is distributed and spent within
individual countries. Moreover, an excessive focus on per capita income growth can
32
obscure the real goal, which is the enrichment of human life. Given the imperfect nature
of economic wealth as a measure of human development, the HDI offers an effective
alternative to traditional measures to measure well-being and socio-economic progress
(Anand, S., Sen, A., 2000).
The structure of the HDI is a comprehensive composite index. The breakthrough
was the creation of a single statistic that serves as a reference framework for social and
economic development. The HDI sets a minimum and maximum value for each dimension
and then shows where each country stands in relation to these values, expressed as a
number between 0 and 1.1. The higher a country's HDI value, the higher its level of human
development (and vice versa).
The HDI is the oldest and most important measurement index since the first Human
Development Report. Its strengths include transparency, simplicity and resonance with the
population. However, its importance does not mean that it is the only possible measure of
human development, and it also has its weaknesses, such as failing to capture many aspects
of life that people value and have reason to value, such as economic, social and political
freedom, or protection from violence, uncertainty and discrimination.
Since 1990, the HDI has had three dimensions: a long and healthy life, knowledge
and an adequate standard of living. Currently, four indicators are used to capture the three
dimensions (Figure 2.5): life expectancy at birth (long and healthy life), average years of
adult education at age 25 and above, expected years of schooling (education) and gross
domestic product (GDP) per capita adjusted for purchasing power parity (standard of
living) (Roser, M., 2014).
Figure 2.5 HDI dimensions and indicators18
The HDI calculation process involve the following steps:

1. The first step in calculating the HDI is to create three separate indices for each of
these three dimensions, which are then used to calculate the global HDI. For each
of the three three-dimensional indices, the country results are normalised to a value
between 0 and 1 using the minimum and maximum values.
2. The second step is to aggregate these three indices to create a global HDI. For this
purpose, the three-dimensional indices are multiplied together, and the third root
is taken. In this way, the geometric mean of the dimension indices is obtained.
Here are 3 sections that present the current indicators in each dimension and the
minimum and maximum values used to normalise them in HDI:
Long and healthy life
It uses a long and healthy life as an indicator of life expectancy at birth. The number of
years a newborn child could expect to live if the prevailing patterns of mortality by age at
18
Source: United Nation Development Programme (2018) part Technical notes
33
birth remain the same throughout the child's life. The average life expectancy index is
calculated with a minimum value of 20 years and a maximum value of 85 years.
Education
The education component of the HDI is measured by two indicators: the average years of
education of adults aged 25 and over and the expected years of education of children under
10. Estimates of average years of education are based on the length of time spent in school
at each level of education. The estimates of expected years of schooling are based on two
factors: enrolment at age at all levels of education and the number of school-age children
in the population for each level of education. These two indicators are first normalised with
a minimum value of 0 and a maximum value of 15 for average years of schooling and 18 for
expected years of schooling. Societies can also exist without formal education; a minimum
value of 0 years is used for both education variables.
Standard of living
The standard of living is measured using an income-based measure. Of course, income is
not a result that directly reflects a person's capabilities or human development.
Nevertheless, income is an important resource and can represent aspects of the standard
of living. The income component is measured by the natural logarithm of GDP per capita,
adjusted for purchasing power parity. The minimum value is $100 PPP and the maximum
value is set at $75,000. With an estimated annual growth rate of 5 per cent, only three
countries are expected to exceed the $75,000 ceiling over the next five years, so the income
index limited to 1. The HDI uses a natural logarithm of income to reflect the declining
importance of income in richer countries (another dollar of income has more additional
value to a poor person than to a rich person - meaning that as income rises, the ability to
transform additional income into equally valuable functions decreases ). The index is
calculated by normalising the natural logarithm of GDP with respect to the natural
logarithm of the minimum and maximum values (United Nations Development
Programme, 2018).
2.1.2 Environmental performance index - EPI

Due to the impact of depletion of natural resources and unabated pollution in many sectors
of the economy and the well-being of citizens, it was necessary to develop an
environmental performance index and assess the environmental performance of states
(Chandrasekaran, I., Kumar, S., Raghunathan, S, Chandrasekaran, S., 2013).
The EPI index was developed by a group of environmental experts at Yale University
("Environmental Law and Policy Center of Yale University") and Columbia University
("Center for the International Earth Science Information Network at Columbia University" -
CIESIN) and based on an environmental sustainability index composed of four years in a
row from 2002 to 2005.
In particular, the aim of EPI is to help policymakers identify environmental
problems, monitor trends in pollution control and natural resource management, identify
which policies will deliver good results, and provide them with international
implementation. Comparison of benchmarks for "similar groups", thematic way of
distinguishing between advanced and backward people, placement of best practice and
creating a successful policy model. The EPI index focuses on two basic environmental goals:
1.reducing the environmental stress on human health and 2.increasing ecosystem viability
34
and promoting sound management of natural resources (Deng., K., Yu, Z., Patnak, S., Wang,
J., 2019).
The EPI index ranks countries according to their environmental performance into two
general policy areas: protection of human health and protection of ecosystems. The two
pillars of the EPI structure are environmental health and ecosystem vitality. Environmental
health evaluates the degree of protection of human health from negative impacts on the
environment. For this purpose, three categories of problems are measured: health effects,
air quality, and water and sanitation. Ecosystem vitality evaluates ecosystem protection
and resource management. Six categories of problems are assessed for this purpose: Water
Resources, Agriculture, Forests, Fisheries, Biodiversity and Habitat, Climate and Energy. To
assess these problems, 20 national indicators reflecting environmental data are calculated
and aggregated. The data sets for the calculation of these indicators come from national
government reports, the World Bank, the United Nations Development Programme, the
United Nations and the World Resources Institute.
The 2015 study "A proposal for a Composite Index of Environmental Performance
(CIEP) for countries" shows that EPI makes it possible to identify the negative
environmental impacts and the expected impact of pressure on the natural state of
available resources, which cause harmful effects on the environment (Garcia-Sanchez, I.
M., Almeida, T. A., Camara, R. P. B., 2015). One of the most important challenges of modern
civilisation is the protection of the environment, which represents the basis of natural life,
including all human activities. If protection is not adhered to, there is a risk of serious global
problems, such as the depletion of non-renewable resources, the threat to renewable
resources, overpopulation, pollution, which will affect human health, biodiversity and
global warming.
"The Environmental Performance Index 2018 " evaluates and provides a quantita-
tive basis for comparing, analysing and understanding environmental behaviour in 180
countries (Appendix B: EPI Index - Ranking of 180 countries).
These countries are measured and evaluated according to their behaviour, using
both the latest available data and data from about ten years ago. These results give an
indication of the actual position on basic environmental issues and determine where or
what progress is achieved or not achieved (Wonding, Z. A., Emerson, J. W., de Sebrinin, A.,
Esty, D. C., et al., 2020).
The 2018 Environmental Performance Index (EPI) assesses 180 countries in 24
performance indicators in ten categories of Environmental health (40%) and ecosystem
vitality (60%). These metrics provide national-level information on how close countries are
in achieving their environmental policy goals. Figure 2.6 shows a hierarchy of ten problem
categories: Air Quality (26%), Water and Hygiene (12%), Heavy Metals (2%), Biodiversity
and Biotopes (15%), Forests (6%), Fisheries (6%), Climate and Climates (18%), Air Pollution
(6%), Water Resources (6%) and Agriculture (3%). These problem categories are then
combined into 2 policy objectives - environmental health (40%) and ecosystem vitality
(60%) and finally consolidated into one overall objective EPI (100%).
35
Figure 2.6 EPI Framework19

Where : Environmental health represemts the reduction of environmental stress for human health and the
vitality of ecosystems is the protection of ecosystems and natural resources.
The collection process is carried out in the following steps:

1. Scores are calculated for each of the top ten policy categories based on one to four
basic indicators, with each basic indicator representing a discrete set of data. The
ten policy categories are: (1) Environmental disease burden; (2) Water resources
for human health; (3) Air quality for human health; (4) Air quality for
ecosystems; (5) Water resources for ecosystems; (6) Biodiversity and habitat; (7)
Forestry; (8) Fisheries; (9) Agriculture; and (10) Climate change. The weight of each
indicator is shown in Figure 2.6.
2. Scores are further calculated for environmental objectives and ecosystem vitality,
with weights assigned as shown in Figure 2.6.
19
Source: Own processing according to the Wolding et al. (2020)
36
3. The overall environmental performance index shall then be calculated on the basis
of the average of the two broad objective scores. The ranking is based on the index
score.
A meaningful comparison of countries requires compiling a score 20


(  =  × 100) for each of the 24 indicators and placing them on a
common scale, with 0 indicating the worst performance and 100 indicating the best
performance. The location of a country on this scale determines the extent to which the
country achieves its international sustainability goals (Wonding, Z. A., Emerson, J. W., de
Sebrinin, A., Esty, D. C., et al., 2020).
The EPI uses targets to identify the best and worst results for each indicator. Targets
can be set by a number of criteria and The EPI has chosen targets for best performance if:
1. established in international agreements, treaties or institutions, such as the
World Health Organization;
2. based on the recommendation of an expert assessment.
3. set at the 95th or 99th percentile depending on the distribution of the
underlying data (Slovak Environment Agency, 2019).
2.2 Cluster analysis – method of empirical classification

In 1939, Robert Choate Tryon first used the term from noise analysis (Tryon, R. Ch., 1939).
Cluster analysis is a classification procedure that groups objects into subgroups that are
more similar to each other than objects in other subgroups. The resulting branching
diagram is a classification that provides a sequence of clusters (subgroups) according to
which a group of objects is divided. For example, when examining a set of ecological units,
this analysis is useful for showing the patterns of species composition between these units.
Cluster analysis essentially creates a dendrogram or tree whose branches represent the
individual ecological units, with data on the species composition of these locations
determining the structure of the branch. Merged branches represent groups or clusters of
sites with similar species composition and the length of a branch before merging is
inversely proportional to the degree of similarity in species composition.
There are a wide range of cluster analyses. We have focused on hierarchical,
agglomerative analyses where each object is considered a cluster. The choice of an
appropriate method is crucial because it determines ( partially ) a model derived from the
species composition data. Like many multidimensional statistical analyses, cluster analysis
attempts to represent complex relationships between objects, in our case between
countries, in a simple one-dimensional way. We processed the application of cluster
analysis by comparing 3 models for a group of 15 EU countries. The status of all acquired
variables covered reflects the observation period of the latest data obtained at the end of
2018, which represents the full coverage of the HDI (Human Development Index) and EPI
(Environmental Performance Index) variables for all monitored countries.
20 Where:  is the value of the country, ,  the target for the best performance,  is the target for the worst
performance. If the value of the country is higher than , we set its indicator score to 100. Similarly, if the
value of the country is less than , we set its indicator score to 0.
37
Cluster analysis of a multidimensional dataset aims to divide a large dataset into

meaningful subgroups of subjects. In cluster analysis, a large number of methods are
available to classify objects based on their ( un )similarity.
We expand the data matrix  of  type with  objects and  indicators into the
set  by means of clustering procedures with all clusters , in which the objects of
the primary matrix X have been grouped. The total number of clusters m has the possibility
to range from 1 to , while the best situation occurs when we reach the number of clusters
smaller than the number of objects (in our case the studied countries) (van Vark, G. N.,
Howells, W. W., 1984).
From the most well-known metrics of distances between objects, we chose
the Euclidean distance of objects for our analysis , which is set by the following equation
(van Vark, G. N., Howells, W. W., 1984):
  ,   = ∑( −  ) 2.1
Where:
xis is the value of the s-th variable for the i-th object
xis is the value of the s-th variable for the j-th object
This distance measurement, which generalises the concept of physical distance in
two- or three-dimensional space to multidimensional space, is often referred to as the
"Pythagorean distance" and forms the basis for Ward's method.
The main types of analysis are hierarchical clustering procedures, which are divided into:
• agglomerative - the decomposition process begins with each cluster that contains
exactly one object and continues the decomposition by a suitably selected method
until all of them are merged into one cluster;
• divisive - the opposite procedure begins with one cluster containing all objects and
gradually splits into smaller clusters (Legendre, P., Legendre, L., 2012).
Next, we will deal with hierarchical clustering procedures, where there are
a number of different methods used to determine which clusters should be combined
at each stage, Nearest-neighbour clustering method, Median method and Ward’s
method were chosen to collect minimised heterogeneity clusters.
The median method is described by the following two equations (Legendre, P.,
Legendre, L., 2012)
1. Nearest-neighbour clustering method ("Nearest")21
 ( ,  ) =  ( ,  )
2.2
 ∈  ,  ∈ 
2. Median method ("Median")22
 
, 
 ( ,  ) =  (  ) ℎ  =  ∑∈  , 
 =  ∑∈ 
  2.3
21
The nearest neighbour method uses the distance of the nearest cluster elements Ch and Cr
22
The Median clustering method uses the distance between the medians of two clusters and serves as an
improvement to the Centroid method
38
Ward's method is a correct hierarchical procedure and makes it possible to

determine how many groupings should be taken into account, and its great advantage is
considered to be the tendency to remove small clusters and form clusters of approximately
the same size. The similarity between 2 clusters is the sum of squares in the clusters
grouped together in all variables, where the closeness between the 2 clusters is defined as
the increase in the square root error resulting from the grouping of 2 clusters (Han, J.,
Kamber, M., Pei, J., 2012). In the case of Ward's method in terms of distance, equation 1.4
can be formulated in terms of the product of the Euclidean distance of the objects between
the centres of the clusters to be merged and the coefficient based on the size of the
cluster23 (Řezanková, H., Húsek, D, Snášel, V., 2009):
 
( ,  ) = , 
×   (  ) 2.4
 
The results of hierarchical clustering can be displayed graphically using a tree

diagram - "dendrogram", which shows all the steps in a hierarchical process, including
distances, where clusters combine.
Figure 2.7 Simple dendrogram pattern24
23
In hierarchical grouping, the sum of squares starts from zero (each point is in its own grouping) and then
increases as we merge the clusters. Ward's method keeps this growth as small as possible. Considering two
pairs of clusters whose centres are equidistant from each other, the method prefers to merge the smaller
ones.
24
Source: Own processing
39
ENVIRONOMICS AS A COMPREHENSIVE METHODOLOGICAL APPROACH
3 ENVIRONOMICS AS A COMPREHENSIVE METHODOLOGICAL

APPROACH
Sustainable development and environmental issues are among the greatest challenges
facing humanity on the threshold of the third millennium. In the conditions of the Slovak
Republic and the Netherlands, this area of the issue is analysed by a small number of
authors. In this part of the analysis, we focus on the application of selected methods of
measuring and monitoring a set of green growth indicators, HDI and EPI sustainability
indices and the method of multidimensional statistical classification using cluster analysis
on a sample of EU countries, including Slovakia and the Netherlands.
Each main group of indicators starts with a section where we select the area for
monitoring green growth (always highlighted in bold in the tables) and match it more
closely with available information from the EU statistical office, Eurostat, or the OECD
working on better policies for better life of 36 states of the World. Subsequently,Slovakia
and the Netherlands are then analysed in comparison to the European Union average,
while a comparison and development of the given area is made in the period from 2008 to
2018.
3.1 Indicators monitoring environmental and resource productivity

A key element of green growth is the environmental and resource efficiency of production
and consumption and their evolution across time, space and across sectors. Understanding
these developments and the factors leading to these changes is an essential part of
developing a green growth policy.
Progress can be monitored by comparing the use of environmental services in
production with the output produced and by monitoring the separation of trends in
production and environmental services. The division at the national level can be partly
explained by the effects of substitution. This could include the substitution of imports for
products and services that are produced domestically and require a high level of
environmental performance. Such shortcomings in production-based measures can be
addressed by focusing on efficiency developments or in relation to consumption (OECD,
2014).
Among the main topics that are important for green growth, we rank 2 major areas:
• CO2 productivity and energy productivity, which describe interactions with the
climate system , the carbon cycle and the environmental and economic efficiency with
which energy resources are used in production and consumption, and which inform
policy results and promote low-carbon technologies and cleaner energy (OECD, 2002),
(OECD, 2008).
Table 3.1 CO2 productivity and energy productivity 25
CO2 productivity
Energy productivity
CO2 productivity and energy
Energy intensity in economic sectors
productivity
Share of energy from RES in gross domestic energy consumption
Contribution of electricity produced from renewable energy sources
25
40
CO2 productivity
CO2 from fossil fuel combustion and biomass contributes significantly to greenhouse gas
emissions ("Green House Gas" - GHG), which enhance the natural greenhouse effect,
leading to temperature fluctuations and other consequences for the Earth's climate.
Carbon dioxide CO2 , which accounts for more than 80% of total greenhouse gas emissions,
sets the overall trend and is a key factor in countries' ability to cope with climate change.
Climate change is a global concern in terms of its impact on ecosystems, human
settlements, agriculture and the frequency and extent of extreme weather events. This
could have a significant impact on human well-being and socio-economic activities, which
could also be reflected in the performance of the world economy.
The main challenges are to reduce CO2 and other greenhouse gas emissions and to
stabilize the concentration of greenhouse gases in the atmosphere at a level that would
limit their adverse effects on the climate system. With current policies to mitigate climate
change and the growing industrialisation of emerging economies, global emissions are
likely to continue to rise. Progress in stabilising greenhouse gas concentrations in the
atmosphere therefore depends on the development and coordination of national and
international strategies to further decouple CO2 and other greenhouse gas emissions from
economic growth. This requires an appropriate policy framework and a combination of
instruments that lead to structural and technological change and stimulate
innovation. National emissions are affected by changes in the geography of global demand
and supply with increasing trade flows and the relocation of carbon-intensive
production. Reductions in national emissions can thus be partially or completely equalised
anywhere in the world.
Progress towards green growth can be assessed in terms of productivity trends in
CO2 emissions in relation to production and demand, and the level achieved between
CO2 and other greenhouse gas emissions and economic growth:
• Production-based CO2, which is the CO2 emissions produced from the combustion
of fossil fuels in the country and the domestic demand for energy needed during
the various stages of production of goods and services.
• Demand-based CO2 reflects the economic value created per unit of
CO2 emissions to meet domestic final demand. Demand-based CO2 emissions are
emissions based on production, plus emissions contained in imports minus
emissions contained in exports. They include CO2 emissions created at the different
stages of the production of goods and services consumed in domestic final
demand.
Table 3.2 CO2 productivity based on supply (US dollar / kg)
GEO/TIME 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
EU28 5.04 5.21 5.16 5.46 5.48 5.64 6.08 6.14 6.29 6.45 6.72
Slovakia 4.03 4.14 4.14 4.48 4.80 4.75 5.31 5.51 5.50 5.30 5.60
Netherlands 5.10 5.06 4.81 5.26 5.25 5.26 5.59 5.40 5.51 5.76 6.08
41
GDP / production-based CO2

USD / Mt of CO2
16
14 2018 2010
12
10
8
6
OECD, 2010
4
2
0
Poland
Bulgaria
France
Spain
Austria
Czech Republic
OECD
Portugal
Cyprus
Italy
Denmark
Hungary
Netherlands
Germany
Slovak Republic
European Union
Finland
Estonia
Ireland
Lithuania
Croatia
Latvia
Sweden
United Kingdom
Romania
Luxembourg
Malta
Belgium
Greece
Slovenia
Figure 3.1 CO2 productivity based on supply in EU countries in 2010 and 201826
7
U.S. dollar / kg
4
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
European Union Slovakia Netherlands
Figure 3.2 Development of CO2 productivity based on the offer of Slovakia, the Netherlands in comparison
with the EU 27
26
Source: Own processing according to the OECD Economic Outlook No. 91 (OECDiLibrary, 2012) and the IEA
CO2 Emissions from Fuel Combustion Statistics database (OECDiLibrary, 2019a)
27
Source: Own processing according to the OECD Statistics (SVK, NL, EU). Production-based CO2 productivity,
GDP per unit of energy CO2 emissions (2008 - 2018) ) (OECD.Stat, 2019c)
42
GDP / CO2, % change, 2000 - 2010
OECD AUT
BEL
TUR -50 CZE
-30
SWE DEU
-10
10
SVN DNK
30
50
SVK 70 ESP
90
PRT EST
POL FIN
NLD FRA
LUX GBR
ITA GRC
IRL HUN
Figure 3.3 CO2 productivity by supply (OECD countries) in 2000-201028
Real income / demand-based CO2

USD / Mt of CO2
8
2015 2010
6
4
OECD, 2010
2
0
Slovak Republic
Sweden
France
Luxembourg
Spain
Austria
Ireland
European Union
Germany
Bulgaria
Poland
Estonia
Belgium
Portugal
Italy
Hungary
Netherlands
Romania
Denmark
Czech Republic
Cyprus
OECD
Croatia
Lithuania
Latvia
Malta
Slovenia
Finland
Greece
United Kingdom
Figure 3.4 CO2 productivity based on demand in EU countries in 2010 and 201529
28
Source: Own processing according to the OECD Economic Outlook No. 91 (OECDiLibrary, 2012)
29
Source: Own processing according to the OECD (2012), "OECD Economic Outlook No. 91", (OECDiLibrary,
2012); IEA (2012), IEA CO2 from Fuel Combustion Statistics (database), (OECDiLibrary, 2019a)
43
Table 3.3 CO2 productivity based on demand (US dollar / kg)30

GEO/TIME 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
EU28 3.66 3.71 3.80 3.88 4.14 4.11 4.30 4.50 4.61 4.85 4.99
Slovakia 3.40 3.64 3.68 3.80 3.78 3.94 4.05 4.68 5.00 5.25 5.30
Netherlands 3.82 3.95 3.93 4.12 4.18 4.10 4.42 4.64 4.61 4.95 4.75
5
U.S. dollar / kg
3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 3.5 Development of CO2 productivity based on the demand of Slovakia, the Netherlands in comparison
with the EU31
CO2 emissions from energy use continue to rise worldwide, mainly due to increases
in transport and energy transformation. In 2010, global energy-related CO2 emissions
reached a record high of 31.3 billion tonnes. However, since 1990, emissions in European
countries have increased more slowly than in the world. This trend has been highlighted by
the rapid increase in emissions in emerging economies. Despite the general improvement
in the energy efficiency of industrial processes, CO2 emissions from energy use have
continued to increase, especially in Asia-Pacific countries and North America.
Share of energy from RES in gross domestic consumption

According to Eurostat, the statistical office of the European Union, the share of energy
produced from renewable sources in gross final energy consumption in the EU rose to 18
per cent in 2018, compared to 17.5 per cent in 2017, and more than doubled compared to
2004, when it was only 8.5 per cent. The share of renewable energy sources (RES) in gross
final energy consumption is one of the main indicators of the Europe 2020 climate and
energy strategy. The EU's target is to obtain 20% of energy production from RES by 2020
and to reach a level of at least 32% by 2030. Using the data from Eurostat, which we have
processed in Figure 4 below, we can assess the positive situation of the 12 Member States
of the European Union that have managed to reach or even exceed the 2020 target share
of RES.
Figure 3.6 The share of renewable energy in EU countries in 2018 shows the 28 EU
Member States, each member state has its own Europe 2020 target. The national targets
take into account the different starting points of the Member States, renewable energy
30
Source: Own processing according to the OECD (2012), "OECD Economic Outlook No. 91", (OECDiLibrary,
2012); IEA (2012), IEA CO2 from Fuel Combustion Statistics (database), (OECDiLibrary, 2019a)
31
Source: Own processing according to the IEA CO2 from Fuel Combustion Statistics (database), (OECDiLibrary,
2019a)
44
potential and overall economic performance. The countries with the highest share of
trademarks are Sweden, Finland, Latvia and Denmark, while the lowest are the
Netherlands, Malta and Luxembourg. In 2018, only 12 of the 28 EU Member States had a
share equal to or higher than their national binding targets by 2020. These are Sweden,
Finland, Latvia, Denmark, Estonia, Croatia, Lithuania, Bulgaria, Greece, Italy, the Czech
Republic and Cyprus. The other four countries - Austria, Portugal, Romania and Hungary -
are close to meeting their 2020 national targets by less than one percentage point. On the
other hand, there are 9 member countries, including the Slovak Republic, that are up to 4
percentage points short of reaching the target, while the other 3 EU countries, such as the
Netherlands, France and Ireland, are 4 or more points behind.
Share of Energy from Renewable Sources in EU Countries in 2018 Goal for 2020
50,00
40,00
30,00
%
20,00
10,00
0,00
EU
Latvia
Italy
Spain
Czech Republic
Slovak Republic
Poland
Ireland
United Kingdom
Luxembourg
Netherlands
Sweden
Finland
Denmark
Austria
Croatia
Portugal
Estonia
Lithuania
Romania
Slovenia
Bulgaria
Greece
France
Germany
Hungary
Cyprus
Belgium
Malta
Figure 3.6 Share of energy from renewable sources in EU countries in 201832
In 2018, the share of renewable energy in total energy consumption increased in 21 of the
28 Member States of the European Union, remained stable in one member state and
decreased in six countries. As mentioned above, the first place among the countries with
the highest share was Sweden, who in 2018 reached about more than half (54.6%) of the
energy produced from renewable sources. It was followed by Finland with a share of
(41.2%), Latvia (40.3%), Denmark (35.7%) and Austria (33.4%). In contrast, the lowest share
of renewable energy sources was recorded in the Netherlands (7.4%). Low shares (less than
10%) were also recorded in Malta (8%), Luxembourg (9.1%) and Belgium (9.4%).
Becoming the world's first climate-neutral continent in 2050 is the goal of the Green
Deal - a package of measures that should allow citizens and businesses to utilise the
benefits of sustainable development. The use of RES has many potential benefits, including
reducing greenhouse gas emissions, diversifying energy supplies and reducing dependence
on fossil fuel (oil and gas) markets. The growth of RES can also stimulate employment in
the EU by creating jobs in new 'green' technologies (Hedberg, A., Piqueres, S. L., Sipka, S.,
2019).
32
Source: Own processing according to the Eurostat (Eurostat, 2019)
45
Let us take a closer look at our selected countries - Slovakia and the Netherlands -
compared to the EU average. The analysis provides a comparison and development of the
countries over the period 2008-2018 in achieving the goals in the use of RES.
Interestingly, the EU has set a target for the share of energy produced from
renewable sources in gross final consumption at 18 per cent by 2018, which has been
achieved according to Table 3.2. The target is set at 20% by 2020, with the constructed
Figure 3.6 Development of the share of RES (in 2008-2018, period of 10 years) in percentage
(%) shows a growing trend of the EU, which represents a high progress in the field of climate
and energy.
Slovakia has set a target of 14% by 2020. Table 3.4 shows data of 11.90% in 2018,
which means that it has not yet exceeded its target. Figure 3.7 shows that between 2013
and 2014, the Slovak Republic showed a significant increase of up to 1.58%. Since 2017, it
has shown a growing development, which represents a positive development towards the
goals.
The Netherlands ranks last in our statistics, which means that the lowest share of
RES was measured there at 7.39%. So far, the country is very far from its target of 14% by
2020, which ultimately reduces the country's progress towards green growth.
Table 3.4 Share of renewable sources in gross domestic energy consumption (in %)33
GEO/TIME 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
EU28 11,37 12,62 13,16 13,41 14,69 15,38 16,22 16,73 16,99 17,47 17,99
Slovakia 7,72 9,37 9,09 10,35 10,45 10,13 11,71 12,88 12,03 11,47 11,90
Netherlands 3,6 4,27 3,92 4,52 4,66 4,69 5,42 5,66 5,83 6,46 7,39
20
15
% 10
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Figure 3.7 Development of the share of renewable energy in the Slovak Republic and
the Netherlands compared to the EU 34
Contribution of electricity produced from renewable energy sources

Energy is an important component of the economy, both as a sector itself and as a factor
in all other economic activities. The structure of the country's energy supply and the
intensity of its use, together with changes over time, are important determinants of
33
Source: Own processing based on Eurostat data (Eurostat, 2019) – Share of energy from renewable sources
34
Source: Own processing based on Eurostat data (Eurostat, 2019) – Share of energy from renewable sources
46
environmental behaviour and the sustainability of economic development, therefore the

green growth. Access to affordable energy is an essential to reduce poverty.
The effects of energy production and use on the environment vary according to the
energy source. The main concerns relate to contributions to greenhouse gas emissions and
local and regional air pollution. Other impacts include water quality, land use and the risks
associated with fossil fuel extraction, transport and use. The use of renewable energy
sources, low-carbon and clean fuel technologies plays an important role in tackling climate
change and energy security.
2018 1990
100%
80%
60%
40%
20%
0%
European Union
Netherlands
Luxembourg
Latvia
Poland
Czech Republic
Malta
Italy
Spain
United Kingdom
Ireland
Slovak Republic
Lithuania
Croatia
Finland
Romania
Slovenia
Greece
Belgium
Austria
Denmark
Sweden
Portugal
Germany
Bulgaria
France
Estonia
Hungary
Cyprus
Figure 3.8 Contribution of electricity produced from renewable energy sources in 201835
Progress towards green growth can be evaluated based on the energy productivity
of the economy and based on domestic energy intensity targets, energy efficiency targets
or the share of renewable energy in energy or electricity supplies. Progress can be further
evaluated on the basis of international environmental commitments that have implications
for energy policies and strategies.
Table 3.5 Contribution of electricity produced from renewable energy sources (%)36
GEO/TIME 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
EU28 16.80 18.72 20.39 20.74 23.52 26.49 28.48 29.24 29.51 29.83 32.40
Slovakia 15.87 18.95 21.63 17.67 19.32 22.28 22.94 22.68 24.72 23.81 21.76
Netherlands 8.86 9.53 9.39 10.81 12.09 11.91 11.27 12.40 12.83 14.87 16.50
35
Source: Own processing according to the IEA World Energy Statistics and Balances (OECDiLibrary, 2019b)
36
Source: Own processing according to the OECD Statistics (SVK, NL, EU). Renewable electricity, % total elec-
tricity generations (2008 - 2018) (OECD.Stat, 2019b)
47
32
28
24
% 20
16
12
8
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Figure 3.9 Development of the contribution of electricity produced from RES of the Slovak Republic, the
Netherlands in comparison with the EU37
• Resource productivity is characterised by the environmental and economic efficiency

with which natural resources and materials are used in production and consumption,
and which inform the results of policies and measures that promote resource
productivity and sustainable material management in all sectors. Important resources
and materials include mineral resources (metal minerals, industrial minerals,
construction minerals); biotic resources (food, feed, wood); water
and nutrients (Flachenecker, F., Rentschler, J., 2018).
Table 3.6 Source productivity38
Material productivity
Waste generation (excluding municipal waste) and the rate of their recovery
Resource productivity The amount of generated municipal waste and the rate of their recovery
Nitrogen and phosphorus balance
Water productivity
Material productivity
Material resources form the physical basis of the economy. They differ in their physical and
chemical properties, their wealth and their value for countries. The use of raw materials
from natural resources and related processes such as production and consumption have
environmental, economic and social consequences beyond the borders of individual
countries. Improving resource productivity and ensuring sustainable management of
material resources is critical to both security of supply and the environment.
The main challenge is to ensure that materials are used efficiently at all stages of
their life cycle (extraction, transport, production, consumption, recycling and disposal) and
throughout the whole supply chain. This will avoid wasting resources, reduce negative
environmental impacts (upstream and downstream) and potentially reduce pressure on
primary natural resources. Governments need to provide incentives throughout the life
cycle to support innovation that addresses the environmental externalities of resource use.
For example, by internalising the external costs of waste management into the prices of
37 Source: Own processing according to the OECD Statistics (Slovakia, the Netherlands, EU). Renewable elec-
tricity, % total electricity generations (2008 - 2018) (OECD.Stat, 2019b)
38
Source: Own processing according to the OECD Indicators (OECD, 2011b)
48
consumer goods and waste management services. It also requires the integration of
materials, product and chemicals policies. Countries use approaches such as circular
economy and 3R policies ( reduction, reuse and recycling ) policies, sustainable materials
management and sustainable production to improve resource productivity.
Sustainable materials management is a challenge in Slovakia because the country
has a shortage of raw materials and relies on imports of energy and materials. The Slovak
economy is less resource intensive than the economy of the Netherlands or other European
OECD countries.
The Slovak Environment Agency defines Domestic Material Consumption (DMC) as
follows (Škantárová, K., 2020):
"Domestic material consumption measures the total amount of materials directly
spent in the economy, excluding the hidden material flows. It is determined based on the
Eurostat methodology (analysis of material flows at the macro level) and it represents the
sum of domestic utilised extraction, i.e. the amount of extracted mineral resources (energy,
mining, non-metallic and construction materials) and produced collected biomass
(agricultural crops, logging, grazed biomass and so on) that were obtained in the territory
of the given state per time unit. These materials from domestic environment are added with
imports and deducted of exports (imports and exports of raw materials, biomass, semi-
finished goods and final consumption products). The reduction of material consumption or
increasing the resources productivity leads to a reduction of total material demands of
socio-economic system and to the reduction of environmental load."
In 2017, domestic material consumption (DMC) per capita in the Slovak Republic
reached 71,060 tonnes, which corresponds to 13.1 tonnes per capita and is lower than the
European average (13.4 tonnes per capita in the EU 28). The development trend is positive,
due to the achieved increase in DMC per capita in the years 2000 - 2017, by 30.9%,which
we record as an efficient use of natural resources.
In terms of material productivity, Slovakia is below the OECD average (Figure 3.10).
This suggests that the country could use material resources more efficiently for wealth
creation. However, the country's performance is very similar to neighbouring Central
European countries such as Austria, Slovenia or the Czech Republic. The OECD countries
with the highest material productivity tend to be those whose economies focus on high-
value services and products, as can be seen in the Netherlands. Countries with economies
that are more dependent on the extraction of material resources tend to have low levels
of material productivity. Among these countries include Estonia and Poland and their fossil
fuel extraction, which is an important factor in their low material productivity (OECD, 2019
b).
49
6,0
5,0
USD (2010 PPP)/kg
4,0
3,0
2,0
1,0
0,0
United…
Poland
Ireland
Netherlands
Luxembourg
Finland
Estonia
EU
France
Latvia
Romania
Bulgaria
Italy
Spain
Belgium
Malta
Greece
Slovenia
Czechia
Portugal
Lithuania
Germany
Slovakia
Austria
Croatia
Denmark
Sweden
Cyprus
Hungary
Figure 3.10 Material productivity in EU countries in 201839 40
Furthermore, in the analysis of the Slovak Republic and the Netherlands in

comparison with the EU average, we get to the development and comparison of the
countries' share of material productivity from 2008 to 2018, expressed through purchasing
power parity in USD/kg.
In the case of the Netherlands, it is interesting that it reaches the first place (Figure
3.10) with a material productivity value of 5.223 USD/kg in 2018 (Figure 3.10). The value of
5.223 is also higher than the EU average of 2.777.
Slovakia has not yet managed to exceed the European Union average, as its value
of material production is 2.34. According to Figure 3.11 Development of the share of
material productivity of the Slovak Republic and the Netherlands in comparison with the
EU average, we found that Slovakia made its biggest progress between 2011 and 2012,
when its material production increased by 0.30 USD/kg. There has been a rising trend in
recent years, which could mean positive progress for the Slovak Republic towards
exceeding the European Union average.
Table 3.7 Domestic material consumption (USD/kg)41
GEO/YEAR 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
EU28 2.18 2.32 2.37 2.33 2.53 2.6 2.61 2.7 2.76 2.76 2.777
Slovakia 1.61 1.77 1.89 1.92 2.22 2.33 2.16 2.28 2.38 2.38 2.34
Netherlands 3.75 3.86 3.9 4.05 4.24 4.47 4.41 4.15 4.71 5.24 5.22
39
Source: Own processing according to the OECD Data, Material Resources: Material Resources, Total mate-
rials, US dollars/kilogram (2008 – 2018) (OECD data, 2018b)
40
Note: Material productivity refers to economic output (expressed as GDP) created per unit of domestic
material consumption calculated as the sum of domestic extraction of raw materials used in the economy
and its physical trade balance (imports minus exports of raw materials and products).
41
50
4
% 3
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Figure 3.11 Development of the share of material productivity of the Slovak Republic and the
Netherlands in comparison with the EU average42
The amount of generated municipal waste and the rate of their recovery
Over the last two decades, EU countries have made significant efforts to curb the
generation of municipal solid waste and to promote the prevention of industrial waste.
Municipal waste production has increased by 2% since the beginning of 2000. This indicates
a slight separation from economic growth (gross domestic product increased by 12% over
the same period) and population growth (waste per capita decreased by 6%). A person
living in Europe produces on average 516 kg of municipal waste per year; this is about 40
kg less than in 2000, but still about 10 kg more than in 1990.
In several countries, the intensity of municipal waste generation has decreased by
double digits. The most important were Spain and Estonia, where the per capita amount
decreased by more than 20%. Seven countries have not succeeded in decoupling waste
production from economic growth. In Denmark and Norway, waste production per capita
has increased sharply during a period of modest economic growth. In some countries, such
as Portugal, waste generation has continued to increase despite the economic slowdown.
Increasing material recovery complements waste reduction efforts. Gradually, more waste
is being diverted from landfills and incinerators and returned to the economic cycle through
recycling and composting. Regardless of the progress made in reducing municipal waste
generation, the rate of material recovery has increased in all countries except Turkey.
Significant progress can be reported in many Central and Eastern European
countries where the recovery rate was extremely low in the early 2000s. Over the last
decade, some countries have managed to reduce municipal waste production and increase
recovery at the same time (e.g. Estonia, Hungary and the United Kingdom).
42
51
Municipal waste generated (kg per capita) Municipal waste recycled or composted (% treated waste)
800
700
600
500
400
300
200
100
0
European…
Slovak…
Denmark
Germany
Luxembourg
Ireland
Netherlands
Portugal
Italy
Spain
Slovenia
United Kingdom
Belgium
Czech Republic
Latvia
Hungary
Poland
Austria
France
Greece
Finland
Sweden
Lithuania
Estonia
Figure 3.12 Amount of generated municipal waste and rate of its recovery (2017)43
Nevertheless, landfilling remains the main method of disposal in many European

countries. Landfill taxes are often used to promote waste prevention, reuse and material
recycling. Tax rates usually vary according to the type of waste disposed of (i.e. higher tax
rates for recoverable waste).
Table 3.8 Total municipal waste production per capita (kg)44
GEO/TIME 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
EU28 553.33 543.46 531.76 532.15 529.18 523.48 520.76 521.53 524.05 527.58 525.91
Slovakia 292.45 312.07 306.12 317.81 310.06 305.54 302.95 318.82 327.85 346.84 377.34
Netherlands 601.09 595.60 585.70 568.49 566.31 548.06 524.83 526.51 523.42 521.69 516.53
Countries with low tax rates, such as the Czech Republic landfills more than half of
municipal waste. Other factors that play a role include bans on the landfill of certain
categories of waste (e.g. biodegradable waste), the capacity of recovery and recycling
facilities and population density.
Table 3.9 Recycled municipal waste, mechanically-biologically treated waste (%)45
GEO/TIME 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
EU28 31.53 31.98 32.25 32.33 32.91 33.44 33.61 34.28 34.85 35.81 35.97
Slovakia 6.83 7.77 8.46 9.20 10.90 13.40 10.93 10.56 14.97 23.17 29.85
Netherlands 58.02 48.44 49.06 49.18 49.07 49.43 49.84 50.90 51.77 53.48 54.56
Generally speaking, recycling rates have increased for some high volume materials,
such as glass, steel, aluminium, paper and plastics, but remain low for many others. Many
valuable materials continue to be disposed of as waste and are lost to the economy if they
are not recycled. Unused "city mines" (e.g. electrical and electronic equipment) could be
an important source of minerals and metals for industry. They are also a potentially
important domestic source of raw materials in the future. In Europe, approximately a third
of the 13,400 tonnes of materials consumed per capita end up in waste each year.
43
Source: Own processing based on the statistics "Municipal waste" (OECD.Stat, 2018), OECD Environment
Statistics (OECDiLibrary, 2019c) a Green Growth Indicators (OECD, 2017)
44
Source: Own processing according to the OECD Data, Environmental and resource productivity: Municipal
waste generated, kg per capita (2007 – 2017) (OECD.Stat, 2018)
45
Source: Own processing according to the OECD Data, Environmental and resource productivity: Municipal
waste recycled or composted, % treated waste (2007 – 2017). (OECD.Stat, 2018)
52
3.2 Indicators monitoring the natural asset base

Natural resources are the most important basis of economic activity and human well-being.
Their stocks are part of natural capital, providing raw materials and energy, water, air and
soil. They support the provision of environmental and social services necessary for the
development of produced, human and social capital. The extraction and consumption of
resources affects the quality of life of current and future generations.
Natural resources differ in their physical characteristics, their wealth and their value
for countries or regions. Their effective management and sustainable use are key to
economic growth and environmental quality. The goal is to optimise the net benefits of
resource use in the context of economic development:
• ensuring an adequate supply of renewable and non-renewable resources to support
economic activities and growth
• managing the environmental impacts associated with the extraction and processing
of natural resources in order to minimise negative impacts on the quality of the
environment and human health
• preventing the deterioration and depletion of natural resources
• maintaining non-commercial environmental services (OECD, 2017).
Progress can be monitored by monitoring stocks of natural resources and other

environmental assets, together with flows of environmental services and using indicators
that reflect the degree of maintenance of the asset base in terms of quantity, quality or
value.
Among the main topics that are important towards green growth, we include:
• availability and quality of renewable natural resources, including freshwater,
forests and fish
• availability of non-renewable reserves of natural resources , in particular mineral
resources such as metals, industrial minerals and fossil energy carriers
• biological diversity and ecosystems, including species and habitat diversity and soil
resource productivity (McCormick, J., 2018).
Table 3.10 Renewable sources46
Development of forest land areas

Renewable resources Forest resources and the intensity of their use
Intensity of using surface water resources
Non-renewable resources DEU for minerals
Endangerment of plant species
Endangered species
Biodiversity and ecosystem
Changes in land use
Soil erosion
Development of forest land areas

Forests are among the most diverse and widespread ecosystems on Earth and have many
functions:
• provide wood and other products;
• how to have cultural values;
• provide the benefits of recreation;
46
53
ecosystem services, including soil, air and water regulation;

•
are reservoirs of biodiversity;
•
and commonly act as carbon sinks.
•
The main issues concern the impacts of human activities on forest diversity and
health and on natural growth and regeneration of forests, and the implications for the
provision of economic, environmental and social forest services. Many forest resources are
threatened by overexploitation, fragmentation, environmental degradation and
conversion to other land uses. The main pressures from human activities include
agricultural expansion, transport infrastructure development, unsustainable forestry, air
pollution and deliberate burning of forests.
The main challenge is to ensure the sustainable management of forest resources.
This includes preventing overexploitation and degradation in order to maintain the value
of wood and an adequate supply of wood for production activities, and to ensure the
provision of basic environmental services as well as social and indigenous values. This
means defining the optimal rate of harvesting- not too high to avoid overexploitation of
the resource and not too low to maintain the productive capacity of the resource - and
integrating environmental considerations into forestry policies, including through
measures such as eco-certification.
Progress towards green growth can be evaluated based on national targets and the
international principles of sustainable forest management adopted at UNCED in 1992 and
reaffirmed at the World Summit on Sustainable Development in 2002. Other international
initiatives include the Ministerial Conferences on the Protection of Forests in Europe
(Strasbourg, 1990; Helsinki, 1993; Lisbon, 1998; Vienna 2003; Warsaw 2007), which
resulted in Europe-wide criteria and indicators for sustainable forestry; The Montreal
Process of Sustainable Development of Boreal Forests and the United Nations Forum on
Forests.
The indicators that emerge from this call since 1990 are intended to:
• the area of forest land as a percentage of the total land area and per
square kilometre per capita,
• volume of forest resources in cubic meters.
Intensity of use of forest resources, 2015

4000
3500
3000
cubic metres, millions
2500
2000
1500
1000
500
0
Slovak…
United…
Czech…
Luxembo…
Bulgaria
Romania
Finland
Sweden
Ireland
Greece
Slovenia
Estonia
Latvia
Belgium
Germany
Netherlands
Denmark
Croatia
Lithuania
Spain
Austria
Poland
France
Cyprus
Portugal
Hungary
Italy
Figure 3.13 Intensity of use of forest resources 47
47Source: Own processing according to the Natural asset base: : Intensity of use of forest resources (2000 -
2020) database (OECD.Stat, 2019d).
54
These indicators provide an overview of the quantitative aspects of forest resources

and the wood supply functions in forests. They represent national averages that can mask
important differences between forests. They should be read with information on forest
quality (e.g. species diversity, including tree and non-tree species; forest degradation;
forest fragmentation) and on the production and trade of forest products.
Table 3.11 Development of forest resources of the Slovak Republic and the Netherlands48
GEO/TIME 2000 2010 2015 2020
Slovakia 459.05 517.18 535.28 537.67
Netherlands 61.10 76.00 79.02 82.74
Intensity of using surface water resources

Freshwater resources, the distribution of which varies widely between and within
countries, have a great environmental and economic importance. Different forces put
pressure on water resources. These include over-abstraction and degradation of water
quality due to human-induced pollution (agriculture, industry, households), climate change
and weather conditions, and the introduction of invasive species. Excessive water
abstraction in particular can have significant environmental and socio-economic
consequences. These range from low river flows, depleted groundwater and deteriorating
water quality (including salinisation of freshwater bodies in coastal areas) to loss of
wetlands, desertification and risks to food security and economic production (European
Environment Agency, 2018b).
The main challenges are to ensure sustainable management of water resources to
prevent over-abstraction and degradation. The aim of this management model is to
maintain sufficient freshwater supplies of suitable quality for economic activities and
human use and to support aquatic and other ecosystems. To this end, risks related to water
quantity and quality need to be identified, targeted and mitigated in a coordinated way.
Water quantity is best managed through a combination of water demand management,
water-saving practises and technologies, and well-designed water distribution. Water
quality management requires prevention, reduction and management of water pollution.
It must cover all sources and all water bodies (surface waters, underground waters, coastal
waters). It must also take into account all major existing and emerging pollutants.
Infrastructures and other investments can also affect the natural integrity of rivers, lakes,
collectors and wetlands. In addition, they can affect hydromorphological conditions, the
natural water retention capacity in river basins and ecosystem function (Gleick, H. P.,
Palanippan, M., 2010).
Figure 3.14 shows that in all countries for which data are available, the national
income generated per unit of freshwater abstracted has increased over the last two
decades. We observed 2 observation periods, the year 1990 and the year 2015, when we
were able to obtain relevant data for most countries by analysis. The largest increases
occurred in the Slovak Republic, Poland and the Czech Republic, where productivity levels
more than tripled during this period. In Slovakia, the performance is basically derived from
three factors. These include large-scale wastewater reuse and treatment, and pioneering
investments in water-friendly technologies (e.g. drip irrigation). Prices reflect resource
costs moving towards the use of higher value water. In Central European countries, the
48
Source: Own processing according to the Natural asset base: Intensity of use of forest resources (2000 -
2020) database (OECD.Stat, 2019d)
55
increase in water productivity is probably the result of improved infrastructure and

structural changes in the economy (shift to less demanding industries).
2015 1990
USD / m³
500
400
300
200 n.a.
100
0
Luxembourg
OECD EU
Denmark
Slovak Republic
Latvia
Czech Republic
Germany
Poland
Netherlands
Spain
Ireland
United Kingdom
Italy
Lithuania
Sweden
Belgium
France
Slovenia
Hungary
Turkey
Estonia
Greece
Finland
Austria
Portugal
Figure 3.14 Development of freshwater abstraction in EU countries in USD/m3 49
Massive distribution of water can increase incentives for innovation in water-

intensive activities. Subscription fees are usually low in most countries and increasing them
would improve cost recovery. They would also provide a price signal, reducing the
attractiveness of low-value and inefficient water consumption. Tradable water permits or
abstraction rights exist through either formal or informal water markets. They have been
shown to encourage the allocation of water for higher value uses. However, appropriate
precautions need to be taken to avoid potential negative effects of such trade. These
include, for example, diversion of environmental flows, speculative behaviour by investors
not from a river basin, or distributional problems when wealthy groups or users "buy up
and dry" the poor. In addition, transaction costs should be kept as low as possible,
regardless of the existing regime (Martin, L. J., 2017).
Table 3.12 Freshwater resources (USD/m3)50
GEO/TIME 1990 2015
EU28 512.1686 476.3086
Slovakia 34.77025 260.9805
Netherlands 60.5454 69.7797
The Netherlands is located in a delta of four major international rivers with half of
its territory before the floods and faces persistent water problems such as flood risk, water
scarcity and water quality, as shown in Table 3.12 itself, whose data indicate a significant
difference in freshwater abstraction in compared to the EU and Slovakia average (OECD,
2015).
Table 3.13 Non - renewable resources, Biodiversity and ecosystem51
Non-renewable resources DEU for minerals
Endangerment of plant species
Endangered species
Biodiversity and ecosystem
Changes in land use
Soil erosion
49
Source: Own processing according to the OECD statistics (OECD.Stat, 2019a), (OECDiLibrary, 2017)
50
Source: Own processing according to the OECD statistics (OECD.Stat, 2019a)
51
56
Before the adoption of the River Basin Management Plan under the Water
Framework Directive in 2009, the country sought to improve water management. Over
time, the country has developed a strong water management system, which has performed
successfully, but recent trends have shown an increase in the percentage of water defences
(levees, dunes, dams and storm barriers) that do not meet high Dutch safety standards.
Endangered species
Biological resources provide raw materials for production and growth in many sectors of
the economy. They are essential components of ecosystems and natural capital, and their
diversity plays a crucial role in sustaining life support systems and quality of life.
Biodiversity conservation is a key concern at national and global levels. Pressures
on biodiversity caused by human activities can be physical (e.g. habitat modification),
chemical (toxic pollution, other pollution caused by human activities) or biological (e.g.
change in population dynamics).
The main challenge is to maintain or restore the diversity and integrity of
ecosystems, species and genetic material and to ensure the sustainable use of biodiversity.
This means strengthening habitat and species protection, stopping illegal use and trade,
integrating biodiversity issues into economic and sector policies, and raising public
awareness. This requires a combination of both demand-side and supply-side instruments,
including economic and market-based instruments (pricing, removal of environmentally
harmful subsidies and environmental taxes and charges, as well as payments for ecosystem
services), supported by legislation, voluntary approaches and information tools.
Percentage of amphibians threatened (left axis) Number of known amphibian species (right axis)
% nb
90 300
80
250
70
60 200
50
150
40
30 100
% threatened
20 n.a. 50
10
0 0
France
Finland
Slovenia
Czech Republic
Netherlands
Sweden
Germany
Ireland
Austria
Estonia
Slovak Republic
Italy
Belgium
Latvia
Spain
Luxembourg
Hungary
Greece
Portugal
Denmark
Poland
United Kingdom
Lithuania
Figure 3.15 Endangered mammalian species,% of total known species52
52 Source: Own processing according to the OECD Environment Statistics (OECD data, 2019), Vié, Hilton-Tay-
lor, Stuart (2008), Pande, Arora (2014), Dinesh, Radhakrishnan, Gururaja (2013) Natural asset base: Threat-
ened mammal species, % total known species. (OECDiLibrary, 2020)
57
3.3 Indicators monitoring the environmental quality of life

Environmental results are important determinants of human health and well-being. They
prove that growth of production and income need not always be accompanied by the
growth of material well-being. Reduced environmental quality can be a consequence and
can lead to unsustainable development models. This can have significant economic and
social consequences, from health costs and lower labour productivity to reduced
agricultural production, impaired ecosystem functions and generally a lower quality of life.
Environmental conditions affect people's quality of life in various ways. They affect
human health through air and water pollution, exposure to hazardous substances and
noise, as well as the indirect effects of climate change, water cycle changes, loss of
biodiversity and natural disasters that affect the health of ecosystems and damage human
property and lives. People also benefit from environmental services, such as access to clean
water and nature, and their choices influence environmental equipment (European
Environment Agency, 2019a).
The main themes of green growth include:
• Exposure of people to pollution and environmental risks, associated effects
on human health and quality of life, and related health costs and impacts on
human capital.
• Public access to environmental services and equipment or the level and
type of access of different groups to environmental services, such as clean
water, sanitation, green spaces and public transport (Mnanagi, S., 2015).
Table 3.14 Environmental health and risks53
Exposure of the population to air pollution by airborne dust (PM10)
Environmental health and risks
Air quality in urban areas
Air quality in urban areas

Air pollution is the single biggest environmental risk in the world. Reducing the risks to
human health from deteriorating air quality is therefore a key element in improving living
conditions. Particulate matter (PM2.5) are the most serious pollutant in the world. Chronic
exposure, even with moderate levels of PM2.5, significantly increases the risk of heart
disease and stroke, which is the leading cause of death in OECD countries (World Health
Organization, 2016). The other most polluting substances are small particles (PM10), ozone
(O3), nitrogen dioxide (NO2) and sulphur dioxide (SO2). Emissions from transport, industry,
electricity generation, agriculture and domestic sources are major contributors to outdoor
air pollution (Department for Environment Food & Rural Affairs, 2019).
The sources of air pollution and the severity of pollution vary from country to
country and within countries. Therefore, it is important to adapt policies to specific local
conditions. For example, more stringent measures are needed in densely populated areas
or for emission sources located in the lee of urban areas. Such spatially heterogeneous
measures help to achieve environmental goals at lower costs than measures that apply
uniformly to resources in all locations and to populations at all levels of risk. The cost-
effective implementation of air pollution policies requires attention as it allows countries
53
Source: Own processing according to the report Towards Green Growth: Monitoring Progress (OECD,
2011b)
58
to move more quickly towards greener growth model while creating more economic
opportunities than jobs or exports.
Figure 3.16 Exposure to air pollution by PM2.5 in 200854
Figure 3.17 Exposure to air pollution by PM2.5 particles in 201755

Where: The indicator measures the weighted annual average concentration of solid pollutants at urban sta-
tions in agglomerations. Fine and coarse particles (PM10), particles smaller than 10 micrometres in diameter,
can be transferred deep into the lungs, where they can cause inflammation and worsen the condition of
people suffering from heart and lung diseases. Fine particles (PM2.5) are those with a diameter of less than
54
Source: Own processing according to the report Exposure to air pollution by particular matter (European
Environment Agency, 2019b)
55
59
2.5 micrometres, they are a subset of PM10 particles. Their harmful effects on health are more serious, as
they can be drawn further into the lungs and can be more toxic.
Progress towards green growth can be evaluated by measuring the population's
exposure to air pollutants and evaluating the health impacts and their economic costs. The
costs of air pollution result mainly from its harmful effects on human health. They take the
form of shorter life expectancy, increased health care costs and lower labour productivity.
Other consequences include reduced agricultural production and damage to ecosystems
As shown in Figures 3.16 and 3.17, despite commendable improvements in
pollution reduction, the population of most OECD countries is chronically exposed to
harmful levels of PM2.5, with 2 types of particles being divided into fine particles with PM2.5
levels and coarse particles with PM10 levels. More detailed information on individual
particles is given in the explanatory notes. Less than one in three OECD countries complies
with the WHO Air Quality Guidelines for an annual average exposure to PM2.5 of 10
micrograms per cubic meter (μg/m3 ). According to the illustrated maps, we can compare
what air pollution the individual European countries were exposed to in 2008 and 2017,
and how it developed during the observed period. In order to be able to process
and describe information about our monitored sample (Slovakia and the Netherlands), we
have prepared Table 3.15 with more detailed data for the monitored period of 9 years -
2008 and 2017 expressed in μg/m3 .
We can evaluate the situation as positive, as on the basis of the obtained data all
our 3 monitored samples are in numbers, which compared to 2008 decreased by almost 4
or more measured points. Slovakia ranks first in values, which decreased by as much
as 7.6 μg / m3 , which also exceeds the EU average data. In the case of the development,
taken from the Figure 3.17, we can observe a positive descending development, which
could represent a decreasing tendency of exposure to air pollution by fine PM2.5 particles,
which are very harmful to health.
Table 3.15 Air quality in urban areas (μg / m3)56
GEO/TIME 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
EU 28 17.5 17.4 18.1 18.4 16.8 15.7 15.2 14.6 13.8 14.1
Slovakia 25.1 27.2 22.8 26.7 22.7 20.1 18 19 14.7 17.5
Netherlands 16.3 16.7 17.1 16.8 13.5 14 13.9 12.7 11.1 11.3
30
25
20
µg/m3 15
10
5
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Figure 3.18 Development of the share of air pollution in the Slovak Republic and the Netherlands57
56
57
60
Table 3.16 Access to environmental services58

Life expectancy at birth
Access to environmental services Connecting the population to public sewerage
Connecting the population to the public water supply
Life expectancy at birth

Air pollutants from energy transformation, energy consumption and industrial processes
mainly contribute to regional and local air pollution. Deteriorating air quality can have
significant economic and social consequences, from health costs, reduced labour
productivity and the need to renovate buildings, to reduced agricultural production,
damage to forests and a generally lower quality of life.
The greatest concerns relate to impacts on human health and ecosystems. Human
exposure is particularly high in urban areas where economic activities are concentrated.
Some population groups, especially the very young and the very old ones, are particularly
vulnerable. The growing concern is the concentration of fine particles, NO2, toxic air
pollutants and ground-level ozone events in both urban and rural areas.
The main challenges are to further reduce emissions of local and regional air
pollutants in order to achieve a strong decoupling of emissions from GDP and to reduce the
exposure of the population to air pollution.
Average annual exposure level of the average urban resident to PM10 (micrograms per m3)
70
2010
60 1990
50
40
30
20
10
0
Slovak…
Czech…
United…
Germany
OECD
Estonia
Sweden
France
Luxembourg
Ireland
Finland
Poland
Slovenia
Greece
Austria
Hungary
Denmark
Portugal
Belgium
Netherlands
Italy
Spain
Figure 3.19 Population exposed to small air pollution by fine particles (PM10 )59
Progress towards green growth can be assessed on the basis of national targets and
international commitments on emissions and air quality, and based on changes in the
number of people exposed to a given level of air pollution, with a focus on vulnerable
groups. Progress can also be assessed on the basis of the health costs caused by
58
Source: Own processing according to the report Towards Green Growth: Monitoring Progress (OECD,
2011b)
59
Source: Own processing according to the statistics Environmental dimension of quality of life: Population
exposed to air pollution by small particulates (PM10) (OECD.Stat, 2020a)
61
deteriorating air quality and the impact on labour productivity and human capital. We know
the indicators related to the exposure of the population to air pollution by small and fine
particles (PM10 and PM2.5 ):
• For small particles, the indicator refers to PM10 levels weighted by the urban
population in residential areas of cities with more than 100,000 inhabitants.
• For fine particles, the indicator refers to estimates of the proportion of the population
exposed to different levels of PM2.5 derived from satellite measurements.
Table 3.17 Population exposed to small air pollution by fine particles (PM10)60
GEO/TIME 1990 2010
EU28 38.79 20.08
Slovakia 45.95 12.68
Netherlands 44.46 29.98
Over the past two decades, urban air quality has slowly improved in terms of SO2
concentrations, and the estimated average annual level of exposure of the average urban
population to PM10 has decreased. This prgress iso caused, among other factors, due to the
switch from coal to natural gas for electricity generation and to the improvement in the
performance of pollution abatement equipment in industrial installations that reduce
PM10 emissions. But episodes of acute ground-level ozone pollution in both urban and
rural areas, NO2 , PM2.5 concentrations, and toxic air pollutants have frequently exceeded
recommended limits and are becoming increasingly worrying. These exceedances are
largely due to the concentration of pollution sources in urban areas and the increasing use
of private vehicles for driving in the cities. Some population groups are particularly
vulnerable to air pollution. The very young and the very old people represent the highest
risk. The World Health Organisation estimates that urban and rural air pollution caused 3.7
million premature deaths worldwide in 2012. About 88% of these premature deaths
occurred in low- and middle-income countries, with the largest numbers in the Western
Pacific and Southeast Asian regions.
Access to water supply, sanitation and sewage treatment
Globally, inadequate access to safe water supply and sanitation acts as a large drag on
economic growth and well-being. It affects people’s health, increasing mortality and
morbidity. It also reduces labour productivity, increases healthcare costs and undermines
freshwater ecosystems (Mills, E. J., Cummimg, O., 2016).
In developing and emerging countries, the biggest challenge is to extend water
supply and sanitation services to rural areas and the poor. In OECD countries, the biggest
challenge is often to renew and upgrade existing infrastructure. This is particularly
important in the face of climate change, which makes water demand and availability more
uncertain and can also increase rainwater run-off in urban environments. Strengthened
infrastructure would enable countries to maintain relatively high levels of water supply and
sanitation services in the face of population dynamics and climate change. In this context,
existing wastewater treatment facilities need to be better equipped for increasingly
stringent environmental and health regulations, as well as new and emerging pollutants
(Ashely, R., Cashman, A., 2006).
60
Source: Own processing according to the statistics Environmental dimension of quality of life: Population
exposed to air pollution by small particulates (PM10) (OECD.Stat, 2020a)
62
In this context, adequate financing of water services remains a challenge, including

in OECD countries. A first step is to combine revenues from water tariffs, transfers from
public budgets and transfers from the international community. This should aim to cover
the costs of investment, operation and maintenance of water infrastructure as much as
possible and as efficiently as possible. Well-designed tariffs for water supply and sanitation
services should cover the costs of operation, maintenance and renewal of the
infrastructure, as well as a progressive share of capital costs, where possible. Targeted
social measures outside the water bill are best suited to address the consequences of
redistribution and affordability.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0% n.a.
Norway
Portugal
Netherlands
Slovenia
Lithuania
Poland
Latvia
Czechia
France
Estonia
Finland
Belgium
Sweden
Greece
Austria
Spain
Luxembourg
Slovakia
Turkey
Italy
Hungary
Denmark
Germany
Ireland
Iceland
United Kingdom
Primary Secondary Tertiary General Public Treatment
Figure 3.20 Connection rate to wastewater treatment in 2015 (%)61, 62
Access to public wastewater treatment has developed differently in different

countries, and across the OECD, the share of the population whose wastewater is
connected to a municipal treatment plant increased from about 60% in the early 1990s to
almost 80% today. About 72% benefit from at least secondary treatment. However,
settlement patterns, economic and environmental conditions and the timing of the start
vary. This means that the share of the population connected to wastewater treatment
plants and the level of treatment also vary greatly from country to country. Some countries
have reached the economic and technical limits for connecting to sewage systems. They
61
Source: Own processing according to “Water: Wastewater Treatment” (OECD.Stat, 2020b), Sustainable De-
velopment Goals Indicators (OECD.Stat, 2020c); Global Burden of Disease Study (Institute for Health Metrics
and Evaluation (IHME), 2018)
62 Primary waste water treatment means treatment of waste water by a physical and/or chemical process
involving settlement of suspended solids, or other processes. The biological oxygen demand (BOD) of the
incoming waste water is reduced by at least 20 %. The total suspended solids of the incoming waste water
are reduced by at least 50 %.
Secondary waste water treatment usually involves a process involving biological treatment with secondary
settlement or another process. The result is BOD removal of at least 70 % and a chemical oxygen demand
(COD) removal of at least 75 %.
Tertiary treatment (apart from the secondary) of nitrogen and/or phosphorus and/or any other pollutants
affecting the quality or specific use of water (microbiological contamination, paint). These minimum treat-
ment efficiencies define tertiary treatment: removal of organic pollution at least 95% for BOD and 85% for
COD. The optimal connection rate is not necessarily 100%. It may vary from country to country and depends
on geographical features and the spatial distribution of habitats
63
need to find other ways to serve small, isolated settlements, including through effective,
independent on-site treatment systems (Figure 3.20).
3.4 Indicators monitoring economic opportunities and policy responses

Governments play a key role in promoting green growth by creating conditions that
stimulate greener production and consumption through economic instruments, promoting
cooperation and sharing of best practice between businesses, developing and promoting
the use of new technologies and innovations, and increasing policy coherence. The main
challenge is to use environmental protection as a source of growth, international
competitiveness, trade and jobs (Kanianska, R., 2017).
Businesses play an important role in adopting greener management approaches
and new business models, in developing and using new technologies, in research and
development and in stimulating innovation. Businesses, governments and civil society also
contribute by providing consumers with the information they need to make purchasing
decisions that reduce the environmental impact of consumption (Soewarno, N., Tjahjadi,
B., Fithrianti, F., 2019).
In this section, we address the main issues that are important for green growth:
• Technology and innovation, which are generally important drivers of growth and
productivity, especially for green growth. They are important for managing natural
resources and raw materials and minimising pollution. Innovations can stimulate
new markets, contribute to job creation, support the shift to new management
methods and facilitate the adoption of cooperative approaches and the diffusion of
knowledge.
• Production of environmental goods and services which are an important aspect of
the economic opportunities that exist in a greener economy.
• Investments and funding with the goal to facilitate the uptake and dissemination
of technology and knowledge, to promote the exchange of knowledge between
countries and to contribute to development and environmental goals.
• Prices, taxes and transfers that provide important signals to producers and
consumers. They serve as tools to internalise externalities and influence market
participants in adopting more environmentally friendly behaviour patterns
(Independeng Group of Scientists appoited by the Secteraty-General, 2019).
Table 3.18 Prices and taxes63
Share of environmental taxes in total tax revenues
Share of environmental taxes in GDP
Prices and taxes
Prices of electricity and natural gas for households
Average price for production, distribution and supply of drinking water
Innovation Expenditure on research and development in selected sectors
Share of environmental taxes in GDP

Market-based instruments play a key role in facilitating the transition to green growth.
Compared to regulatory instruments such as emission limits or normative technological
standards, environmental taxation promotes the lowest cost reduction for polluters. It also
provides incentives to reduce emissions per unit of pollution. In addition, the additional
63
Source: Own processing according to the Towards Green Growth: Monitoring Progress. Indicators (OECD,
2011b)
64
revenue can be used to support fiscal consolidation or to reduce other taxes (such as taxes
on labour and capital, which distort labour supply and savings decisions). Shifting the
overall tax burden on labour and capital towards environmentally harmful consumption
and production patterns while maintaining a constant level of redistribution can improve
economic efficiency.
Governments collect taxes to increase revenue or discourage harmful behaviour.
Historically, most environmental taxes were introduced primarily to increase income, but
today they provide important market signals. Their aim is to influence the behaviour of
producers and consumers by affecting the relative prices of substitute goods.
Efforts to green the tax system should be accompanied by a gradual phasing out of
government support measures for environmentally harmful products or activities
(maintaining unnecessary consumption or production practises). Moreover, they represent
opportunity costs for society, where resources could be directed to different, more
productive purposes.
There are two main challenges. The first challenge is environmental tax reform,
which should systematically take into account the environmental externalities in all
emission sources of emissions (or all resource users). Second challenge - all types of support
or preferential tax rates for fossil fuels should be excluded. This means that potential
regressive distributional effects outside of environmental taxes must be addressed through
other targeted measures to protect vulnerable households. In addition, governments
should provide predictable and transparent market signals through taxation to guide long-
term investment decisions (e.g. in alternative energy sources). Greater international
coordination can ultimately mitigate the potential loss of competitiveness of domestic
industries.
4
percentage of GDP
0
Spain
Poland
Ireland
United Kingdom
Italy
OECD
Slovakia
Germany
France
Luxembourg
Belgium
Norway
Sweden
Estonia
Hungary
Czechia
Finland
Austria
Netherlands
Portugal
Turkey
Slovenia
Denmark
Others, 2014 Motor Vehicles and Transport, 2014 Energy, 2014

%
Figure 3.21 Tax revenues related to the environment, percentage of GDP
From Figure 3.21 we can see that the share of environmental taxes in total tax
revenues is decreasing compared to GDP. The use of environmental taxes is increasing, but
remains limited in many countries. Revenues from these taxes represent approximately
5.2% of all tax revenues, corresponding to 1.6% of OECD GDP.
65
Over the last 15 years, countries such as Poland, Estonia and Turkey have shifted
part of their revenues to environmentally related activities. Some countries have
introduced new environmental taxes as part of fiscal consolidation, e.g. taxes on nuclear
fuel and aviation, carbon taxes or car tax rates linked to CO2 emissions and sometimes to
local air pollution. However, most countries have seen a higher increase in their labour tax
revenues compared to the environment.
Expenditure on research and development in selected sectors
Technology development and innovation are key drivers of economic growth and
productivity. They are important for successful energy and materials management and
have a significant impact on policies aimed at conserving natural resources and materials
and minimising environmental impact. Technological innovations support the shift towards
more integrated approaches to materials production and management. Many energy-
related technologies, such as "clean" technologies as well as information and
communication technologies (ICT), are reducing emissions. Innovation in education and
government is important to support shifts to new management methods and greater
transparency in decision-making
While technology and innovation have enormous potential, new technologies can
also generate additional pressures on the environment or the availability of a strain of
materials. Often these are new or substitute materials whose consequences may not yet
be known. The same applies to the development and marketing of new products that have
implications for air pollution, chemical safety, recyclability and waste management.
Environmentally related government R&D budget (2008)

Environmentally related government R&D budget (2018)
% total government R&D

8
7
6
5
4
3
2
1
0
Poland
Slovak Republic
Ireland
Romania
Slovenia
Finland
Lithuania
Portugal
Latvia
Spain
Greece
Italy
Germany
Hungary
Luxembourg
Czech Republic
United Kingdom
France
Estonia
Sweden
Denmark
Belgium
Austria
Netherlands
Figure 3.22 Environmentally related government research and development budget from the total budget
for science and research (%)64
64
Source: Own processing according to the Economic opportunities and policy responses (OECD.Stat, 2020d)
66
3.5 Global Sustainability Indices

In this part of the publication we come to specific variables, sustainability indices and their
subsequent analysis applied to the Slovak Republic and the Netherlands. In the case of the
Human Development Index (HDI), we have used 3 main dimensions and related indicators,
compared the achieved results and evaluated the position of Slovakia and the Netherlands
within the evaluated EU countries. We followed a similar way in the Environmental
Performance Index (EPI), where we evaluated Slovakia and the Netherlands in 24
performance indicators in ten problem categories related to Environmental Health and
Ecosystem Vitality. Finally, we provide in Appendix C: EPI, Environmental Health and
Ecosystem Vitality Score and Appendix D: HDI Index, 2017 (Map of world and Europe) we
also provide an insight into the World map and Map of Europe within the HDI and EPI
indices.
3.5.1 HDI index and its components in Slovakia and the Netherlands
We rank the HDI index among the aggregated indicators that measure the progress of
society in 3 dimensions related to the health, education and living standards of the
population. The main principle of the HDI index is to measure the level of human
development achieved with a single index and to ensure comparison between all countries
in the world. We calculate the HDI by taking the geometric mean of 3 specific indices
calculated from 3 main dimensions.
The international ranking of countries according to the HDI index is recalculated
each year based on the most recent comparable data in the area of the 3 dimensions of the
Human Development Index: long and healthy life, education and standard of living.
Countries are divided into 4 country groups with 4 levels according to the size of the HDI
index: very high HDI level, high HDI level, medium HDI level and low HDI level.
Table 3.19 HDI and its components in Slovakia and the Netherlands in 201865
Indicator Netherlands Slovakia
HUMAN DEVELOPMENT INDEX 0.934 0.855
LONG AND HEALTHY LIFE
Life expectancy 82.3 77
EDUCATION
Estimated number of years of education 12.2 15.0
Average years of schooling 18.0 12.5
STANDARD OF LIVING
Gross national income per capita (PPP) 46,711 29,467
In Table 3.19 we compared the Human Development Index of Slovakia and the
Netherlands. From this we can conclude that the Netherlands is one of the countries with
a very high level of human development of 0.934 and Slovakia is one of the countries with
a high HDI of 0.855. On the basis of Table 3.20 we have shown how the Human
Development Index developed in Slovakia and the Netherlands in the observation period
1990 - 2018 (United Nations Development Programme, 2020).
65
Source: Own processing according to the the United Nation Development Programme (2020) database
67
Table 3.20 Trends in the development of HDI in Slovak Republic and the Netherlands in 1990 - 201866
Years 1990 2000 2010 2011 2012 2013 2014 2015 2016 2017 2018
Netherlands 0.83 0.88 0.91 0.921 0.923 0.923 0.924 0.932 0.933 0.934 0.934
Slovakia 0.738 0.763 0.827 0.832 0.836 0.839 0.844 0.845 0.853 0.855 0.855
In order to make an international comparison of the EU countries, we have

constructed Figure 3.23 using the Human Development Index data of selected 24 member
countries drawn from the United Nations Development Programme (UNDP). Slovakia took
third place among the V4 countries (Czech Republic, Poland, Slovakia and Hungary) and the
Netherlands took 1st place among the economic union of the 3 Benelux countries
(Netherlands, Belgium and Luxembourg).
Norway
Ireland
Germany
Sweden
Netherlands
Denmark
Finland
Belgium
Austria
Luxembourg
Slovenia
Spain
France
Czechia
Malta
Italy
Estonia
Poland
Greece
Lithuania
Slovakia
Latvia
Portugal
Hungary
0,8 0,82 0,84 0,86 0,88 0,9 0,92 0,94 0,96
Index
Figure 3.23 International comparison of the HDI index of EU countries67
3.5.2 EPI index and its categories in Slovakia, in the Netherlands and within
the EU countries
In the following Table 3.21 we have prepared the evaluation of the EPI Index for the
Netherlands and Slovakia. The Netherlands ranks 18th out of 180 countries rated with a
score of 75.46 and the best score (EPI 99.90) in the Water Resources category in 3rd place
66
Source: Own processing according to the United Nation Development Programme (2020) database
67
Source: Own processing according to the United Nation Development Programme (2020) database
68
and the worst score (EPI 34.60) in the fisheries category in 131st place. Slovakia placed 28th
with a score of 70.6, with the best overall score EPI of the V4 countries and the Eastern
European countries. The best score (EPI 75.08) in the ecosystem vitality category ranked
3rd place and the worst score (EPI 59.42) was achieved by Slovakia in the air quality
category, where it was placed in the 133rd position.
Table 3.21 Evaluation of the EPI index of Slovakia and the Netherlands68, 69
Categories Global Ranking of EPI Index Global Ranking of EPI Index
the Netherlands Slovakia
EVALUATION OF THE EPI INDEX 18th 75.46 28th 70.60
ENVIRONMENTAL HEALTH 20th 92.26 89th 63.87
Air quality 29th 89.68 133rd 59.42
Household solid fuels 1st 100.00 62nd 63.46
PM2.5 Exposure 116th 80.58 162nd 50.78
PM2.5 Exceedance 115th 85.01 161st 62.69
Water and Sanitation 14th 98.26 42nd 69.62
Drinking water 20th 97.67 48th 65.12
Sanitation 18th 98.85 41st 74.12
Heavy metals 13th 89.80 20th 87.21
ECOSYSTEM VITALITY 35th 64.25 3rd 75.08
Biodiversity and Habitat 78th 80.13 19th 94.31
Marine protected areas 1st 100.00 - -
Biome Protection 111th 66.62 1st 100.00
Species Protection Index 26th 99.82 1st 100.00
Representativeness Index 60th 57.50 43rd 68.25
Species Habitat Index 113th 77.72 79th 86.21
Forests 32nd 35.79 82nd 17.09
Fisheries 131st 34.60 - -
Fish Stock Status 111th 46.72 - -
Regional Marine Trophic Index 117th 22.48 - -
Climate and Energy 77th 52.55 9th 74.21
CO2 Emissions Intensity (total) 130th 37.68 15th 78.21
CO2 Emissions Intensity (power) 87th 36.52 36th 54.92
Methane Emissions Intensity 28th 85.54 40th 76.29
NO2 Emissions Intensity 25th 87.37 11th 98.23
Black Carbon Emissions Intensity 6th 98.70 26th 79.02
Air pollution 5th 96.56 18th 79.51
SO2 Emissions Intensity 3rd 98.72 43rd 70.22
NOX Emissions Intensity 9th 94.40 15th 88.81
Water Resources 3rd 99.90 46th 89.95
Agriculture 59th 35.39 13th 61.53
The EPI 2018 index evaluated 180 countries across 24 performance indicators and
in the categories of Environmental Health and Ecosystem Vitality problems. We have
68
Source: Own processing according to the Environmental Performance Index (2020a) and (2020b)
69
Note: The missing data in the Biodiversity and Biotope: Marine Protection Areas and Fisheries sections
show that Slovakia does not have access to the sea and the benefits of coastal states, and that the Nether-
lands does not have missing data as the country is washed by the North Sea from the Northwest.
69
attached a complete preview of the comparison at the end of the publication (Appendix B:
EPI index - Ranking of 180 countries).
France
Denmark
Malta
Sweden
Luxembourg
Austria
Ireland
Germany
Finland
Spain
Belgium
Italy
Netherlands
Greece
EU
Portugal
Slovakia
Lithuania
Czechia
Slovenia
Latvia
Hungary
Estonia
Poland
60 65 70 75 80
Index
Figure 3.24 Global comparison of the EPI index of EU countries70, 71
3.6 Hierarchical clustering procedures

The last presented analysis is a comparison of 3 models of cluster analysis for a set of 15
countries of the European Union. Our 2 examined variables were: Human Development
Index (HDI) and Environmental Performance Index (EPI) as aggregate indicators, which we
described in more detail in the introduction in the first chapter, from a methodological
point of view in the third chapter and in their application in the last chapter Results.
The characteristics of the raw data were taken into account in the selection of
appropriate hierarchical clustering methods. In the cluster analysis of our data, we used
the statistical software SAS Enterprise Guide 4.2 statistical software, which forms
hierarchical clusters of observations containing the coordinates of the data, but also their
distances. If the dataset contains coordinates, the cluster analysis calculates the Euclidean
distance of the objects before applying the clustering method is applied. The result of the
70
Source: Own processing according to the Environmental Performance Index (2020c)
71
Data obtained from the individual EU countries and subsequently created a ranking according to the
achieved score within the Environmental Performance Index (EPI).
70
hierarchical agglomerative clustering is a diagram that is displayed as a tree diagram - a

"dendrogram" that can be displayed in the SAS system in 2 ways, vertically or horizontally.
The main purpose of the dendrogram is to find the best way to assign objects to clusters.
The key to interpretation is to focus on the level at which the two different objects are
connected.
3.6.1 Nearest Neighbour Method

To compare the first cluster analysis model, we used the Nearest Neighbour method as the
first of the hierarchical clustering methods. The principle of the Nearest Neighbour model
is that the algorithm uses a minimum distance to measure the distance between clusters.
2 objects placed in a cluster are separated by the shortest possible distance, gradually
adding more clusters to the original objects by creating the 3rd nearest neighbour. After
processing the model using SAS, we constructed a dendrogram.
Table 3.22 Clusters according to the nearest neighbour method72
Clusters EU countries
1. Sweden
Hungary, Slovakia, Greece, Italy, Netherlands, Belgium, Luxembourg, Austria, Czech
2.
Republic, Finland, Germany, Ireland, France, Denmark
Figure 3.25 Cluster created according to the nearest neighbour method73
According to the constructed dendrogram (Figure 3.25) and also from Table 3.22, it
follows visually and analytically apparent that we have divided the 15 countries into 2
clusters. If we take a closer look at the clusters formed, we can see that cluster 2 as a larger
group contains the dominance of 14 developed countries of the European Union. Countries
72
Source: Own processing according to data obtained from HDI and EPI index variables
73
71
such as Denmark, France, the Netherlands, Italy, Greece, Slovakia and Hungary used the
dendrogram to show a similar levels of HDI and EPI indices. Cluster 1 contains only one EU
country, Sweden, as significantly more developed in terms of achieving higher values of
HDI and EPI indices.
3.6.2 Median Method

As a second method of cluster analysis for the comparison of European countries, we have
chosen the Median method, which serves as a certain extension of the Centroid method.
We have described the detailed principle of these methods in more detail in the previous
chapters. The Centroid method uses the distance between the centroids of two clusters to
evaluate the overall cluster solution, of the cluster, with the centre of gravity representing
the centroid of a particular cluster. The distance between two clusters is calculated as the
difference between the centres of gravity. The median method is based on the median,
which follows from the name itself, and instead of calculating the average for each cluster
to determine its centre of gravity, it calculates the mean distance between all pairs of
observations or individuals in the clusters. After processing the data for this model, we
created a dendrogram using SAS software.
Table 3.23 Clusters according to the median method74
Clusters Eu countries
1. Sweden
Hungary, Slovakia, Greece, Italy, Netherlands, Czech Republic, Ireland, France,
2.
Denmark, Austria , Belgium, Luxembourg , Finland, Germany
74
72
Figure 3.26 Cluster according to the median method75, 76
According to Table 3.23 and the dendrogram (Figure 3.26), we can observe a very
similar situation as with the nearest neighbour method. We redistributed 15 countries into
two main clusters. Cluster 1 contains again a set of 14 EU countries, whose monitored data
of HDI and EPI indices are relatively similar. While Sweden belongs again to the 2nd cluster
and shows its strength over other countries.
3.6.3 Ward’s Method

As a final analysis, we present the most commonly used method in marketing, called the
Ward's Minimum Variance Method. In Ward's method, clusters are formed that minimise
the variance in each cluster. For each cluster, the average for each variable is calculated
and in each cluster the observations are compared to the average for each variable. The
observations or clusters are combined in such a way that the variance in the resulting
solution cluster is minimised as much as possible. After summarising the data from our
analysis, we used SAS software to create a table and construct a dendrogram.
Table 3.24 Clusters according to the Ward’s Minimum Variance method77
CLUSTERS Eu countries
Hungary, Slovakia, Czech Republic , Greece, Italy, the Netherlands, Austria,
1.
Belgium, Luxembourg, Finland, Germany
2. Ireland, France, Denmark , Sweden
Figure 3.27 Cluster according to the Ward’s Minimum Variance method 78
75
76
In SAS, the Median method is called the "Centroid method"
77
78
73
The illustrated dendrogram (Figure 3.27) illustrates the situation of 2 constructed

clusters of countries, which can be nicely distinguished from the cluster formed by Ward's
Minimum Variance method. On the right-hand side of the dendrogram we see cluster 2,
which connects the 4 strongest countries in Northern Europe. These are the richest
economies in the world with even income distribution, low unemployment and highly
developed institutionalisation as measured by the Human Development Index (HDI) and
the Environmental Performance Index (EPI), indicating that the countries are of a high
standard. From the opposite left side of the dendrogram, we see developed countries
connected by one cluster with relatively similar values of the HDI and EPI indices. Although
more significant differences are seen mainly in countries such as Hungary (left side of the
dendrogram) and Germany (closer to the Nordic countries of the dendrogram), where the
differences are obvious and Hungary is trying to catch up, but it is not yet enough. Table
3.24 also clearly shows 2 clusters with a division of the countries according to the achieved
values of the HDI and EPI indices
In terms of cluster characteristics, it is important to look at the values that the
countries report for the two indicators used for the analysis. In the case of cluster 1, things
are clear: we have an economically strong country that seems to be performing under the
control of the European Strategy targets and the corresponding values for an important
environmental factor. In the case of clusters of the 2nd degree, we can observe interesting
situations in all 3 analysed methods. In the case of Slovakia, in the first Nearest Neighbour
method, we can see how it reworked for the second lowest place, which analyses that it
has the highest average value of HDI and EPI index of all the countries analysed, together
with Hungary and Greece. On the other hand, the Netherlands is approaching the average
values of the indices of Belgium and Luxembourg. The countries in this group are
characterised by an average employment rate between 70% and 81.1% (except Greece -
64% and Poland 64.60%) as well as high values for greenhouse gas emission values of over
102 compared to 1990. These countries are the ones that need to make sustainable efforts
to become knowledge-based economies. When analysing the median method, we get
similar results as in the case of the first method, but the fundamental difference is the
distance used between the centre of gravity of the two clusters to evaluate the overall
solution of the cluster. More interesting, however, is the last Ward method, where the
strongest EU countries (Sweden, Denmark, France and Ireland) separated into a second
cluster. The countries in cluster 1 seem to have interesting characteristics: greenhouse gas
emissions are less than 71, compared to 1990 at 100, with the exception of Belgium (92)
and Sweden (91), and compared to cluster 2, the countries have a higher average of people
at risk of poverty and a lower average of primary consumption.
3.7 Hierarchical clustering analysis of attitudes towards environment

across cultures
This subchapter is combining knowledge and tools of the marketing across cultures with
the hierarchical clustering analysis to define cultural clusters based on the attitudes to-
wards environment and its protection, which were further described using Hofstede’s Cul-
tural model.
Intercultural marketing is about both localization and globalization: it aims to cus-
tomize products and marketing strategies to the needs of customers, within the framework
of a global strategy. Intercultural marketing seeks to balance intercultural differences
74
between nations, requiring local adaptation of the marketing program, and intercultural
equivalences, contributing to the creation of a scope and learning effect. To carry out such
a marketing optimization, it is necessary to identify segments of the global market, consist-
ing of countries, in which it is possible to apply a single marketing program. Yet, intercul-
tural marketing does not only focus on geographical and national segmentation criteria,
but also considers consumer values, attitudes, preferences, and lifestyles, which it also as-
sociates with age, social class, ethnicity, employment, etc. (Usinier, 2009)
There are currently several studies that have used these segmentation criteria to
identify segments of the global market, including demographic (Anderson, 1999),, psycho-
logical and value-oriented studies (Boote, 1983),, quality of life studies (Peterson, 2000),
attitudes (Verhage, 1989), behavior (Askegaard, 1998), customer loyalty (Yavas, 1992) and
purchasing situation (Gehrt, 2003).
Geographical zones of cultural homogeneity correspond to a large extent with na-
tional cultures (Usinier, 2009). One of the studies confirming this statement is that of De
Mooij and Keegan (De Mooij, 1991), who conducted a comparative analysis of lifestyles in
Europe and Asia, which resulted in the definition of multinational target groups. Each of
these target groups represents a separate segment, consisting of consumers in several
countries.
Conclusions on global lifestyle convergence have also been supported by gender-
based global market segmentation (Tai, 1997), which identified changes in consumer life-
styles in Hong Kong, Taiwan, and China e.g., based on women's perceptions and roles, fam-
ily life, health, and the environment. The research led to the finding that women in China
tend to be influenced by Western values and are radically approaching Hong Kong and Tai-
wanese consumers. Another study demonstrated the usefulness of global gender-based
segmentation for Turkish travel agencies (Koc, 2002).
There is no uniformity in intercultural marketing in the methodology of global mar-
ket segmentation based on socio-cultural factors. Research methods and procedures are
often derived from intercultural psychology (Matsumoto, 2011). Certain alternative ap-
proaches have been provided by other authors (Kale, 1987), (Kreutzer, 1988), (Souiden,
2002), (Hofstede T. , 1999) and (Usinier, 2009), which deal directly with the field of inter-
cultural or global marketing. Usinier (Usinier, 2009) also presented a specific methodology
in the form of operative mapping of zones of cultural homogeneity, based on cultural as
well as marketing criteria associated with the product category. The result of such a matrix
should be the identification of the countries within which the product will be marketed,
and which fall into one segment as the equivalent of a zone of cultural homogeneity.
This subchapter presents a hierarchical clustering analysis (segmentation) based on
attitudes towards environment and Hofstede’s cultural model (Hofstede G. , 2001), who
has carried out extensive research on this issue over several decades. A key concept of his
research is national culture, which he understands as the collective programming of the
mind that an individual acquires when growing up in a particular country.
He was inspired by Inkeles and Levinson (Inkeles, 1997) - a study of national culture,
in which they distinguished three dimensions of values that have incremental implications
for the functioning of society and individuals within societies. These are: the relationship
to authority; the self-perception of the individual in terms of the relationship between the
individual and society, as well as in terms of the individual understanding of masculinity
and femininity; and finally, ways of managing conflicts, including managing aggression and
expressing emotions.
75
Hofstede (Hofstede G. , 2001) conducted his pilot research in IBM, on the sample of
116,000 employees of 66 nationalities in 50 countries, who answered 63 questions reflect-
ing their system of values. Based on their answers, Hofstede derived four dimensions of
national culture, for which he subsequently quantified the respective values for each coun-
try. These dimensions are: (1) Power Distance (PDI), which deals with the fact that all indi-
viduals in societies are not equal – it expresses the attitude of the culture towards these
inequalities amongst us. Power Distance is defined as the extent to which the less powerful
members of institutions and organisations within a country expect and accept that power
is distributed unequally. (2) Uncertainty Avoidance (UAI) has to do with the way that a so-
ciety deals with the fact that the future can never be known: should we try to control the
future or just let it happen? This ambiguity brings with it anxiety and different cultures have
learnt to deal with this anxiety in different ways. The extent to which the members of a
culture feel threatened by ambiguous or unknown situations and have created beliefs and
institutions that try to avoid these is reflected in the score on Uncertainty Avoidance. (3)
Individualism (IDV) - the fundamental issue addressed by this dimension is the degree of
interdependence a society maintains among its members. It has to do with whether peo-
ple´s self-image is defined in terms of “I” or “We”. In Individualist societies people are sup-
posed to look after themselves and their direct family only. In Collectivist societies people
belong to ‘in groups’ that take care of them in exchange for loyalty. (4) Masculinity (MAS)
- a high score (Masculine) on this dimension indicates that the society will be driven by
competition, achievement, and success, with success being defined by the winner / best in
field – a value system that starts in school and continues throughout organizational life. A
low score (Feminine) on the dimension means that the dominant values in society are car-
ing for others and quality of life. A Feminine society is one where quality of life is the sign
of success and standing out from the crowd is not admirable. The fundamental issue here
is what motivates people, wanting to be the best (Masculine) or liking what you do (Femi-
nine). (5) Long Term Orientation (LTO) - this dimension describes how every society must
maintain some links with its own past while dealing with the challenges of the present and
future, and societies prioritize these two existential goals differently. Normative societies.
which score low on this dimension, for example, prefer to maintain time-honoured tradi-
tions and norms while viewing societal change with suspicion. Those with a culture which
scores high, on the other hand, take a more pragmatic approach: they encourage thrift and
efforts in modern education to prepare for the future. (6) Indulgence (IND) - one challenge
that confronts humanity, now and in the past, is the degree to which small children are
socialized. Without socialization we do not become “human”. This dimension is defined as
the extent to which people try to control their desires and impulses, based on the way they
were raised. Relatively weak control is called Indulgence” and relatively strong control is
called “Restraint”. Cultures can, therefore, be described as Indulgent or Restrained.
An extensive replica of Hofstede's research, entitled Culture in the Cockpit, was con-
ducted by Merrit (Merritt, 2000), who set the following question: Does Hofstede's theory,
which is based on research conducted in only one enterprise in the 1970s, currently have a
universal validity? Merrit conducted similar research as Hofstede on the sample of 9,417
pilots from 26 airlines in 19 countries. He used the FMAQ questionnaire, which measures
82 items using a five-point Likert scale of pilots' attitudes and values, related to their work
and environment. The result of this research was the validation of Hofstede's findings.
In research following Hofstede's theory, an internal differentiation of the individu-
alism-collectivism dimension was achieved. It turned out that individualism is not the same
76
in all the countries, esp. in terms of performance-related values. E.g., a study of three indi-
vidualistic countries with the same language (USA, Canada, Australia) found that US resi-
dents place much higher pressure on performance compared to the other two countries
(Feather, 1994). However, the differences between individualistic countries are even more
pronounced when looking at the Scandinavian countries, which, as individualistic countries,
share certain features with the US, but collectivistic elements are also included here. Be-
cause of this finding, researchers started to distinguish between the vertical and horizontal
dimensions of individualism - collectivism, based on the individual's view of their own po-
sition in relation to others. While in horizontally oriented societies individuals tend to per-
ceive the position of people equally, individuals are perceived as different from other mem-
bers of society based on the social hierarchy, thus accepting social inequalities (Triandis,
1995).
Hofstede's approach to identifying and comparing cultural values has been widely criticized
(McSweeney, 2002), (Gerhart, 2005) and (Nakata, 2009), but it can still be considered relevant
and evidenced by its relevance in subsequent research and studies (Steenkamp, 2002), (Hofstede
T. , 1999) and (Wedel, 2000).
3.7.1 Clustering design

Broadly stated, there are two approaches to segmentation (Wedel, 2000), namely, a priori
methods and post-hoc methods. In a priori methods, an analyst uses domain knowledge to
segment the population into different groups. We will not be focusing on these types of
approaches. In post-hoc methods, the analyst relies on data analysis to identify groupings.
There are two broad categories of post-hoc methods: (1) Traditional methods, which are
based on using a distance or a similarity metric to determine how far or near a customer is
from other customers in the market, and (2) Newer probability-based, such as latent cluster
analysis, which can help identify groupings in the population from which a sample of re-
spondents has been selected for the segmentation analysis.
Traditional cluster analysis refers to a range of techniques that are available to iden-
tify structure (groupings) within complex and multidimensional data, as are typically avail-
able in segmentation studies. There are two basic classes of methods: (1) Hierarchical
methods, in which we build up or break down the data row by row, and (2) Partitioning
methods, in which we break the data into a prespecified number of groups and then real-
locate or swap data to improve some measure of effectiveness. The software that was used
to conduct the analysis (enginius) includes one method of each type i.e., Ward’s (Ward,
1963) (hierarchical) and K-means (partitioning), which are among the most popular seg-
mentation methods used in practice. The clustering analysis was conducted using both of
these methods but after detailed evaluation of the results obtained, Hierarchical clustering
(Ward’s method) was further selected as a method providing much clearer results.
Hierarchical methods produce “trees,” formally called dendograms. In Ward’s
method, we form clusters based on the change in the error sum of squares associated with
joining any pair of clusters. Using Ward’s (1963) procedure, we form clusters based on min-
imizing the loss of information associated with grouping individuals into clusters. We meas-
ure loss of information by summing the squared deviations of every observation from the
mean of the cluster to which it is assigned. Using Ward’s method, we assign clusters in an
order that minimizes the sum of squares error (SSE) from among all possible assignments,
where SSE is defined as
77

   
 
 =  ∑  −

∑   ,

where Xij is the intent to purchase score for the ith individual in the jth cluster; k is
the number of clusters at each stage; and nj is the number of individuals in the jth cluster.
The number of clusters (K) to use is usually based on managerial judgment, but cer-
tain indices can also help us to determine an appropriate number of clusters. In hierarchical
clustering, we use the distances at which clusters are combined as a criterion and select
the solution (number of clusters) for which distances between clusters are reasonably
large. As we increase the number of clusters, we should be looking for a big improvement
in our criterion followed by a smaller improvement, as an indication that there is little ben-
efit to producing finer clusters.
Once we’ve identified the appropriate number of segments and countries which
belong to each segment, we begin the process of profiling the members of those segments.
In cluster profiling, we attempt to create a picture of the members of the clusters using all
the variables of interest. In this subchapter, Hofstede’s cultural indices (as described in the
previous text) were applied as descriptors, measured from 0 to 100 pt.
The chosen segmentation basis are representing attitudes towards the environ-
ment and were gathered from the World Values Survey (Survey, 2022) database using the
data collected in the last two waves of data gathering (2017 – 2022 and 2010 – 2014). The
following questions and answers were applied.
Table 3.25 Segmentation variables79
Wave Variable Title
2017 - 2022 Q111 Protecting environment vs. Economic growth
2017 - 2022 Q79 Confidence: The Environmental Protection Movement
2017 - 2022 Q99 Active/Inactive membership: environmental organization
2010 - 2014 V78 Schwartz: It is important to this person looking after the environment
2010 - 2014 V83 Past two years: participated in demonstration for environment
Q111 Question wording

Here are two statements people sometimes make when discussing the environment and
economic growth. Which of them comes closer to your own point of view?
A. Protecting the environment should be given priority, even if it causes slower economic
growth and some loss of jobs
B. Economic growth and creating jobs should be the top priority, even if the environment
suffers to some extent
Table 3.26 Q111 Binomical Scale80
Binomical scale 1 0
Answer Protecting environment Economy growth and creating jobs

I am going to name a number of organizations. For each one, could you tell me how much
confidence you have in them: is it a great deal of confidence, quite a lot of confidence, not
very much confidence or none at all?
To analyze the data gathered, the following scale was applied.
79
Source: World Values Survey (2022)
80
Source: Own processing according World Values Survey (2022)
78
Table 3.27 Q79 Likert Scale81

Likert Scale 5 4 3 2 1
Answer A great deal Quite a lot Don't know Not very much None at all

Now I am going to read out a list of voluntary organizations; for each one, could you tell
me whether you are a member, an active member, an inactive member or not a member
of that type of organization?
To analyze the data gathered, the following scale was applied.
Table 3.28 Q99 Scale82
Scale 0 0.5 1
Answer Don't belong Inactive member Active member
V78 Question wording

Now I will briefly describe some people. Using this card, would you please indicate for each
description whether that person is very much like you, like you, somewhat like you, not like
you, or not at all like you?
Table 3.29 V78 Likert Scale83
Likert
7 6 5 4 3 2 1
Scale
Very much Like Somewhat like Don´t A little like Not like Not at all
Answer
like me me me know me me like me
V83 Question wording

During the past two years have you…Participated in a demonstration for some environ-
mental cause?
Table 3.30 V83 Binomical Scale84
Binomical Scale 1 0
Answer Yes No
The segmentation data has been further factorized. Data has been scaled before
factorization. Two (2) factors have been retained during the factorization.
Table 3.31 Factor table85
Factors Eigen value Variance explained (%) Cumulated variance explained (%) Retained
Factor 1 1.845 36.90 36.9 Yes
Factor 2 1.579 31.58 68.5 Yes
Factor 3 0.747 14.94 83.4 No
Factor 4 0.479 9.59 93.0 No
Factor 5 0.350 6.99 100.0 No
The following table presents the attribution of segmentation variables to each of

two dimensions.
81
82
83
84
85
79
Table 3.32 Loadings table86

Segmentation variables Dim.1 Dim.2
Environment_vs_Growth -0.361 0.778
EP_confidence -0.463 0.756
EP_membership 0.562 0.551
E_importance 0.862 0.170
E_demonstration 0.665 0.262
The segmentation data applied in the Hierarchical clustering analysis contains the
full information about all the chosen segmentation variables on a sample of 34 countries
are in Appendix D, Table D.1.
The discrimination data (Table D.2 in Appendix D) includes the value of each variable
that was applied as a descriptor. The discrimination data was gathered and applied for the
same set of 34 countries as presented in the Table D.1.
There was also a set of countries that were lacking a part of the information related
to attitudes towards the environment that was available for countries included in the seg-
mentation data set. This group of countries was selected as a sample of classification data
and could be found in Table D.3, Appendix D. It includes the list of countries and attributed
values of Hofstede’s cultural indices.
3.7.2 Segmentation, discrimination and classification result

By applying these three sets of data about segmentation, discrimination, and classification
variables, the following results were obtained.
The ideal number of segments is a function of statistical fit (what the data say),
managerial relevance (what makes the most sense from a managerial point of view), and
targetability (can the segments be easily targeted). When the three criteria do not perfectly
converge, selecting the right number of segments becomes a judgment call. Using statisti-
cal criteria exclusively (see scree plot analysis below), we have retained three segments.
The segmentation method relies on the hierarchical clustering approach. This approach
generates a dendrogram that we display next.
The dendrogram represents the grouping process of observations into clusters. It is
a tree diagram to illustrate the arrangement of clusters produced by hierarchical clustering,
and how the observations are incrementally clustered together. The chart reads from bot-
tom (all initial observations are separated) to top (all observations are clustered into one
unique segment). The height represents the distance between the two groups of observa-
tions being merged at each step. If two very distant groups are being merged, this will cre-
ate a 'jump' in the dendrogram, indicating that it might be wise to stop the clustering pro-
cess before.
86
80
Figure 3.28 Dendogram87
The scree plot compares the sum of squared error (SSE) for each cluster solution. A
good cluster solution might be when the SSE slows dramatically, creating an 'elbow'. Such
elbow does not always exist. From a statistical point of view, the SSE reported in the scree-
plot is computed as the sum of squared error between each observation and its cluster
centroid (or center), summed over all the observations.
The screeplot displays, for each cluster solution, a measure of within-cluster heter-
ogeneity. If clusters group observations that are widely different (which will happen if the
number of clusters is too small to capture the variability in the data), the value will be high.
A good cluster solution might be where the screeplot displays an 'elbow', that is, where
increasing the number of clusters beyond a certain point does not dramatically decreases
within-cluster heterogeneity. The measure displayed in the screeplot is related, but not
equivalent, to the distance reported in the dendrogram.
87
81
Figure 3.29 Screeplot88
The following table presents the size of the population (the number of countries
being included in the analysis) and its structure i.e., the size of each segment being created
using hierarchical clustering approach.
Table 3.33 Segment size89
Segment Population Segment 1 Segment 2 Segment 3
Size 34 16 4 14
Relative size 100% 47% 12% 41%
Table 3.34presents the description of the population as an average value per the
whole group of countries being included in the analysis, and the description of each seg-
ment being created using the hierarchical clustering approach. These average values are
calculated as averages of each segmentation variable, overall for each segment (centroid).
Segmentation variables that are statistically different from the rest of the population are
highlighted in red (lower) or green (higher).
88 Source: Own processing

89
82
Figure 3.30 Statistical differences in segment profiles90
Segment differences per segment were further assessed. Cell colors indicate to
what extent a segment is statistically different from the rest of the population on each
segmentation variable.
Table 3.34 Segment description91
Segmentation variable Population Segment 1 Segment 2 Segment 3
Environment_vs_Growth 0.565 0.599 0.426 0.565
EP_confidence 3.09 3.22 2.54 3.11
EP_membership 0.092 0.061 0.041 0.142
E_importance 5.20 4.82 5.41 5.57
E_demonstration 0.067 0.040 0.040 0.107
The figure below is a graphical representation of the various segments, segment

members, and segmentation variables. It is obtained by plotting the first two dimensions
of a principal component analysis performed on the (standardized) segmentation data, on
top of which segment information has been overlaid. Because only the first two dimensions
of the PCA are displayed, and these two dimensions capture only 68,5% of the variance in
the data, some differences between segments might not appear here. Note that segmen-
tation variables with no variance, if any, have been excluded. Two clusters who appear to
overlap in the first two dimensions might be distinct on other dimensions. Consequently,
this chart is a useful guide, especially to see which segmentation variables are correlated,
but may be misleading if used to select the optimal number of segments.
90
91
83
Figure 3.31 Spatial representation of clusters and segmentation variables using principal component analy-
sis92
The Table D.4 in Appendix D presents the segment to which each country (member
of the population) that was included in the segmentation dataset belongs to.
The following table reports the descriptor averages of each segment. The more dif-
ferences can be found, the easier it will be to predict segment membership based on de-
scriptors alone.
Table 3.35 Descriptor data per segment93
Discrimination variables Population Segment 1 Segment 2 Segment 3
IDV 35.8 45.0 30.0 27.0
IND 44.2 43.4 17.0 52.9
LTO 48.3 66.8 41.8 29.0
MAS 50.6 49.3 50.0 52.2
PDI 70.0 61.4 88.0 74.6
UAI 68.5 68.3 82.3 64.9
Descriptors’ differences per segment were further assessed. Cell colors indicate to
what extent a segment is statistically different from the rest of the population on each
discrimination variable.
92
93
84
Figure 3.32 Statistical differences in descriptors94
The figure below is a graphical representation of the various segments, segment

members, and descriptors. It is obtained by outputing the first two dimensions of a princi-
pal component analysis performed on the (standardized) descriptors, on top of which seg-
ment information has been overlayed. Because only the first two dimensions of the PCA
are displayed, and these two dimensions capture only 57.8% of the variance in the data,
some differences between segments might not appear here. Note that descriptors with no
variance, if any, have been excluded. If two or more segments fully overlap, it is unlikely
that they could be clearly separated based on descriptors alone. However, two segments
that seem to overlap on two dimensions may be more clearly separated on other dimen-
sions. Consequently, the confusion matrix is a better guide to assess the quality of segment
classification based on descriptors.
94
85
Figure 3.33 Spatial representation of segments and their descriptors using principal component analysis95
Often, segmentation variables for each customer may not be available to decision-
makers, but descriptors variables may be available. In this section, we explore whether de-
scriptors alone can predict segment membership with sufficient accuracy. The confusion
matrix and hit rates (reported below) indicate whether the model is accurate enough. For
member classification based on descriptors, Enginius uses a multinomial logit model. The
largest segment is selected as the default option (dummy), and the model identifies which
descriptors are the most significant for predicting cluster memberships. If a descriptor is
highly predictive, its p-values is close to zero, and the cells appear in green (or red).
The following table contains coefficients of the model created to classify countries
based on their descriptors using Hofstede’s cultural indices. Segment 1 is the model base-
line.
Table 3.36 Model coefficients96
Model parameters Segment 2 Segment 3
(Intercept) -35.7 45.8
IDV -6.86 -6.51
IND -2.18 -1.18
LTO -11.9 -11.5
MAS 1.40 1.85
PDI 13.4 11.9
UAI -1.09 -1.62
The following table shows probabilities that parameter estimates are different from
zero only by chance (p-values).
95
96
86
Table 3.37 Parameters‘ p-values97

p-values Segment 2 Segment 3
(Intercept) 0.824 0.708
IDV 0.997 0.989
IND 0.997 0.997
LTO 0.991 0.974
MAS 0.997 0.965
PDI 0.987 0.979
UAI 0.999 0.992
The confusion matrix compares actual segment membership (obtained from the
segmentation analysis and the original segmentation variables) and predicted segment
membership (obtained from the in-sample classification analysis and the descriptors
alone). When actual and predicted segment memberships coincide, the diagonal elements
are comparatively large, indicating that the classification model based on available de-
scriptors is accurate. As shown in the following confusion matrix, the model has correctly
classified 34 of the 34 observations. Thus, the global hit rate of the model is 100%. The off-
diagonal elements are considered classification errors.
Table 3.38 Confusion matrix98
Confusion matrix (count) Predicted 1 Predicted 2 Predicted 3 Total
Segment 1 16 0 0 16
Segment 2 0 4 0 4
Segment 3 0 0 14 14
Total 16 4 14 34
The same results are graphicly presented in the following graphic representation of
the confusion matrix: actual segment membership versus predicted segment membership.
Bubbles in the diagonal represent the correct classification.
The Table D.5 in Appendix D details the probabilities of each member of the seg-
mentation dataset to belong to each cluster (as predicted by the in-sample classification
model and the descriptors alone). The segment with the highest probability is retained and
is compared to the actual segment membership to measure model accuracy and classifica-
tion errors.
97
98
87
Figure 3.34 Confusion matrix plot99
Next, we apply the classification model (calibrated above) to a new population of

never-before-seen contacts, for whom only descriptors are available, known as out-of-sam-
ple classification. Because segmentation variables and actual segment membership are un-
available, the actual accuracy of the model predictions are unknown and can only be in-
ferred from the previous section. Following table describes the size of the population and
of each segment that was created. The size is based on the out-of-sample data, which in-
cludes 45 countries. The highest share was observed in Segment 1.
Table 3.39 Segment size (out-of-sample classification)100
Segment size Population Segment 1 Segment 2 Segment 3
Size 45 23 7 15
Relative size 100% 51% 16% 33%
The following Table 3.40 details the probabilities of each member of the out-of-
sample classification data to belong to each cluster as predicted by the above-described
classification model and the descriptors alone. The segment with the highest probability is
retained.
The aim of this section was to identify specific clusters within the global market that
can be defined as zones of homogeneity in terms of attitudes toward the environment. This
was done using hierarchical clustering analysis (Ward's method), using attitude toward the
environment as a segmentation variable. 34 countries were distributed along 3 segments
(clusters). The other 45 countries included in the analysis lacked crucial information on at-
titude toward the environment. A special classification model was developed and evalu-
ated to classify this group of countries, which was not included in the sample. The
99
100
88
classification was based on six Hofstede cultural indices, and each of out-of-sample coun-
tries was assigned to one of the three previously identified segments.
Table 3.40 Classification model predictions101
Country Prob(cluster 1) Prob(cluster 2) Prob(cluster 3) Predicted
Albania 0% 100% 0% 2
Algeria 0% 98% 2% 2
Azerbaijan 0% 100% 0% 2
Austria 100% 0% 0% 1
Bangladesh 0% 9% 91% 3
Bolivia 0% 85% 15% 2
Bosnia Herzegovina 0% 1% 99% 3
Bulgaria 100% 0% 0% 1
Canada 100% 0% 0% 1
Croatia 100% 0% 0% 1
Czechia 100% 0% 0% 1
Denmark 100% 0% 0% 1
Estonia 100% 0% 0% 1
Finland 100% 0% 0% 1
France 100% 0% 0% 1
Georgia 0% 0% 100% 3
Greece 100% 0% 0% 1
Hungary 100% 0% 0% 1
Iceland 100% 0% 0% 1
Indonesia 0% 0% 100% 3
Iran 0% 0% 100% 3
Italy 100% 0% 0% 1
Lebanon 0% 0% 100% 3
Latvia 100% 0% 0% 1
Lithuania 100% 0% 0% 1
Montenegro 0% 100% 0% 2
Norway 100% 0% 0% 1
Poland 100% 0% 0% 1
Portugal 0% 3% 97% 3
Puerto Rico 0% 0% 100% 3
Serbia 0% 100% 0% 2
Slovakia 0% 0% 100% 3
Vietnam 0% 0% 100% 3
Slovenia 100% 0% 0% 1
Spain 100% 0% 0% 1
Sweden 100% 0% 0% 1
Switzerland 100% 0% 0% 1
North Macedonia 0% 100% 0% 2
United Kingdom 100% 0% 0% 1
Venezuela 0% 0% 100% 3
Ghana 0% 0% 100% 3
India 0% 0% 100% 3
South Africa 100% 0% 0% 1
Trinidad and Tobago 0% 0% 100% 3
Uruguay 0% 0% 100% 3
101
89
MODELING AIR POLLUTION AND CARBON DIOXIDE EMISSIONS
WITH A COMPUTABLE GENERAL EQUILIBRIUM MODEL
4 MODELING AIR POLLUTION AND CARBON DIOXIDE EMISSIONS

Deteriorating air quality, frequent thunderstorms, prolonged drought, and water short-
ages... just a few issues closely related to the vast field of environmental conditions are at
the center of interest of many countries and their policy makers. One of the goals of the
European Commission is to make Europe the first climate neutral continent by 2050. To
this end, the European Green Deal document sets out various policies to reduce net green-
house gas emissions by at least 55% by 2030 compared to 1990 levels, use at least 32% of
energy from renewable sources, and increase energy efficiency by 32.5%.
In this chapter, we address the modeling of carbon dioxide emissions at the macro-
economic level using a computable general equilibrium (CGE) model. First, the CGE model
is briefly introduced as a methodological tool, then the environmental model used for the
simulation is described. The next part deals with the indicators of air pollution and emis-
sions and their evolution within a 10-year period (2004 - 2014). Finally, in the context of
the European Green Deal, the impact of a reduction in greenhouse gas emission quotas on
selected macroeconomic aggregates is modeled together with welfare analysis.
The methodology of general equilibrium economic models has been widely used to
model various climate impacts and changes, with a selection from work done in recent
years: Wittner and Waschik (2021) model the impacts of drought and wildfires in New
South Wales and the rest of Australia, Gao, Gedders and Ma (2020) quantify the direct and
indirect economic losses caused by typhoons and floods in one of the most developed prov-
inces, Guangdong, China, Ferrarini, Ferreira Filho, Cuadra and Victoria (2020) analyze how
the expansion of irrigation in the Sao Francisco region could affect water availability in four
other physiographic regions, Touitou, Laib, Boudeghdengh (2020) use a dynamic CGE
model to analyze water resources management and the climate crisis in Algeria, da Silva
and Gurgel (2019) use a CGE model to model climate change and flooding in the Brazilian
Amazon, the economic impacts of the climate crisis in Iran were studied by Vatankhah,
Moosavi and Tabatab (2019), and Ekr, Erk and Guney (2019) quantified the impacts of cli-
mate change on agricultural production in Turkey.
Zhang, Liu & Wang (2021) use general economic equilibrium models to model ex-
treme climate events, incorporating what they call a new damage function into the Cobb-
Douglas production function to simulate future climate damage in economic sectors. The
results suggest that the new damage function could better simulate the abrupt economic
consequences of extreme climate events and the variability of climate damages than, for
example, the Nordhaus method. Cumulative indirect losses due to weather extremes far
exceeded direct losses, with economic losses increasing most rapidly in the real estate, fi-
nancial, wholesale, and retail sectors.
Bardazzi & Bosello (2021) produced a review study of the use of CGE models to an-
alyze the relationship between water, energy, and food. They found that while these mod-
els are particularly well suited to tracking interlinkages across sectors and countries, most
CGE models have difficulty representing competing water uses across sectors, particularly
those related to the energy sector.
90
4.1 Methodology and data
A computable general equilibrium model is based on the circular flow of commodities and
payments in an economic system. The main agents are households, which own primary
factors, and firms, which use these factors to produce commodities and make payments.
Most models involve the government and foreign countries in this circular flow. The eco-
nomic system is in equilibrium only if the primary factors possessed by households or the
commodities produced by firms are fully used by firms and households, respectively, and if
expenditures on each activity equal income. It follows that neither products nor values can
be created out of nothing and that each activity or property must be closely related to use
and each revenue must equal expenditure. The principle is illustrated in Figure 4.1.
commodity
market
commodities
expenses
commodities commodities
households firms gover-
t t nment
axes axes
factors‘
revenues
factors
factors
market
Figure 4.1 Circular flow in economic system102
These rules are the foundations of Walras' general equilibrium. The flows of com-
modities and factors are absorbed by consumption: The output of firms is entirely con-
sumed by households and the primary factors owned by households are entirely used by
firms. For a given commodity, the quantity produced must equal the aggregate demand of
households and other firms. Similarly, the demand of firms for the primary factor must be
fully satisfied by the aggregate supply of households. This implies the condition of equilib-
rium in all markets. The sum of total revenues from commodity production must be allo-
cated either to households in the form of income from factor ownership, to other sectors
in the form of payments for intermediate consumption, or to the government in the form
of taxes. The value of any commodity is then the sum of all the values of the inputs used in
its production: the cost of intermediate inputs and payments to primary factors. The above
principles lead to constant returns to scale, perfectly competitive commodity markets, and
the "zero profit" condition. Finally, households use the income from owning the factors to
102
Source: Wing (2004)
91
consume goods, the so-called income equilibrium. CGE models based on the three condi-
tions of market equilibrium, zero-profit condition, and income equilibrium make it possible
to find such a set of prices and allocation of commodities and factors of production that
satisfy the general equilibrium.
Therefore, it is possible to model the general equilibrium without explicit financial
transfers, and money is not normally used as a commodity. Flows are expressed in terms
of one of the commodity values, the so-called numéraire commodity, whose price is fixed.
For this reason, there are only relative prices in the CGE models.
In this chapter we use the Energy-Environmental version of the CGE model devel-
oped by the Global Trade Analysis Project, coordinated by the Center for Global Trade Anal-
ysis at Purdue University, USA (McDougall & Golub, 2009). A description of the agents in
the model follows: government, aggregated household, firms, global bank, then interna-
tional trade and transportation, carbon dioxide emissions, and finally carbon taxation. Each
section highlights the changes from the original model in terms of carbon modeling.
Regional household
Expenditure = Income
Private household Savings Government
PRIVEXP SAVE GOVEXP
Domestic goods Imported goods Domestic goods Imported goods
VDPA VIPA VDGA VIGA
Figure 4.2 Regional expenditure and Income103
Figure 4.2 shows the breakdown of regional income among private consumption
expenditure, government consumption expenditure, and saving. Household and govern-
ment consumption consists of domestic and imported goods that can be substituted ac-
cording to the given elasticities. Note: The common coefficients of the basic data are used
in the model. There are 65 goods in the model, which for simplicity are aggregated into
eight main groups, denoted by i and j:
Aggregation of sectors and goods

Agriculture (Agr):
paddy rice, wheat, cereal grains nec104, vegetables, fruits, nuts, oil seeds, sugar cane, sugar beet,
plant-based fibers, crops nec, bovine cattle, sheep, goats, animal products nec, raw milk, wool, silk-
worm cocoons, forestry, and fishing,
Coal mining (Coal):
coal,
Crude oil (Oil):
oil,
103
104
not elsewhere classified
92
Natural gas extraction (Gas):
gas and gas manufacture, distribution,
Refined oil products (Oil_pcts):
petroleum and coal products,
Electricity (Electricity):
electricity,
Energy intensive industries (EN_int):
minerals nec, chemical products, basic pharmaceutical products, rubber and plastic products, min-
eral products nec, ferrous metals, metals nec,
Other industries and services (Oth_ind_ser):
bovine meat products, meat products nec, vegetable oils and fats, dairy products, processed rice,
sugar, food products ned, beverages and tobacco products, textiles, wearing apparel, leather and
wool products, paper products, publishing, metal products, computer, electronic, optic, electrical
equipment, machinery and equipment nec, motor vehicles and parts, transport equipment nec, man-
ufactures nec, water, construction, trade, accommodation, food and services, transport nec, water,
air transport, warehousing and support activities, communication, financial services nec, insurance,
real estate services, business services nec, recreational and other services, public administration and
defense, education, human health and social work, dwellings.
4.2 Air pollutants and emissions

The United States Environmental Protection Agency defines air pollution as follows: "One
or more chemicals or substances present in the air in sufficient concentrations to cause
harm to humans, other animals, vegetation, or materials. Such chemicals or physical con-
ditions are called air pollutants," and emissions are defined as "Releases of gasses into the
atmosphere that may be either intentional or unintentional." The following nine air pollu-
tion and three emission markers are measured in the above industry groups, with a focus
on the Slovak Republic and the Netherlands and the remaining European Union countries
(Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Ger-
many, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Poland, Portu-
gal, Romania, Slovenia, Spain, Sweden, and the United Kingdom), denoted as r.
Air pollution indicators
BC - Black Carbon - BC
lack carbon occurs in the atmosphere as particles (see below) and causes its heating in various ways.
The smaller the particles, the greater the negative effects on health, especially on the cardiovascular
and respiratory systems of humans. The main sources of black carbon are transportation (mainly
diesel engines), residential heating and cooking when burning coal, wood, and other biomass, open
burning of agricultural waste and biomass from logging, and forest fires. (Lindenberg, 2016) Black
carbon occurs mainly in two different sizes, PM10 and PM2.5, see below.
CO - Carbon Monoxide - CO
Carbon monoxide is a gas that occurs in small amounts in the Earth's atmosphere. The rest comes
from chemical reactions with organic compounds emitted by human activities and natural origin. It
indirectly affects radiative forcing by increasing concentrations of direct greenhouse gasses, includ-
ing methane and tropospheric ozone. It is a transient air pollutant in some urban areas, originating
primarily from the exhaust of internal combustion engines and from the incomplete combustion of
various other fuels. (Seinfeld & Pandis, 2006)
NH3 – Ammonia - NH3
Ammonia comes from both natural and anthropogenic sources, with the primary source being agri-
culture, e.g., manure, slurry, and fertilizer application. Gaseous ammonia reacts with other pollutants
in the air to form fine particles of ammonium salts that can affect human respiration and also affect
the chemistry of the soil on which it settles. (Air Pollution Information System, 2022)
NMVOC - Non-methane volatile organic compound
Volatile organic compounds include volatile hydrocarbons and other organic molecules released into
the atmosphere, not including methane emissions. They can have biogenic or anthropogenic sources.
93
About 50% of NMVOCs emitted to the atmosphere come from transportation, including losses from
distribution and extraction (30% from road transportation alone), solvent use (30%), and other in-
dustrial processes (15%); less than 5% are emitted from vegetation. There are human health concerns
about carcinogenic VOCs, and other concerns arise from the role of VOCs in generating ozone in air
polluted by nitrogen oxides. (Air Pollution Information System, 2022)
NOX - Nitrogen Oxides - NOx
Nitric oxide NO and nitrogen dioxide NO2 are known as nitrogen oxides NOx, often appearing as a
brownish gas. It is a strong oxidant and plays an important role in atmospheric reactions with volatile
organic compounds that produce ozone (smog) on hot summer days. Nitrogen oxides are formed
during combustion processes, partly from nitrogen compounds in the fuel, but mainly from the direct
combination of atmospheric oxygen and nitrogen in the flames. About one-quarter of total emissions
come from power plants, half from motor vehicles, and the remainder from other industrial and do-
mestic combustion processes. (Air Pollution Information System, 2022)
OC - Organic Carbon - OC
Organic carbon in the atmosphere includes hydrocarbons, oxygenated or halogenated compounds
and multifunctional compounds, and particulate matter. Total organic carbon is the amount of car-
bon contained in an organic compound; it is used as a non-specific indicator of water quality. Black
carbon BC (see above) and organic carbon contribute significantly to particulate matter in air pollu-
tion (see below), which is the leading cause of disease and premature death worldwide. (Air Pollution
Information System, 2022)
PM10 - Particulate matter with a diameter of 10 µm or less - PM10
Particulate matter, also known as particle pollution, is a complex mixture of airborne particles and
liquid droplets consisting of acids, ammonium, water, black carbon, organic chemicals, metals, and
soil material. Some are emitted directly from a source, such as construction sites, dirt roads, fields,
smokestacks, or fires. Most particulate matter is generated in the atmosphere by power plants, in-
dustry, and motor vehicles. "Coarse particles" (PM10-2.5), such as those found near roads and dusty
industries, are 2.5 to 10 micrometers in diameter. Dust particles play a role in many air pollution
problems, including the effects of particles on human health, respiratory and heart problems caused
by inhalation of small particles, local effects of dusts that cover vegetation, and light scattering that
has the potential to offset global warming. (United States Environmental Protection Agency, 2022),
(United States Environmental Protection Agency, 2022)
PM2_5 - Particulate matter with a diameter of 2.5 µm or less
"Fine particles" (or PM2.5as found in smoke and haze, are less than 2.5 micrometers in diameter and
pose the greatest risk to health. Fine particles are also the leading cause of reduced visibility (haze).
(United States Environmental Protection Agency, 2022)
SO2 - Sulphur Dioxide - SO2
Sulfur dioxide is a toxic gas and a major air pollutant. It has significant effects on human health. The
concentration of sulfur dioxide in the atmosphere can affect the suitability of habitats for plant com-
munities and animals. Its emissions are a precursor to acid rain and particulate matter in the atmos-
phere. The largest sources of sulfur dioxide emissions are power generation, industrial boilers, diesel
engines, and other industrial processes such as petroleum refining and metal processing. (Air
Pollution Information System, 2022)
Emission indicators
N2O - Nitrous oxide
Nitrous oxide is a greenhouse gas nearly 300 times more potent than CO2; it also depletes the strat-
ospheric ozone layer. It is estimated that 64% of the N2O that enters the atmosphere is of natural
origin and 36% is caused by human activities. The main components of anthropogenic emissions are
fertilized agricultural soils and livestock manure, fertilizer runoff and leaching, biomass burning, fossil
fuel combustion and industrial processes, biodegradation of other nitrogen-containing atmospheric
emissions, and human sewage. (United States Environmental Protection Agency, 2022)
CH4 – Methane - CH4
Methane is a hydrocarbon and the main component of natural gas. It is also a potent greenhouse gas
(second only to CO2, accounting for 16% of global emissions), it prevents infrared radiation (known
as the greenhouse effect). About 60% of global methane emissions come from man-made emission
sources. They come from fossil fuel production and transportation, agriculture (fermentation,
94
livestock manure, and rice cultivation), solid waste, wastewater treatment, and coal mining.
(Lindenberg, 2016)
FGAS - Fluorinated Gasses
luorinated gasses are a group of very potent greenhouse gasses and although they account for only
1% of global greenhouse gas emissions, they are the fastest growing greenhouse gasses in the world.
They are not produced naturally, but are used in residential, commercial, industrial, and automotive
air conditioning systems, refrigeration systems, insulation manufacturing, firefighting foams, and sol-
vents. (Lindenberg, 2016)
Energy substitution was incorporated into the model by using the top-down approach
(called macroeconometric or computable general equilibrium), in which the demand for
energy inputs is derived from the demand for the outputs of the sectors via the production
functions or cost functions.
top of the pro- qo(j,r)

duction
ESUBT
endowment- non-energy
value-added
energy nest
energy inputs
ELFVAEN
K-E
land labor domestic foreign
subproduct
capital-energy
nest energy
ELFKEN K
subproduct
energy nest
ELFENY non-
electricity electricity
non-electricity energy
energy nest
ELFNELY
non-coal en- non-coal

ergy nest coal
energy
ELFNCOAL
petroleum
crude oil gas ...
products
Figure 4.3 Production structure105
105
Source: Own processing based on Burniaux and Truong (2002)
95
Figure 4.3 shows the production process tree using nested CES (Constant Elasticity
of Substitution) production functions. The qoj.r is the production function in industry j in
region r using two main types of inputs, namely, endowment-energy inputs, discussed
later, and non-energy inputs consisting of domestic and foreign entries. The elasticity of
substitution ESUBT is zero for all aggregate industries, implying that these two types are
not substituable.
The value-added energy nest uses the primary factors of land and labor and the
capital-energy subproduct with elasticity of substitution ELFVAEN in the value-added en-
ergy subproduct. The values indicate that subproduction in the Netherlands is somewhat
more flexible than in Slovakia (with the exception of Other industries and services). Coal
industry allows substitution of primary factors and capital-energy subproduct with the
highest flexibility than other industries, i.e. Agriculture with very low elasticity for all re-
gions.
Table 4.1 EVFE Elasticity of substitution106
EVFE Elasticity of substitution in value-
added energy sub-production
ELFVAEN EU25 SK NL ELFVAEN
1 Agr 0.25 0.24 0.26 5
4
2 Coal 3.52 2.59 3.91 3
2
3 Oil 0.39 0.32 0.40 1
0
4 Gas 0.22 0.02 1.00
5 Oil_pcts 1.26 1.26 1.26
6 Electricity 1.26 1.26 1.26
7 En_Int_ind 1.21 1.20 1.22
EU25 SK NL
8 Oth_ind_ser 1.36 1.37 1.35
In the capital-energy nest, the subproduct capital and energy are used and the com-
plementarity or substitutability is described by the elasticity of substitution between en-
ergy and capital ELFKEN. The values of this parameter reflect the ease with which energy
use adjusts to the level of investment. EU, SK and NL obtain identical values in Agriculture,
Electricity, Energy intensive industries, Other industries and services 0.5 and 0.0 for the rest
of the aggregated industries. Neither industry flexibly adjusts for investment changes.
In the GTAP-E model, energy is treated as a special good that is removed from the
intermediate input nest and inserted into the value-added nest: energy commodities are
divided into "electricity" and "non-electricity" groups. The energy nest uses electricity and
non-electricity energy, with a degree of substitution within the groups ELFENY. There is
uniform substitutability in Agriculture, Energy intensive industries, and Other industries
and services and zero substitutability for the rest of industries, with the same pattern in all
three observed regions.
The non-electricity energy nest is further divided into coal and non-coal energy with
the elasticity parameter ELFNELY indicating the substitutability between the two energy
sources in the production of the energy subproduct. The pattern is the same as for the
capital-energy elasticity of substitution.
106
Source: Own processing based on McDougall and Golub (2009)
96
The most detailed production pattern is described in the non-coal energy nest using
crude oil, gas, petroleum products, etc. with the ELFNCOAL elasticity of substitution. Again,
the pattern is the same for all three regions: perfect substitutability in the Agriculture, Elec-
tricity, Energy intensive industries, and Other industries and services, and zero value for
the rest of industries.
The next section focuses on modeling the carbon tax in the CGE model used for the
experiments described later. The behavior of private households, firms with intermediate
consumption and government, each with a demand for a composite good consisting of do-
mestically produced goods and imported goods, is described in the model as follows:
carbon tax exclusive value tax on market price of demand for
 of consumption of = commodity  ∙  commodity i in  ∙ commodity i 
commodity i in region r i purchased in region r region r in region r
consumption domestic imported
government  =  ∙  ∙   =  ∙  ∙ 
households  =  ∙  ∙   =  ∙  ∙ 
firms  =  ∙  ∙   =  ∙  ∙ 
Indirect tax receipts

carbon tax on consumption expenditure carbon tax exclusive value
consumption of commodity  =  on commodity − of consumption of 
i in region r i in region r commodity i in region r
tax on con-
domestic imported
sumption
government  =  −   =  − 
households  =  −   =  − 
firms  =  −   =  − 
Carbon dioxide emissions modeling

total carbon emissions
 from commodity i in 
region r (in mil tons of CO )
 emissions from  emissions from
= firm´s usage of domestic + firm´s usage of imported 
commodity i in region r commodity i in region r
government´s consumption government´s consumption
+ + 
of domestic commodity of imported commodity
i in region r i in region r
private consumption private consumption
+ + 
of domestic commodity of imported commodity
carbon emissions from commodity i in region r
 
2 =  2 +  2 +

 
+2 + 2 + 2 + 2
97
Then the carbon dioxide emission may be aggregated through region r (in millions of tons
of CO2).
total carbon emissions total carbon emissions
  =  
through region r from commodity i in region r

total carbon emissions in region r

_
2 =  2

carbon tax exclusive value

share of carbon tax exclusive value  
of consumption of commodity i in region r
of consumption on total consumption =
consumption expenditure
of commodity i in region r  
on commodity i in region r
tax share domestic imported
 
government  =  =
 
 
households  =  =
 
 
firms  =  =
 
carbon emissions from consumption
emissions intensity  
of commodity i in region r
of consumption of commodity  =
consumption expenditure on
i in region r  
commodity i in region r
emissions
domestic imported
intensity
2 2
government 2 = 2 =
 
2 2
households 2 = 2 =
 
2 2
firms 2 = 2 =
 
taxation of
consumption of 
commodity i
share of carbon tax
market price tax on
exclusive value of
=  ∙ of commodity  + commodity 
consumption on total consumption
of commodity i in region r
emissions intensity nominal carbon
+ 100 ∙ of consumption of commodity  ∙  tax rate in region r 
i in region r (in current USD per ton of CO )
98
taxation of
consump- domestic imported
tion
 =   = 
∙ ( +  ) ∙ ( +  )
government + 100 + 100 ∙ 2
∙ 2 ∙ 
∙ 
 =   = 
∙ ( +  ) ∙ ( +  )
households + 100 + 100 ∙ 2
∙ 2 ∙ 
∙ 
 =   = 
∙  +   ∙  +  
firms + 100 + 100
∙ 2 ∙ 2
∙  ∙ 
International emissions trade107
power of emissions real carbon dioxide carbon dioxide
 = − 
purchases in region r emissions in region  emissions quota in region 
emissions trade
 = 2 − 2
4.3 The current status and the development in 10 years

The values of nine air pollution indicators and three emission types were observed for two
periods 10 years apart (2004 - 2014) for the Slovak Republic (SK), the Netherlands (NL) and
the other countries of the European Union (EU25) to show the direction of their evolution,
see Table 4.2 to Table 4.5. For each indicator, the columns and rows with the lowest, the
best and the "total" values were calculated as total percentage changes of the observed
indicators and industries.
First, the aggregate changes in air pollution and emissions for the Slovak Republic
were analyzed. Table 4.2 shows that on average, air pollution indicators have increased in
all categories (see "Total" column), with decreases ranging from -2% (particulate matter
with a diameter of 2.5 µm or less) to -50% (sulfur dioxide). In the Oil, Gas and Other indus-
tries and services industries there were pure improvements in all indicators, ranging from
-30% to -72% overall. Agriculture, Coal, Oil products, and Energy intensive industries
showed improvement, except for a few indicators, such as the increase of ammonia in Coal
and Energy intensive industries. The Electricity industry recorded a remarkable deteriora-
tion in many indicators, in some of them (ammonia, organic carbon, and particulate matter
with a diameter of 2.5 µm or less) by more than one hundred percent. The emission indi-
cators follow almost the same pattern from the point of view of the observed industries,
with the exception of Other industries and services, where all emissions have increased and
which have deteriorated in all categories.
107 gco2qr = CO2Qr
99
Table 4.2 Aggregate air pollution and emissions - change in 2004 – 2014 in the Slovak Republic108
See Appendix E for a further breakdown of the air pollution data presented for the
Slovak Republic in terms of production (Table 4.6), intermediate use (Table 4.7), and house-
hold consumption (Table 4.8). The most negative changes are observed in the Particular
matter with a diameter of 2.5µm or less, which are associated with intermediate use in
Agriculture (by 128%) and Other industries and services (7.4 times). It is worth highlighting
that although household consumption accounts for only about 10% of the country's total
air pollution and emissions, pollution and emissions have improved in almost all categories
(except for Nitrous oxide and Particular matter with a diameter of 10µm or less in Oil prod-
ucts with a maximum increase of 16%).
The Netherlands shows positive results of its environmental policy. Except for Agri-
culture, all industries have improved air pollution indicators (with some deviations up to -
11%, see Table 4.3). Emissions have improved in the Coal, Oil, Gas, and Oil products indus-
tries, while they have increased from 10% to 21% in Agriculture and Electricity. Energy-
intensive industry and Other industries and services show both directions of change. Most
notable is the 75% increase in fluorinated gasses in Other industries and services, which
includes most industries (see above in text).
Table 4.3 Aggregate air pollution and emissions - change in 2004 – 2014 in the Netherlands109
108
Source: Own processing based on GTAP data
109
100
Table E.4, Table E.5 and Table E.6, (in Appendix E) break down the data for the
Netherlands and show that most of the positive changes are due to output transformation,
not infrequently 100%, suggesting a complete eradication of some indicators of air pollu-
tion and emissions. On the other hand, there is little evidence of improvement in interme-
diate use and even deterioration in almost all indicators (some of them by almost 50%) in
the Coal industry.
The progress of the European Union countries is shown in Table 4.4, which shows
that there are overall positive changes in air pollution, excluding the Coal and Gas indus-
tries. Emissions follow the patterns of the Slovak Republic and the Netherlands, with in-
creases in Electricity and Other industries and services, up to 104% for Fluorinated gasses.
Table 4.4 Aggregate air pollution and emissions - change in 2004 – 2014 in the EU25110
The disaggregated data (see Appendix E) in Table E.7 suggest a problem in the Oil
products industry related to production, where almost all air pollution and emissions indi-
cators have increased (except for organic carbon, which decreased by -43%). Table E.8
shows the increasing air pollution and emissions in the Gas industry, which deteriorated by
up to 55%. And finally, Table E.9 explains the Coal and Gas industry's contribution to air
pollution comes from residential consumption.
Next, we focus on air pollution and emissions related to endowment in Table 4.5,
which, together with intermediate use, yields the changes in production (see Table E.1,
Table E.4, and Table E.7 in the Appendix E). The decline in air pollution indicators is tracked
only for land and capital, and the data in Table 4.5 show that Slovakia shows a decline (or
no change) in all categories with an improvement of up to -30%, in contrast to the Nether-
lands, where the use of primary factors worsens by up to 18% for all indicators. The Euro-
pean Union countries in average slightly improve in all observed categories varying from
0% to -8%.
Overall, the ten-year changes in the three regions observed signal a good message
for the impact of environmental policy. In the next chapter, we will see how the European
Green Deal affects various economic aggregates and welfare in each region.
110
101
Table 4.5 Air pollution and emissions associated with endowment - change in 2004 – 2014111
Land Capital
APQE_14
SR NL EU_25 SR NL EU_25
BC 0% 0% 0% 0% 0% 0%
CO 0% 0% 0% 0% 0% 0%
NH3 -19% 7% -7% -30% 11% -4%
NMVOC 0% 0% 0% -25% 13% -3%
NOX -13% 7% -8% -30% 10% -5%
OC 0% 0% 0% 0% 0% 0%
PM10 -24% 18% 0% -30% 12% -4%
PM2_5 -23% 17% 0% -28% 11% -5%
SO2 0% 0% 0% 0% 0% 0%
Total -19% 8% -7% -29% 11% -4%
NC_QE Land Land Land Capital Capital Capital

N2O 0% 0% 1% -27% 11% -6%
CH4 0% 0% -3% -24% 10% -6%
FGAS 0% 0% 0% 0% 0% 0%
Total 0% 0% -2% -24% 10% -6%
4.4 The European Green Deal: Modeling the Impact of Reducing Green-
house Gas Emission Quotas
In this chapter, the European Green Deal policy is modeled as a reduction in greenhouse
gas emission quota in all countries of the European Union. The research was inspired by
the technical papers of the Global Trade Analysis Project by (Burniaux & Truong, 2002) and
(McDougall & Golub, 2009). The Global Trade Analysis Project - Energy model presented in
the previous chapter was used with some modifications in terms of the specifications of
the modeled problem.
First, the closures of the model were modified. The variable RCTAXB, real carbon
tax rate112 (in USD1997 per ton of CO2) in region r, which was previously exogenous, was
swapped by NCTAXB, nominal carbon tax rate (in USD1997 per ton of CO2) in region r. The
real carbon tax rate equation deflates the nominal carbon tax rate in 1997 USD per ton of
CO2, corrected for the rate in current prices (NCTAXLEVBr , pbr), with the income deflator
PINDBr.
1
 = ∙ ( − 0.01 ∙  ∙  )

Table 4.6 Values of RCTAXB and NCTAXB
RCTAXB NCTAXB
EU25 621,83 649,42
SK 608,68 639,46
NL 39,26 39,98
The exogenous variable pempb, power of emissions purchases for the Slovak Re-
public, the Netherlands, and the rest of the European Union was swapped by NCTAXB, the
nominal carbon tax rate (per ton of CO2) in the corresponding regions. Emission perfor-
mance is the difference between carbon dioxide emissions (gco2tbr) and the emissions
quota (gco2qbr) in region r.
 = 2 − 2
111
112
The real rate is defined as the nominal rate deflated by the income deflator.
102
The exogenous variable carbon dioxide emissions gco2tb for the Slovak Republic,
the Netherlands and the rest of the European Union was swapped by the power of emis-
sions purchases pemp in the corresponding regions.
Next, a shock was formulated assuming a 55% decrease in the carbon dioxide emis-
sions quota (gco2q) in three regions: all European Union countries, including the Slovak
Republic and the Netherlands. Finally, the solution method chosen was the Gragg method
with 3 solutions, 6 steps extrapolation with 8 subintervals. This multistep solution was used
to reduce linearization errors that occur in the standard one-step or Johansen solution
method. In this method, the exogenous shock is divided into several equal components,
typically 2, 4, or 6. Since the errors are proportional to the size of the shock, halving the
shock at each step results in errors that are less than half the error introduced by a single
step. This procedure leads to a more accurate solution (the more steps, the higher the ac-
curacy).
The reduction of carbon dioxide quota emissions has a direct and clear impact on
the industrial production of commodities, see Table 4.7. In all countries of the European
Union, the production decreases, with the most significant decrease in the Gas industry
(more than 99%), the Coal industry (almost 67%) and the Oil products (almost 39%). In the
Slovak Republic, the main regression is in the Coal industry (more than 76%). Production in
the Netherlands was not affected to the same extent as in the rest of the EU, moreover,
the Electricity and Energy intensive industries have increased their production.
Table 4.7 Industry output of commodities113
qo EU25 SK NL 20%
Agr -6% -3% 1%
0%
Coal -68% -76% -4%
Oil -20% -42% -39% -20%
Gas -99% -4% -12% -40%
Oil_pcts -39% -50% -14%
Electricity -34% -16% 20% -60%
En_Int_ind -16% -34% 5% -80%
Oth_ind_ser -2% -2% -1%
-100%
EU25 SK NL
Domestic sales of commodities in the observed regions are depicted in Table 4.8.
Gas sales decreased by more than 99% in the EU25, but by less than 6% in Slovakia and the
Netherlands. Other significant changes include the decline in Coal sale drop in the EU25
and the Netherlands by about 76% and the decline in domestic sales of Oil in all regions.
113
103
Table 4.8 Domestic sales of commodities114
20%
0%
-20%
-40%
-60%
-80%
-100%
-120%
EU25 SK NL
Total imports (Table 4.9) declined in almost all sectors in the EU25 and the Slovak
Republic, with the largest declines in the Coal, Oil, Gas, and Oil products industries, where
the magnitude of the decline ranged from 40% to 63%. The Netherlands recorded a much
smaller decline in these sectors, and Gas imports also increased by 5%. Electricity imports
increased by 51% in the EU25, while the change in the Netherlands was of roughly the same
magnitude (59%).
Table 4.9 Aggregate imports of commodities115
20%
0%
-20%
-40%
-60%
-80%
-100%
EU25 SK NL
Market prices of commodities (Table 4.10) are affected as shown in Table 4.9 and
the corresponding graph. The price of electricity increased by 71% in the EU25 and by al-
most 40% in SK. Other significant price changes occurred in Gas (increase in EU25 by
29.3%), Coal (decrease in EU25 by almost 19%) and Oil products (increase in EU25 by almost
13% and in SK by 19.2%). The Netherlands shows the smallest price changes, with the larg-
est price decrease for Oil at 25.5%.
114
115
104
Table 4.10 Market price change of commodities116
Overall, the change in the value of gross domestic product (GDP) was enumerated
as follows (see Table 4.11). The emission quota led to an increase in GDP in all observed
regions, mostly as a result of the price increase.
Table 4.11 Change in value of GDP
2,00%
1,87%
1,50% 1,76%
vgdp % change
EU25 0,86% 1,00%
SK 1,76%
0,86%
NL 1,87% 0,50%
0,00%
EU25 SK NL
More than the change in GDP associated with the external shock of the reduction
in the carbon dioxide quota emission rate, the Equivalent Change (EV) variable provides
accurate information about the changes in the global society of the corresponding country.
EV represents the adjustment in income that keeps the consumer's utility at the same level
compared to the level before the shock. Table 4.12 summarizes the welfare decomposition
for three regions.
Table 4.12 Change in value of GDP117
The overall welfare effect for the European region and Slovakia is negative, i.e., con-
sumers are worse off in the context of the emission quota, while they are better off in the
Netherlands. The partial effects almost all move in the opposite direction in the Nether-
lands compared to the other European countries and almost in the same direction in Slo-
vakia. The co2trd variable represents the contribution to the regional EV of emissions trad-
ing, which decreases for all regions, clearly indicating the impact on consumers who are
116
117
105
made worse off by this change. The alloc variable indicates the total contribution of the
allocation effects to the regional EV. The value is negative for the EU25 and Slovakia, while
it is positive for the Netherlands. The variable tot is an abbreviation for the contribution of
changes in the terms of trade to the regional EV, which improves in the EU25 and the Slovak
Republic and worsens in the Netherlands. IS denotes the contribution of changes in the
price of capital commodities to the regional EV, which worsens welfare in the EU25 coun-
tries and the Netherlands, while it improves in Slovakia.
The external shock ensures that the carbon dioxide emissions quota was reduced
by 55% for all three regions. This shock was absorbed by government consumption, house-
hold consumption, and firms' usage of domestic and imported products in each region. The
details of the impact decomposition can be found in Appendix F, Table F.1- Table F.8. The
impact on government consumption is largest in the Netherlands (more than 65% decrease
in the Electricity sector), where consumption decreased in all sectors except domestic con-
sumption of Oil (32% increase). The EU25 and Slovakia have seen a decrease in domestic
consumption of imported goods, partially offset by consumption of the corresponding im-
ports or the domestic sector. The impact on household consumption surprised in the Oil
sector, where both domestic and imported consumption increased (in the Netherlands, the
166% increase was partially offset by a 32% decrease in imports). Other sectors in all re-
gions saw a decrease in household consumption, with the exception of imported Electricity
to the EU25. The remaining six tables show the use of intermediate usage of goods in the
above eight sectors. Firms reduce their consumption in all regions and sectors with a few
exceptions: imported Electricity to the EU25 in the Coal, Oil, Oil products, Energy intensive
industries, and Other industries services sectors. Dutch companies also increased their con-
sumption of domestically produced Oil in all industries. It is interesting to note that the
Electricity industry in the Netherlands increased imports in almost all sectors.
In summary, the indicators of air pollution and emissions have improved signifi-
cantly in all countries of the European Union, with the exception of the Electricity industry
in Slovakia, the Agriculture industry in the Netherlands, and the Coal industry in other coun-
tries of the European Union. The Fluorinated gasses indicator has increased in all observed
countries. The application of the European Green Deal agreement, which provides for a
reduction in greenhouse gas emission quotas, leads to a general decrease in the production
of most commodities and domestic sales. Market prices of most commodities increase,
with the exception of raw materials. The results show a lower responsiveness of the Dutch
economy. The welfare analysis shows that the Slovak Republic, along with the European
Union countries, is worse off as a result of the modeled reduction in emission quotas, while
the Netherlands is slightly better off.
106
COMPARISON OF THE ECONOMIC AND ECOLOGICAL DEVELOPMENT OF SLOVAKIA AND
THE NETHERLANDS BASED ON THE DICE MODEL
5 COMPARISON OF THE ECONOMIC AND ECOLOGICAL DEVELOP-

MENT OF SLOVAKIA AND THE NETHERLANDS BASED ON THE
DICE MODEL
In the previous chapter there were discussed environmental issues from the static point of
view. This chapter presents a dynamic approach of the ecological development.
5.1 An analysis of the current state of the climate crisis

The climate crisis can be defined as the consequences of unnatural warming of the Earth's
surface caused by excessive burning of fossil fuels by humans. Increased emissions and thus
rising temperatures have been observed since the Industrial Revolution in the 18th century,
when industrial production began to develop on a large scale. At that time, people did not
think about the possible consequences for nature. Today, the state of the climate crisis is
critical and it is important to mitigate its effects. However, in order to make predictions
about the economic development affected by climate change, it is necessary to find out
what are the main consequences of climate change.
5.1.1 The change in air temperature

The most common and most discussed consequence of the climate crisis is certainly the
dangerous increase in air temperature, and this problem is no exception in the countries of
the European Union. In the last 55 years alone, the air temperature in Central Europe has
increased by 2°C. To get an idea, a change of 2°C corresponds to a change of vegetation
zones by 300 m.a.s.l. (Lapin, M., 2022) It is natural that the planet is warming up. We alre-
ady know that different types of climates have alternated on our planet. Planet Earth ex-
perienced several ice ages that lasted tens of millions of years, when the Earth's surface
was almost completely covered with ice. However, these ice ages were eventually replaced
by periods of higher temperatures. During the Mesozoic era, the climate was completely
different from that of the Ice Age, when the approximate average temperature of the air
was even higher than the temperature in Europe today and there were no glaciers on the
planet. (SHMU, 2022 a), (SHMU, 2022 b)
So, from a historical point of view, one could say that the current warming of the
planet is fine and there is no reason to worry, but the main problem is the speed at which
the temperature is rising. Humans have definitely contributed to this problem through their
activities, mainly in the form of excessive production of greenhouse gasses, mainly carbon
dioxide, methane and nitrous oxide. Carbon dioxide (CO2) accounts for the largest share of
greenhouse gasses. Its content in the atmosphere is natural, but human activities increase
its amount in a dangerous way. This is mainly due to the burning of fossil fuels and massive
industrial production, as well as the reduction of forest areas that would absorb CO2.
Methane is the second most abundant greenhouse gas. Like CO2, methane occurs naturally
in nature. Currently, however, up to 60% of all methane is anthropogenic methane from
activities such as agriculture, especially livestock, or fossil fuel extraction. Increased levels
of nitrogen oxides in the atmosphere also contribute to global warming. Up to 40% of total
nitrous oxide comes from human activities such as agriculture or biomass burning.
107
Again, the greenhouse effect is a natural phenomenon and is actually essential for
life on Earth and for maintaining average air temperatures. Without the greenhouse gasses
in the atmosphere, which absorb the necessary amount of heat and thus maintain a relati-
vely constant temperature, the Earth would probably not even be habitable and would be
completely covered with ice. So the greenhouse effect as such is not a problem. The cause
of global warming is precisely the amplification of this effect by the excessive production
of greenhouse gasses, which we observed even before the Industrial Revolution (in the
second half of the 18th century). (Lapin, M., 2022)
Figure 5.1 Average global temperature growth from 1880-2020118
Several scientists have already expressed that global warming is unfortunately un-
stoppable. If, in purely theoretical terms, we were to immediately stop producing all gre-
enhouse gasses, we would not stop global warming, but only mitigate it. It is estimated that
the amount of CO2 released will remain in the atmosphere for 50 to 200 years, so it would
not even be theoretically possible to stop the warming of our planet immediately. The Earth
is threatened by the fact that the average temperature will increase by 2.5 °C by the end
of this century, which poses a great threat to all animal and plant life in the form of the
complete destruction of their habitats. There is also a threat of severe melting of glaciers
and rising sea levels, which may ultimately lead to a change in the flow of water in the
oceans and thus to a change in the entire climate on land (Lapin, M., 2022).
As a society, we face a major threat in the form of the climate crisis and therefore
need to take certain steps to minimize the damage we have done ourselves. In 2015, the
world's largest countries agreed to ambitious targets to limit emissions through the Paris
Agreement, created during the Paris Climate Conference (COP21). This agreement was ra-
tified by 55 countries that account for at least 55% of global greenhouse gas emissions
(China, USA, India) and entered into force on November 4, 2016. The goal of the Paris Ag-
reement is to create an action plan to keep the increase in global average temperature
below 2°C, ideally below 1.5°C compared to pre-industrial levels. Due to the incessant de-
velopment of the climate crisis, the countries of the world had to set even stricter targets
compared to the Paris Agreement. From October 31 to November 12, 2021, the 26th Cli-
mate Change Conference, commonly referred to as COP26, was held in Glasgow with the
participation of heads of state and government from all over the world, as well as scientists,
118
Source: NASA (2022)
108
politicians, non-governmental organizations and many others. The goal of this conference
was to build on the goals of the Paris Agreement and adapt them to current conditions,
which require a much more radical approach. Currently, scientists predict a 2.7-3.7°C tem-
perature increase by mid-century under Paris Agreement conditions, which of course is not
the original Paris Agreement goal. Recent analysis by the IPCC (Intergovernmental Panel of
Climate Change) shows that the original 2°C target will not be sufficient. To prevent further
consequences of the climate crisis, we need to reduce this target to 1.5°C. The outcomes
of the conference are strategies and plans thanks to which we can reduce the temperature
rise to below 1.5°C by mid-century and achieve carbon neutrality. The most important key
for countries is to act now. We will achieve the reduction of greenhouse gas emissions by
ending the use of coal as an energy source and using carbon neutral sources instead, pro-
moting electric cars, reforesting trees and restoring forest areas (COP21, 2015), (COP26,
2021).
Carbon neutrality is a state in which CO2 emissions are produced in such quantity
that nature can absorb them. So it does not mean that carbon emissions will be zero. Ho-
wever, it is necessary to achieve some balance between the amount of emissions produced
and the amount of absorbers of those emissions. This goal can be achieved by gradually
transforming the entire economy, reducing the use of coal, gas or fossil fuels, stopping de-
forestation, investing in renewable resources or simply making cooperation between go-
vernments, businesses and society more efficient.
5.1.2 Deforestation
Forests occupy about one-third of the land area of our planet. They naturally retain rain-
water, prevent droughts, provide homes for up to 75% of terrestrial animals, and notably
retain CO2, helping to maintain optimal air quality and mitigate the effects of the climate
crisis (Ritchie, H., Roser, M., 2021).
Deforestation can be defined as the systematic reduction of forest area by humans
in order to use that area for other purposes, often for agricultural purposes, building settle-
ments, constructing roads, logging, or extracting minerals. This massive human activity
reduces forest areas, thereby causing the extinction of many animal and plant species,
disrupting ecosystems, creating deserts and thus contributing to major droughts, but most
importantly depriving our planet of greenhouse gas absorbers that are essential to the cur-
rent climate situation.
The Industrial Revolution has also had a negative impact on forests and human ac-
cess to them. In the second half of the 19th century, we can observe an increase in defo-
restation. The development of industry and the still unchecked increase in the volume of
production, energy consumption, natural resources and human population have been ref-
lected after several decades in a desolate state of forests, oceans and air.
5.2 How does the climate crisis affect the development of the economy?
Climate change is caused by the excessive production of greenhouse gasses by human ac-
tivities. Global temperatures are rising at an unnatural rate, and this is having an impact on
nature and people across the planet. Melting glaciers, rising sea levels, more frequent oc-
currence of natural disasters, climate change, massive migration of population or extinction
of some plant and animal species are just some of the many other consequences of global
warming. All these consequences have an impact on the economy of the individual
109
countries of the world. Natural disasters destroy infrastructure, buildings, public and pri-
vate property, and most importantly threaten human lives. Major droughts cause farmers
to have to irrigate their crops artificially and, in some cases, use pesticides that are harmful
to nature, which can affect crop quality, but also increases production costs and potentially
raises the price. Rising sea levels and unfavorable climatic conditions, especially in coastal
areas, are causing massive population migration. We have listed just a few of the many
consequences of climate change that affect the development of global GDP.
Gross domestic product (GDP) represents the monetary value of all new final goods and
services produced in a given period in a given area. This macroeconomic indicator is used
to quantify the economic performance of a given country. The GDP per capita indicator is
used by countries as an indicator of a certain standard of living to compare the performance
of their economies. The percentage growth of GDP is also important from the point of view
of economic development.
In other words, GDP can also be described as an indicator of a country's prosperity. The
more a country produces, the richer it is. However, this measure of the economy fails in
the face of qualitative externalities such as the climate crisis, which either directly or indi-
rectly affects the performance of the entire country, as well as satisfaction, quality of life
and health. Since GDP is one of the most important macroeconomic indicators, countries
naturally focus on maintaining its value in growth. However, there is a global trend that the
higher the GDP per capita, the more greenhouse gas emissions the country produces. This
trend clearly shows that GDP does not adequately reflect the need to mitigate the conse-
quences of the climate crisis without affecting the development of the global economy in
the long term.
Figure 5.2 Emissions per capita and GDP per capita for different countries119
We can already see the consequences of the climate crisis in the weather changes. Dro-
ught or sudden rains that lead to flooding affect soil quality, water storage capacity, and
thus overall crop yields. These sudden weather changes increase the risk of natural di-
sasters such as minor or major floods caused by torrential heavy rains or melting glaciers,
or even minor tornadoes. The consequences of these disasters are destroyed cities, infras-
tructure, but also agricultural activities in the vicinity of the said disaster. All these conse-
quences mean additional governmental expenses for the restoration of the region in
119
Source:Our World in Data (2022)
110
question. All the aforementioned consequences of global warming affect the most impor-
tant thing a country has: its people. Natural disasters affect the lives of individuals, causing
injuries, existential problems, diseases, and in the worst cases, death. These events can
subsequently translate into increased unemployment rates, higher numbers of people with
physical or mental illnesses, and thus increased strain on the healthcare system, and in
some cases, even permanent migration.
According to an April 2021 report by the Swiss Re Institute (Guo, J., Kubil, D., Saner, P.,
2021), the current trajectory of the climate crisis threatens a loss of 11-13.9% of global
GDP; for Europe, it is a loss of 7.7-8% relative to GDP if there were no global warming. If
the countries of the world acted according to the targets agreed in the Paris Agreement,
the expected loss of global GDP would be 4% and for Europe 2.8%, much lower. We already
know that we will not achieve these Paris Agreement targets with current measures.
5.3 DICE Model

The evolution of the damage caused by the climate crisis and its consequences on GDP,
temperatures, and greenhouse gas (CO2) emissions were observed at four different levels
of carbon tax as one of the effective forms of climate mitigation. These endogenous variab-
les were selected because GDP is regularly used as an indicator of economic performance,
the amount of emissions as a cause and temperature rise as a consequence were used
because of their relationship to the climate crisis. The carbon tax itself is expected to mo-
tivate all of the country's production to behave in a more climate-friendly way, generating
a lower amount of emissions, but with the same or even higher possible efficiency. This
means that despite the need to change overall production, GDP will not be harmed by these
changes. It is also reasonable to assume that the higher the carbon tax, the lower the emis-
sions and therefore the lower the temperature rise will be, because that is the purpose of
the carbon tax. Another assumption is that the higher the carbon tax, the greater the be-
nefit. That is, the higher the carbon tax, the higher the GDP, and the lower the greenhouse
gas emissions and temperature rise compared to the period before the Industrial Revolu-
tion. The level of carbon tax was chosen based on the current levels of carbon tax in Euro-
pean countries from the World Bank database. Sweden has the highest carbon tax at
116.33€/tC (one ton of carbon), for simplicity the figure is rounded to 120€/tC. The coun-
tries with the second highest carbon tax are Switzerland and Liechtenstein at 85.76€/tC,
using a rounded figure of 90€/tC. The third option used is a carbon tax of 45€/tC, which is
currently the sixth highest in Europe in France. The last option was that Slovakia and the
Netherlands would not levy a carbon tax.
5.3.1 The methodology of the DICE model

One of the ways to study the impact of the climate crisis on economic activity is the DICE
model (full name the Dynamic Integrated Climate Economy Model). It is one of the Integ-
rated Group Assessment Models (IAMs), models that combine data from two or more
sectors into one result. Dynamic emissions trends and economic trends are included in the
model. The author of this model is an American economist and professor of economics at
Yale University, William Nordhaus (2020), who has devoted much of his professional career
to researching the effects of climate change on economic prosperity, natural resources,
economic growth, and the importance of the carbon tax. He was awarded the 2018 Nobel
Prize for his work in environmental economics for integrating climate change into long-run
111
macroeconomic analysis. He first published the foundations of his economic model, the
first among IAMs to focus on climate change, in a 1992 paper for the journal Science.
(Nordhaus, W. D., 1992).
According to Nordhaus, the main goal of the DICE is to find an ideal combination of
two options - economic development and climate change mitigation. The combination of
these two options is intended to achieve the greatest possible satisfaction. This goal is
represented by the utility objective function, which is maximized.

max  [(), ()](1 + ) 5.1

[()]

In this equation, U represents the utility level, which in this model can be un-
derstood as the level of social welfare, c(t) is consumption per capita at time t, P(t) is the
population level at time t, and ρ is the net measure of socialization preferences, which is
closely related to market interest rates. The entire utility equation is discounted by the
intergenerational socialization preferences factor between individual generations (1+ ρ) -t.
Since the DICE model combines both economic and environmental terms, the boun-
daries of each science area are defined as follows.
The economic boundaries are composed of five equations. The first set of terms re-
lates to the Ramsey model. The first equation defines utility.
[()] = ()[()] − 1/(1 − ) 5.2
In this equation, α represents the measure of society's valuation of different levels
of consumption, or in other words, the measure of aversion to inequality. Thus, if α were
equal to 0, there would be no aversion to inequality in society and the utility function would
be linear. In this case, the consumption of different generations would be easily interchan-
geable. The higher α is, the more society would consider inequality. The consumption of
the individual generations would be very different.
In this model, Nordhaus and Sztorc assume α =1. We have come up with a logarit-
hmic utility function that is commonly used in economic growth models.
[()] = ()[()] 5.3
The productin function Q(t) is represented by the Cobb-Douglas function with con-
stant returns to scale, where Ω(t) represents the climate factor (5.4), A(t) is the level of
technology, K(t) is capital, and γ is the elasticity of production with respect to capital.
() = Ω()()() () 5.4
The production function Q(t) can also take the form of the sum of investment and
consumption (5.5), with consumption expressed as per capita consumption (5.6).
() = () + () 5.5
()
() = 5.6
()
The final frontier is represented by the capital function, where δK is the level of ca-
pital depreciation.
() = (1 −  )( − 1) + () 5.7
From a practical point of view, the second group of limits can be called ecological
limits. This group of bounds consists of functions that take into account climate change, the
112
damage caused by climate change, the costs associated with mitigating the consequences
of the climate crisis, or the emissions caused by the burning of fossil fuels.
In the first function, we examine the relationship between the amount of greenho-
use gasses and economic development. It is assumed that the total greenhouse gas emis-
sions are only CO2 emissions, since according to Nordhaus, more than 80% of greenhouse
gasses are carbon dioxide.
() = [1 − ()]()() 5.8
E(t) represents the amount of greenhouse gasses at time t, σ(t) represents the car-
bon intensity level and μ(t) represents the emission reduction rate, Q(t) is the Cobb-Douglas
output function (5.4) without the climate factor Ω(t).
Another function describes the accumulation of greenhouse gasses, in this case, CO2
in the atmosphere. In other words, this function describes the carbon cycle in the
atmosphere.
() = () + (1 −  )( − 1) 5.9
M(t) represents the atmospheric CO2 concentration compared to the pre-Industrial
Revolution period at time t, β represents the degree of marginal atmospheric retention,
and δM represents the transmission rate.
Another function shows the relationship between the accumulation of CO2 in the
atmosphere and climate change. The Earth's surface is divided into separate layers because
emissions accumulate differently in each layer. We can think of these layers as the atmo-
sphere, the surface, or the bottom of the ocean.
1 
 () =  ( − 1) + ( ) () −  ( − 1) − ( )[ ( − 1) −  ( − 1)] 5.10
 
1 
 () =  ( − 1) + ( ) ( )[ ( − 1) −  ( − 1)] 5.11
 
Ti(t) is the temperature in the i-th layer at time t compared to 1900, i=1 for the
atmosphere and ocean surface, i=2 for the ocean floor, F(t) is the radiative forcing in the
atmosphere due to greenhouse gasses at time t compared to 1900, Ri is the heat capacity
in each layer, 1/τ2 is the transfer rate from the upper to the lower layer, and λ is the climate
feedback parameter.
The relationship between global temperature increase and income loss is defined
by the quadratic equation (5.12), where d(t) represents the economic loss caused by cli-
mate change.
() 
() = 0.0133   5.12
3
From this equation, the damage caused by a 3°C global temperature rise is 1.3% of
global economic output.
After analyzing the emissions, temperature rise, and damage caused by global war-
ming, it is crucial to figure out how much it will cost us as a society to mitigate the effects
of the climate crisis. The purpose of the following function is to determine the total cost
associated with minimizing the amount of greenhouse gasses.
() =  () = 0.0686(). 5.13
113
TC(t) is the cost associated with mitigating climate change, b1 and b2 are constants.
The climate factor Ω(t) was created by combining the relationships between the
total costs TC(t) and the damages caused by global warming d(t).
[1 −  () ] [1 − 0.0686(). ]
Ω() = = 5.14
[1 + ()] [1 + 0.00144() ]
The numerator contains the total cost function, and the denominator contains the
economic damage (Nordhaus, W. D., 1992).
Unlike standard economic models, IAMs are more complicated to test because it is
not possible to use standard statistical tests or econometric programs. The economic
bounds that make up the equations of the model are commonly used in economic mode-
ling, but the ecological bounds pose a problem in practice. The individual data used in the
functions describing the effects of climate on general well-being (U(t)) have not yet been
sufficiently explored and require further research in the future (Nordhaus, W. D., 2020).
All economic and ecological limits presented in this part of the chapter are based
on the publication of William Nordhaus, which he published in 1992. Since then, 30 years
have passed and much information and data have changed. It should be noted that the
1992 version of the DICE model used data from the mid-1980s and predictions were made
based on that data. After years had passed, it became apparent that many predictions were
incorrect and it was necessary to update almost the entire model. Most of the changes in
economic variables resulted from the incorrect and underestimated assumption of global
output growth, and thus per capita output growth and productivity. Major changes were
made in the latest 2017 revision. The original model's predictions for output and population
growth were underestimated. Particular attention was paid to the social cost of carbon,
quantified in U.S. dollars per ton of emissions produced. From the original $5, the value
increased to $31 per ton of emissions. The trend in this variable was significantly underes-
timated. On the other hand, predictions for trends in global temperatures or emissions ge-
nerated were overestimated, which is a positive result since our goal is to minimize incre-
ases in global temperatures and emissions. (Nordhaus, W. D., 2020)
5.3.2 The data and the model

The Excel version of the DICE model was used to produce the forecasts for Slovakia and the
Netherlands. On the official website of (Nordhaus, W. D., 2020), a publicly available version
of the DICE model was obtained in an earlier version (DICE -R13), which has minimal chan-
ges compared to the latest version. It was necessary to obtain the initial data so that the
program could make predictions for the endogenous variables: the change in temperature,
the amount of CO2 emissions, and GDP for the Slovak Republic and the Netherlands. The
required data came from public databases and reports from the Statistical Office of the
Slovak Republic, the Slovak Hydrometeorological Institute, the National Bank of Slovakia,
the World Bank, Eurostat, and Our world in data. The program models forecasts in five-
year periods. The year 2015 was chosen as the starting year because the data in 2020 were
already affected by the consequences of the global pandemic of the disease COVID -19. In
this model, therefore, it is assumed that the pandemic does not occur, as we wanted to
avoid biased results. The evolution of GDP and other indicators until 2055 was studied. The
year 2050 is considered crucial because the goal is to reduce the global increase in Earth
temperature to 1.5°C by that year. The year 2055 remained the control period.
114
The functions needed for the predictions have already been calibrated. Using the
values of the initial temperature increase of the country under study, the population, the
amount of emissions in the initial period and in the previous period and the resulting
growth rate or decrease in the amount of emissions, the depreciation rate, the interest rate
and the amount of the carbon tax itself, the predictions of the development of temperature
changes, the amount of emissions and the amount of GDP as well as the abatement costs
and the total damage as a share of output were calculated. The individual results changed
after the carbon tax level was changed - 0€/tC, 45€/tC, 90€/tC and 120€/tC.
5.3.3 The Slovak Republic

It is important to analyze the results of the DICE model for Slovakia to better understand
what the predictions mean and whether they follow the trend leading to the carbon neut-
rality stage. Four possible development scenarios with different carbon tax levels were cre-
ated. The first version is a tax of 0€/tC, the second is a tax of 45€/tC, the third is 90€/tC and
the fourth is 120€/tC. The predictions for the development of temperatures, greenhouse
gas emissions and GDP until 2055 are presented in three tables with the percentage incre-
ase of each value.
Table 5.1 An increase in average temperatures in Slovakia compared to the middle of the 18th century in °C120
Tempera- Tempe- Tempe- Tempe-
ture increase rature increase rature increase rature increase
Year
without (%) with tax (%) with tax (%) with tax (%)
tax 45€/tC 90€/tC 120€/tC
2015 2.01000 2.01000 2.01000 2.01000
2020 1.99540 -0.72625 1.99540 -0.72627 1.99540 -0.72628 1.99540 -0.72629
2025 1.98079 -0.73248 1.98079 -0.73250 1.98079 -0.73251 1.98079 -0.73252
2030 1.96769 -0.66117 1.96769 -0.66118 1.96769 -0.66119 1.96769 -0.66119
2035 1.95697 -0.54466 1.95697 -0.54467 1.95697 -0.54467 1.95697 -0.54468
2040 1.94905 -0.40486 1.94905 -0.40487 1.94905 -0.40488 1.94905 -0.40488
2045 1.94405 -0.25641 1.94405 -0.25642 1.94405 -0.25642 1.94405 -0.25643
2050 1.94194 -0.10883 1.94194 -0.10883 1.94193 -0.10884 1.94193 -0.10884
2055 1.94256 0.03196 1.94256 0.03195 1.94255 0.03195 1.94254 0.03195
Table 5.1 shows the change in average temperatures compared to temperatures

before the Industrial Revolution in °C. Obviously, the changes do not have a significant
effect, but this is logical, since we are dealing with changes in average temperatures that
cannot take on extreme values. The percentage decreases between periods are larger the
higher the value of the carbon tax. These results show that the carbon tax leads to a dec-
rease in temperature change, which fulfills the goal set at COP26.
120
Source: Own processing according databases (World Bank, n.d.), (Slovak Hydrometeorological Institute,
n.d.), (Národná banka Slovenska, n.d.), (World Bank, n.d.), (Eurostat, 2019), (Our World in Data, 2022)
115
Table 5.2 Greenhouse gas emissions produced in Slovakia in millions of tons121
Year Emissions increase Emissi- increase Emissi- increase Emissi- increase
without (%) ons with (%) ons with (%) ons with (%)
tax tax tax tax
45€/tC 90€/tC 120€/tC
2015 35.11549 34.54535 34.23622 34.06303
2020 33.15998 -5.56879 33.15948 -4.01174 33.15861 -3.14758 33.15784 -2.65739
2025 31.42987 -5.21745 31.42950 -5.21716 31.42873 -5.21700 31.42804 -5.21685
2030 29.83626 -5.07038 29.83595 -5.07023 29.83531 -5.06994 29.83474 -5.06968
2035 28.37133 -4.90991 28.37107 -4.90979 28.37053 -4.90953 28.37006 -4.90931
2040 27.02713 -4.73786 27.02692 -4.73775 27.02647 -4.73753 27.02607 -4.73734
2045 25.79580 -4.55592 25.79562 -4.55583 25.79242 -4.56607 25.79491 -4.55546
2050 24.66959 -4.36586 24.66944 -4.36578 24.66912 -4.35515 24.66885 -4.36546
2055 23.64096 -4.16961 23.64084 -4.16954 23.64057 -4.16938 23.64034 -4.16925
In Table 5.2 we can observe the evolution of greenhouse gas emissions produced.
Again, at first glance, there are no significant changes between the tax amounts. Neverthe-
less, it is clear that the carbon tax contributes to a reduction in the amount of emissions. It
should be noted that the figures given are in millions of tons. The difference between the
amount of emissions in 2050 in the scenario with a carbon tax of 0€/tC and 120€/tC corres-
ponds to up to 744 tons of emissions. The evolution of emissions under a zero carbon tax
is interesting. We can observe a significant decrease even without the effect of the tax. This
downward trend is due to historical trends. As we mentioned earlier, Slovakia is su-
ccessfully reducing the amount of greenhouse gasses produced, and it is only positive that
it continues to do so, albeit on a theoretical level. We have also found that the higher the
value of the carbon tax, the more emissions are reduced.
Table 5.3 GDP development of Slovakia in billions of €122
Year GDP incre- GDP with increase GDP with incre- GDP with incre-
without ase (%) tax 45€/tC (%) tax ase tax ase
tax 90€/tC (%) 120€/tC (%)
2015 79.888 80.580 81.895 82.715
2020 85.415 6.918 86.104 6.856 87.596 6.961 88.591 7.103
2025 101.562 18.905 102.035 18.503 103.450 18.099 104.392 17.837
2030 112.670 10.937 112.982 10.728 114.325 10.512 115.220 10.372
2035 123.778 9.859 123.934 9.694 125.211 9.522 126.062 9.410
2040 134.886 8.974 134.891 8.841 136.107 8.702 136.918 8.611
2045 145.994 8.235 145.850 8.124 147.011 8.011 147.785 7.937
2050 157.101 7.608 156.811 7.515 157.921 7.421 158.661 7.360
2055 168.209 7.070 167.772 6.990 168.836 6.912 169.545 6.860
The Table 5.3 shows the development of Slovakia's GDP. It should be noted that the
development of GDP was influenced by the damages caused by the climate crisis (total
damages) and the costs incurred to mitigate the consequences of the climate crisis (miti-
gation costs). The values in Table 5.3 are in billions of €. Previously, it was explained that
the global economy needs to be transformed to overcome the climate crisis. The carbon
121
122
116
tax is considered one of the instruments that could be used to do so. The prediction shows
that the tax will generate a higher value of GDP compared to the "no tax" option, but not
in all cases. We can observe a curiosity when using a tax of 45€/tC. In this scenario, GDP
reaches its lowest value in 2050 and then in 2055. GDP with the use of the tax exceeds GDP
without the use of the tax, but only until 2045. From then on, we can conclude that a carbon
tax of 45€/tC does not benefit the economy. In the other scenarios, however, the carbon
tax is a long-term benefit for the Slovak economy. It can also be said that the higher the
tax, the greater the benefit. The percentage increases in GDP values are also worth men-
tioning. The highest annual increase is in 2025 in all scenarios, similar to the amount of
greenhouse gas emissions in Table 5.2. From this point on, the percentage increases are
already decreasing. Theoretically, these increases could once reach a zero level and then
even take on negative values, but in reality this scenario is very unlikely. The development
of GDP as well as all other economic indicators is very dynamic. The values determined in
our forecast may soon coincide with the actual development of the individual variables
studied, but with the development of technologies and the occurrence of various and
unexpected events (e.g. the occurrence of the pandemic COVID -19 in 2019), the predic-
tions will later still differ from reality.
5.3.4 The Netherlands

Four different scenarios of the evolution of the three endogenous variables were also ana-
lyzed for the Netherlands. The tax amounts and the variables studied are the same as in
the case of the Slovakia study.
Table 5.4 Increase in average temperatures in the Netherlands compared to the middle of the 18th cen-
tury in °C123
Year Tempe- Tempe- Tempe- Tempe-

rature increase rature increase rature increase rature increase
tax 45€/tC 90€/tC 120€/tC
2015 0.830000 0.830000 0.830000 0.830000
2020 0.966786 16.480241 0.966784 16.480000 0.966783 16.479880 0.966783 16.479880
2025 1.083983 12.122331 1.083980 12.122253 1.083976 12.121955 1.083978 12.122162
2030 1.185660 9.379944 1.185656 9.379878 1.185653 9.380005 1.185652 9.379711
2035 1.274880 7.524923 1.274875 7.524864 1.274872 7.524883 1.274871 7.524889
2040 1.353980 6.204506 1.353974 6.204451 1.353971 6.204466 1.353970 6.204471
2045 1.424764 5.227847 1.424758 5.227870 1.424755 5.227882 1.424752 5.227738
2050 1.488645 4.483620 1.488639 4.483639 1.488636 4.483648 1.488634 4.483728
2055 1.546747 3.903012 1.546740 3.902961 1.546737 3.902969 1.546735 3.902974
123
117
7,000000
6,000000
5,000000
4,000000
3,000000
2,000000
1,000000
0,000000
2015 2020 2025 2030 2035 2040 2045 2050 2055
Temperature without tax Temperature with tax 45€/tC

Temperature with tax 90€/tC Temperature with tax 120€/tC
Figure 5.3 The temperature change in the Netherlands124
As in the case of Slovakia and in the case of the Dutch data, the increase of the average
temperature in the country compared to the period before the industrial revolution at °C
was studied. Already in 2015 we can see a better starting position of the Netherlands com-
pared to Slovakia, because in the Netherlands a temperature increase of 0.83°C is obser-
ved. The positive news is that in each of the four scenarios, i.e. without the use of a carbon
tax, the Netherlands will reach the target of not exceeding a temperature increase of 1.5°C.
It can be observed that the higher the tax, the lower the temperature increase. It is also
interesting to note that in Slovakia there is a decrease in the average temperature, while in
the Netherlands, on the contrary, the temperature is increasing. This is related to the his-
torical development of temperatures. Slovakia has a worse starting position than the
Netherlands, with a value of the temperature change of up to 2.01°C.
Table 5.5 Greenhouse gas emissions produced in the Netherlands in millions of tons125
Year Emissions increase Emissions increase Emissions increase Emissions increase

tax 45€/tC 90€/tC 120€/tC
2015 173.71774 171.72677 170.64724 170.04242
2020 158.01746 -9.03781 158.01693 -7.98352 158.01583 -7.40206 158.01485 -7.07328
2025 144.07407 -8.82396 144.07361 -8.82394 144.07265 -8.82391 144.07180 -8.82389
2030 131.46028 -8.75507 131.45988 -8.75506 131.45904 -8.75504 131.45830 -8.75501
2035 120.04676 -8.68211 120.04641 -8.68209 120.04569 -8.68206 120.04504 -8.68204
2040 109.71653 -8.60517 109.71623 -8.60516 109.71559 -8.60514 109.71503 -8.60511
2045 100.36373 -8.52451 100.36347 -8.52450 100.36291 -8.52448 100.36243 -8.52445
2050 91.89262 -8.44041 91.89239 -8.44040 91.89191 -8.44037 91.89148 -8.44036
2055 84.21660 -8.35325 84.42164 -8.12989 84.21599 -8.35321 84.21562 -8.35318
Table 5.5 shows the evolution of the amount of greenhouse gas emissions produced in
the Netherlands. At first glance, it is obvious that the carbon tax contributes to reduce the
124
125
118
amount of emissions. It is also true that the higher the carbon tax, the more the emissions
decrease. Obviously, the differences between the amounts of emissions at each tax rate
are not significant. However, it should be noted again that the difference between emissi-
ons in 2050 at a tax level of 0€/tC and 120€/tC is 1140 tons of emissions. The percentage
increases between periods take negative values, so that the number of emissions decreases
each time. However, these negative values approach zero with each period studied. Accor-
ding to this trend, it is reasonable to assume that the percentage changes will be zero or
perhaps even positive over time, but the development of economy and industry is very
dynamic.
Table 5.6 GDP development of the Netherlands in billions of €126
Year GDP incre- GDP with incre- GDP with incre- GDP with incre-
without ase (%) tax ase (%) tax ase (%) tax ase (%)
tax 45€/tC 90€/tC 120€/tC
2015 688.886 695.739 701.545 704.983
2020 812.490 17.943 819.601 17.803 826.711 17.842 831.452 17.939
2025 903.076 11.149 909.559 10.976 916.042 10.806 920.364 10.694
2030 993.581 10.022 999.496 9.888 1005.412 9.756 1009.356 9.669
2035 1084.015 9.102 1089.417 8.997 1094.819 8.893 1098.421 8.824
2040 1174.388 8.337 1179.326 8.253 1184.263 8.170 1187.554 8.115
2045 1264.704 7.690 1269.220 7.623 1273.737 7.555 1276.747 7.511
2050 1354.970 7.137 1359.105 7.082 1363.240 7.027 1365.997 6.990
2055 1445.189 6.658 1448.988 6.613 1452.768 6.567 1455.295 6.537
Table 5.6 shows predictions for the development of the GDP of the Netherlands. The
predictions also included the economic damages caused by climate change (total damages)
and the financial resources spent to mitigate the consequences of the climate crisis (miti-
gation costs). As in the case of Slovakia, the carbon tax contributes directly proportionally
to economic development (GDP) in the Netherlands. These differences are seemingly even
more pronounced. For example, the difference between GDP in 2050 with a carbon tax of
0 €/tC and 120 €/tC is over 11 billion €.
126
119
CONCLUSION
CONCLUSION
Global warming has been observed on our planet for several decades. Since the beginning
of the industrial revolution, we can observe an unnatural increase in the average global
temperature and the associated emissions of greenhouse gasses such as CO2, methane or
nitrogen oxides. The greenhouse effect on Earth is natural. The problem is the extent of
the current state of the greenhouse effect. Melting glaciers, rising sea levels, dry, dying
plants and animals are affecting human health, quality of life and standard of living. These
consequences of global warming have led to the current climate crisis, where the damage
caused so far risks being irreversible unless we reduce the global temperature rise to below
1.5°C. In recent decades, scientists have focused primarily on human consumption of
natural resources, and there is growing evidence that habitat and species degradation and
loss is increasing. Our work has shown that there are geographic variations and typologies
of environmental behavior at the national level and that these can be identified. The first
part of our research on the effects of the Human Development Index (HDI) and the
Environmental Performance Index (EPI) on environmental behavior following previous
analysis results confirms a positive relationship. In this context, there is a large body of
empirical research aimed at determining what influences environmental behavior. For
example, in 2013, an internationally renowned expert on climate change, Karen O'Brien,
examined the influence of environmental health, which is one of the most important
determinants of health, air quality, water, and sanitation, and its positive impact on
environmental performance outcomes (O´Brien, K., Sygna, L., Wolf, J., 2013). One of
Australia's most prominent politicians, Bob Brown, who was one of the most active
environmentalists in 2014, also examined the factors that determine environmental
behavior. The author concludes that the geographical distribution of the degree of
environmental behavior requires different distributions, territorial differences, and
different types of development. Identifying and understanding geographic inequalities in
environmental behavior becomes an important mechanism needed in any study that
focuses on analysis and causality (Brown, B., 2014).
Cluster analysis is an important tool for any study to identify possible convergence
intentions in living standards, education, GDP growth, life expectancy and also
environmental protection to measure the overall progress in environmental sustainability.
One of the UK professors of environmental economics, Paul Ekins, suggested in 2011 that
there is a link between environmental performance and measures of environmental
sustainability improvement (Ekins, P., Anandarajah, G., Strachan, N., 2011). Ideally, these
actions would include four main areas: developing better measurement and monitoring
systems to improve the collection of environmental data, known as environmental data;
developing environmental policies that focus on extremely weak areas; submitting
national-level data and statistics to international organizations such as the United Nations;
and defining subnational metrics and targets to improve environmental performance.
With global developments in various environmental areas, we have seen an
increase in emissions from industry, waste, and emissions from transportation. The
consumption of raw materials is increasing at the expense of environmental externalities,
taking into account all stages of the production of goods, from the extraction of raw
materials to waste management processes. The amount of processed literature, reports
from international and research centers pointing out the negative effects of environmental
120
CONCLUSION
problems with consequences for climate change is increasing every day. Society as a whole
is feeling the effects of climate change on all aspects of our lives. This is true not only for
far away countries, but also for EU countries like Slovakia or the Netherlands.
Environmental behavior is the result of many intertwined factors. Ecological
inequalities in the index of environmental behavior exist in all countries of the world, even
in the most developed countries. In order to create a sustainable and efficient green
environment that is essential for human health and leads to the required ecosystem
viability and environmental health, there must be collaboration between the
environmental sector and other sectors in the country.
As a result of more comprehensive approaches to measuring sustainable
development, there has been an immediate increase in environmental awareness. These
approaches include the Human Development Index (HDI), which has improved for
developing countries since the 1970s. The improvements are reflected in overall education
levels, life expectancy, and rising living standards. Another approach is the Environmental
Performance Index (EPI), which allows countries to compare their social and environmental
inequalities and clearly shows that the key to winning the competition for a sustainable
environment lies in making improvements and investing in the future: Infrastructure
(sanitation, water, and electricity), health care, and education. Improving a country's partial
competitiveness strengthens its long-term competitiveness. In our opinion, the
development of sustainable competitiveness is also driven by social factors, which play an
increasingly important role due to the steady increase in the average value of the HDI.
The results of the analyzes are divided into six main parts. The first part is the
analysis of a set of relevant internationally comparable green growth indicators, which was
conducted by observing four groups of indicators describing the productivity of
environmental resources, natural capital stock, quality of life, policy response and
economic measures in Slovakia, the Netherlands and the EU 28. Based on the conducted
analysis, we concluded that Slovakia considers waste treatment, air quality and
deforestation as the three most important environmental challenges. Compared to the
European Union, the country has one of the lowest waste treatment rates. Air quality is
affected by excessive dust and high nitrogen dioxide concentrations, and the third
challenge is deforestation due to excessive deforestation intensity. These are the
environmental vulnerabilities that cause Slovakia to lag behind developed countries. The
Netherlands, on the other hand, considers biodiversity loss, climate change and
overexploitation of natural resources as the three most important environmental
problems. Habitat fragmentation, deposition of nitrogen in the air, and loss of bird
populations on agricultural land are still present despite national measures to combat these
problems. Most of these problems can be traced back to large-scale agricultural traffic,
which has increased dramatically in recent years. Unfortunately, neither Slovakia nor the
Netherlands has managed to achieve a number of environmental goals, such as reducing
carbon dioxide emissions, increasing the share of energy from renewable sources in gross
final consumption, or overall targets for global nature conservation. According to our
summaries, in conjunction with the OECD recommendations, Slovakia and the Netherlands
need to improve the cost-benefit ratio of their environmental policies, examine
environmental concerns, and integrate them into positive social and economic decisions.
Part of the results will be evidenced later by comparing air pollution indicators and
emissions.
121
CONCLUSION
A second analysis of sustainability indices was then conducted, based on data from
the CIESIN database on sustainable development indices, the UNDP database on the
Human Development Index (HDI), and the Yale, Columbia University and SEF collaborative
report on the Environmental Performance Index (EPI). When comparing EU countries
internationally by the HDI index, we concluded that the Netherlands, with a score of 0.934,
is one of the countries with a very high level of human development, and Slovakia, with a
score of 0.855, is one of the countries with a high HDI. For the EPI index, 180 countries were
evaluated, with the Netherlands ranking 18th with the best score in the Water Resources
category and Slovakia ranking 28th among the V4 countries with the best score in the
Ecosystem Vitality category EPI. Our results show that the HDI index has a significant impact
on the EPI index, but the lack of environmental bureaucracy and legislation has an impact
on environmental protection and sustainability. In addition, the absence of functioning
institutions and government has a significant impact on local ecosystems and affects the
protection of biodiversity and habitats. For this reason, EU countries such as Slovakia, and
in some cases the Netherlands, face problems beyond their inability to maintain good
environmental quality and health.
The third part of the research consists in elaborating a comparison of three models
of cluster analysis for a set of 15 EU countries using two studied variables of human
development and environmental performance indices as aggregate indicators. During our
multidimensional statistical classification, clusters were designed based on HDI, EPI indices
assessing sustainable performance of EU members, as well as possible convergences
between them at the level of EU member states. The indicators used in the analysis form
different groupings and most of the overlaps occur in the groupings whose countries are
ranked first. This type of behavior is typical of countries with strong economies that
perform at all three socio-economic and environmental levels and have consistent
development policies. Sweden and Denmark are the countries that appear in the first
grouping in all cases analyzed. Among the EU countries, Sweden appears most frequently
in the leading grouping in all three cases analyzed. The Czech Republic and Slovakia are best
placed among the former communist countries, and Luxembourg, Belgium and the
Netherlands are third among the "Benelux" countries.
The development of twelve indicators of air pollution and emissions was carried out
in the fourth part of the study. The indicators were observed not only for Slovakia and the
Netherlands, but also for the group of other European Union countries in eight economic
sectors. The indicators show significant progress in all sectors of the examined countries,
except for the electricity industry in Slovakia, agriculture in the Netherlands and coal
industry in the rest of the EU. The negative development of fluorinated gasses is evident in
all countries and all sectors.
The computable general equilibrium model was used in the next part of the study
to examine the impact of reducing greenhouse gas emission quotas under the European
Green Deal agreement. The experiment shows that this leads to a general decrease in the
production of most commodities and in domestic sales. Market prices of most commodities
increase, with the exception of raw materials. The results show a lower responsiveness of
the Dutch economy. The welfare analysis shows that the Slovak Republic, like the European
Union countries, is worse off as a result of the modeled reduction in emission quotas, while
the Netherlands is slightly better off.
The last chapter was used to explain in detail the principles of the DICE model and
then to perform a forecast using this model. Four scenarios were created, using a different
122
CONCLUSION
level of carbon tax in each scenario: 0€/tC, 45€/tC, 90€/tC and 120€/tC. The result of the
analysis was that the carbon tax as such favors the development of GDP and the decrease
in the amount of emissions and temperature, or in the case of the Dutch carbon tax, at
least slows down the increase in temperature. A certain pattern can be observed,
suggesting that the higher the carbon tax, the more favorable our results. With a carbon
tax of 120€/tC, the gross domestic product of Slovakia and the Netherlands reach the
highest values and the emissions the lowest. The potential increase in average
temperatures of both countries was also examined in comparison to the mid-1800s.
Although the temperature trend did not show significant changes between the carbon tax
levels for both countries, the scenario with the highest carbon tax still had the most
favorable outcome in the case of Slovakia, and thus the lowest temperature increase
compared to the base year. In the case of the Netherlands, it was the opposite, with
temperatures increasing instead of decreasing. The difference between the Slovak and
Dutch results was in the initial temperature values. While Slovakia started with a
temperature value of 2.01°C, the initial temperature in the Netherlands was 0.83°C. The
data analysis with the DICE model can be considered successful. We found that Slovakia
and the Netherlands are at least theoretically capable of reducing greenhouse gas
emissions while maintaining a strong economy. According to our projections, both
countries would be able to reduce produced emissions by more than 30% from 2015 levels
by 2050 in each of our four scenarios. The largest reduction in emissions would, of course,
be achieved with a higher carbon tax. Thus, we can conclude that Slovakia and the
Netherlands can mitigate the effects of the climate crisis even without a carbon tax.
In formulating the benefits of this research, we would like to emphasize the
timeliness of the topic, as climate change impacts and environmental problems are
currently one of the most discussed global issues. When analyzing hierarchical clustering
methods, we need to be attentive because the clustering results are unable to provide an
accurate picture of the evaluation of countries' sustainable performance. In order to design
a convergence model for EU member states, a new indicator could be considered, which
could help to design a comprehensive model for assessing a country's sustainable
development and provide a framework for implementing best practice models in countries
with lower classification. The computable general equilibrium analysis provides a static
picture of the future impact of the greenhouse gas emission rates. From this, we can
conclude that the overall impact of the European Green Deal agreement worsens welfare
in Slovakia, while it increases in the Netherlands. The long-term projections based on the
dynamic integrated climate economic model show that both economies are able to reduce
greenhouse gas emissions while achieving strong economic growth.
123
LIST OF TABLES
LIST OF TABLES
Table 1.1 Member States' progress towards energy targets ........................................................................... 14
Table 1.2 List of evaluated indicators and their development ......................................................................... 24
Table 2.1 Basic information: Slovakia and the Netherlands ............................................................................ 28
Table 2.2 Groups of indicators and evaluated areas of green growth............................................................. 30
Table 3.1 CO2 productivity and energy productivity ........................................................................................ 40
Table 3.2 CO2 productivity based on supply (US dollar / kg) ........................................................................... 41
Table 3.3 CO2 productivity based on demand (US dollar / kg) ......................................................................... 44
Table 3.4 Share of renewable sources in gross domestic energy consumption (in %) ..................................... 46
Table 3.5 Contribution of electricity produced from renewable energy sources (%) ....................................... 47
Table 3.6 Source productivity........................................................................................................................... 48
Table 3.7 Domestic material consumption (USD/kg) ....................................................................................... 50
Table 3.8 Total municipal waste production per capita (kg) ........................................................................... 52
Table 3.9 Recycled municipal waste, mechanically-biologically treated waste (%) ......................................... 52
Table 3.10 Renewable sources ......................................................................................................................... 53
Table 3.11 Development of forest resources of the Slovak Republic and the Netherlands.............................. 55
Table 3.12 Freshwater resources (USD/m3) ..................................................................................................... 56
Table 3.13 Non - renewable resources, Biodiversity and ecosystem ............................................................... 56
Table 3.14 Environmental health and risks ...................................................................................................... 58
Table 3.15 Air quality in urban areas (μg / m3) ................................................................................................ 60
Table 3.16 Access to environmental services ................................................................................................... 61
Table 3.17 Population exposed to small air pollution by fine particles (PM10) ................................................ 62
Table 3.18 Prices and taxes .............................................................................................................................. 64
Table 3.19 HDI and its components in Slovakia and the Netherlands in 2018 ................................................. 67
Table 3.20 Trends in the development of HDI in Slovak Republic and the Netherlands in 1990 - 2018........... 68
Table 3.21 Evaluation of the EPI index of Slovakia and the Netherlands, ....................................................... 69
Table 3.22 Clusters according to the nearest neighbour method .................................................................... 71
Table 3.23 Clusters according to the median method ..................................................................................... 72
Table 3.24 Clusters according to the Ward’s Minimum Variance method ...................................................... 73
Table 3.25 Segmentation variables.................................................................................................................. 78
Table 3.26 Q111 Binomical Scale ..................................................................................................................... 78
Table 3.27 Q79 Likert Scale .............................................................................................................................. 79
Table 3.28 Q99 Scale ........................................................................................................................................ 79
Table 3.29 V78 Likert Scale .............................................................................................................................. 79
Table 3.30 V83 Binomical Scale ....................................................................................................................... 79
Table 3.31 Factor table .................................................................................................................................... 79
Table 3.32 Loadings table ................................................................................................................................ 80
Table 3.33 Segment size................................................................................................................................... 82
Table 3.34 Segment description ....................................................................................................................... 83
Table 3.35 Descriptor data per segment.......................................................................................................... 84
Table 3.36 Model coefficients .......................................................................................................................... 86
Table 3.37 Parameters‘ p-values..................................................................................................................... 87
Table 3.38 Confusion matrix ............................................................................................................................ 87
Table 3.39 Segment size (out-of-sample classification) ................................................................................... 88
Table 3.40 Classification model predictions ..................................................................................................... 89
Table 4.1 EVFE Elasticity of substitution .......................................................................................................... 96
Table 4.2 Aggregate air pollution and emissions - change in 2004 – 2014 in the Slovak Republic................ 100
124
LIST OF TABLES
Table 4.3 Aggregate air pollution and emissions - change in 2004 – 2014 in the Netherlands ..................... 100
Table 4.4 Aggregate air pollution and emissions - change in 2004 – 2014 in the EU25 ................................ 101
Table 4.5 Air pollution and emissions associated with endowment - change in 2004 – 2014 ....................... 102
Table 4.6 Values of RCTAXB and NCTAXB ...................................................................................................... 102
Table 4.7 Industry output of commodities ..................................................................................................... 103
Table 4.8 Domestic sales of commodities ...................................................................................................... 104
Table 4.9 Aggregate imports of commodities................................................................................................ 104
Table 4.10 Market price change of commodities........................................................................................... 105
Table 4.11 Change in value of GDP ................................................................................................................ 105
Table 4.12 Change in value of GDP ................................................................................................................ 105
Table 5.1 An increase in average temperatures in Slovakia compared to the middle of the 18th century in °C
....................................................................................................................................................................... 115
Table 5.2 Greenhouse gas emissions produced in Slovakia in millions of tons .............................................. 116
Table 5.3 GDP development of Slovakia in billions of € ................................................................................. 116
Table 5.4 Increase in average temperatures in the Netherlands compared to the middle of the 18th
century in °C ................................................................................................................................................... 117
Table 5.5 Greenhouse gas emissions produced in the Netherlands in millions of tons.................................. 118
Table 5.6 GDP development of the Netherlands in billions of € ..................................................................... 119
Table B.1 EPI Index - Ranking of 180 countries .................................................................................................. II
Table D.1 Segmentation data ........................................................................................................................... VI
Table D.2 Discrimination data ......................................................................................................................... VII
Table D.3 Classification data........................................................................................................................... VIII
Table D.4 Segment membership ....................................................................................................................... IX
Table D.5 Model predictions .............................................................................................................................. X
Table E.1 Air pollution and emissions associated with output – change in 2004 – 2014 in the Slovak Republic
.......................................................................................................................................................................... XI
Table E.2 Air pollution and emissions associated with intermediate use – change in 2004 – 2014 in the Slovak
Republic ............................................................................................................................................................ XI
Table E.3 Air pollution and emissions associated with households’ consumption – change in 2004 – 2014 in
the Slovak Republic .......................................................................................................................................... XII
Table E.4 Air pollution and emissions associated with output – change in 2004 – 2014 in the Netherlands .. XII
Table E.5 Air pollution and emissions associated with intermediate use – change in 2004 – 2014 in the
Netherlands .................................................................................................................................................... XIII
the Netherlands .............................................................................................................................................. XIII
Table E.7 Air pollution and emissions associated with output – change in 2004 – 2014 in the EU 25 ........... XIV
Table E.8 Air pollution and emissions associated with intermediate use – change in 2004 – 2014 in the EU 25
........................................................................................................................................................................ XIV
the EU 25.......................................................................................................................................................... XV
Table F.1 Carbon dioxide emissions from government consumption of domestic and imported products .... XVI
Table F.2 Carbon dioxide emissions from private households’ consumption of domestic and imported products
........................................................................................................................................................................ XVI
Table F.3 Carbon dioxide emissions from firms’ usage of domestic products in the European Union 25 ....... XVI
Table F.4 Carbon dioxide emissions from firms’ usage of imported products in the European Union 25....... XVI
Table F.5 Carbon dioxide emissions from firms’ usage of domestic products in the Slovak Republic ............. XVI
Table F.6 Carbon dioxide emissions from firms’ usage of imported products in the Slovak Republic............ XVII
Table F.7 Carbon dioxide emissions from firms’ usage of domestic products in the Netherlands ................. XVII
Table F.8 Carbon dioxide emissions from firms’ usage of imported products in the Netherlands ................. XVII
125
LIST OF
LIST OF FIGURES
Figure 1.1 Consequences of climate change in the European region............................................................... 11
Figure 1.2 EU climate and energy developments up to 2020 .......................................................................... 12
Figure 1.3 Expected progress of EU countries in the field of climate by 2030 ................................................. 13
Figure 1.4 Material balance model .................................................................................................................. 15
Figure 1.5 Relationship between income and demand for environmental quality .......................................... 18
Figure 1.6 European Ecological Convention ..................................................................................................... 22
Figure 1.7 Three key aspects of the effort........................................................................................................ 22
Figure 2.1 Location of Europe on the world map ............................................................................................ 26
Figure 2.2 Overall highest results in the field of green growth in 2015 ........................................................... 29
Figure 2.3 Overall largest improvement in green growth (2000 – 2015) ......................................................... 30
Figure 2.4 Socio-economic relations and groups of green growth indicators .................................................. 31
Figure 2.5 HDI dimensions and indicators........................................................................................................ 33
Figure 2.6 EPI Framework ................................................................................................................................ 36
Figure 2.7 Simple dendrogram pattern ............................................................................................................ 39
Figure 3.1 CO2 productivity based on supply in EU countries in 2010 and 2018 .............................................. 42
Figure 3.2 Development of CO2 productivity based on the offer of Slovakia, the Netherlands in comparison
with the EU ...................................................................................................................................................... 42
Figure 3.3 CO2 productivity by supply (OECD countries) in 2000-2010............................................................ 43
Figure 3.4 CO2 productivity based on demand in EU countries in 2010 and 2015 ........................................... 43
Figure 3.5 Development of CO2 productivity based on the demand of Slovakia, the Netherlands in comparison
with the EU ...................................................................................................................................................... 44
Figure 3.6 Share of energy from renewable sources in EU countries in 2018 .................................................. 45
Figure 3.7 Development of the share of renewable energy in the Slovak Republic and
the Netherlands compared to the EU .............................................................................................................. 46
Figure 3.8 Contribution of electricity produced from renewable energy sources in 2018 ............................... 47
Figure 3.9 Development of the contribution of electricity produced from RES of the Slovak Republic, the
Netherlands in comparison with the EU .......................................................................................................... 48
Figure 3.10 Material productivity in EU countries in 2018 .............................................................................. 50
Figure 3.11 Development of the share of material productivity of the Slovak Republic and the
Netherlands in comparison with the EU average ............................................................................................ 51
Figure 3.12 Amount of generated municipal waste and rate of its recovery (2017) ....................................... 52
Figure 3.13 Intensity of use of forest resources .............................................................................................. 54
Figure 3.14 Development of freshwater abstraction in EU countries in USD/m3 ........................................... 56
Figure 3.15 Endangered mammalian species,% of total known species .......................................................... 57
Figure 3.16 Exposure to air pollution by PM2.5 in 2008 ................................................................................... 59
Figure 3.17 Exposure to air pollution by PM2.5 particles in 2017 .................................................................... 59
Figure 3.18 Development of the share of air pollution in the Slovak Republic and the Netherlands ............... 60
Figure 3.19 Population exposed to small air pollution by fine particles (PM10 ) .............................................. 61
Figure 3.20 Connection rate to wastewater treatment in 2015 (%), .............................................................. 63
Figure 3.21 Tax revenues related to the environment, percentage of GDP ..................................................... 65
Figure 3.22 Environmentally related government research and development budget from the total budget for
science and research (%) .................................................................................................................................. 66
Figure 3.23 International comparison of the HDI index of EU countries .......................................................... 68
Figure 3.24 Global comparison of the EPI index of EU countries, ................................................................... 70
Figure 3.25 Cluster created according to the nearest neighbour method ....................................................... 71
Figure 3.26 Cluster according to the median method, .................................................................................... 73
126
LIST OF
Figure 3.27 Cluster according to the Ward’s Minimum Variance method ...................................................... 73
Figure 3.28 Dendogram ................................................................................................................................... 81
Figure 3.29 Screeplot ....................................................................................................................................... 82
Figure 3.30 Statistical differences in segment profiles .................................................................................... 83
Figure 3.31 Spatial representation of clusters and segmentation variables using principal component analysis
......................................................................................................................................................................... 84
Figure 3.32 Statistical differences in descriptors ............................................................................................. 85
Figure 3.33 Spatial representation of segments and their descriptors using principal component analysis ... 86
Figure 3.34 Confusion matrix plot .................................................................................................................... 88
Figure 4.1 Circular flow in economic system .................................................................................................... 91
Figure 4.2 Regional expenditure and Income .................................................................................................. 92
Figure 4.3 Production structure ....................................................................................................................... 95
Figure 5.1 Average global temperature growth from 1880-2020 ................................................................. 108
Figure 5.2 Emissions per capita and GDP per capita for different countries.................................................. 110
Figure 5.3 The temperature change in the Netherlands ................................................................................ 118
Figure A.1 The impact of changes in individual European regions ..................................................................... I
Figure C.1 EPI Score........................................................................................................................................... III
Figure C.2 Environmental Health Score............................................................................................................. III
Figure C.3 Ecosystem Vitality Score .................................................................................................................. IV
Figure D.1 World: HDI - Human Development Index, 2017................................................................................ V
Figure D.2 Europe: HDI - Human Development Index, 2017 .............................................................................. V
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137
APPENDIX
APPENDIX
A. The impact of changes in individual European regions
Figure A.1 The impact of changes in individual European regions

Source: Own processing according to EEA Agency Report No. 01/2017 – Climate change, impacts and vulne-
rability in Europe 2016.
I
APPENDIX
B. EPI Index (Ranking of 180 countries)

Table B.1 EPI Index - Ranking of 180 countries
Source: Own processing according to EPI Global Metrics for the Enviro: Ranking Country Performance on High-
Priority Enviro Issues. Yale Center for Enviro Law & Policy, Yale University. URL: <https://epi.yale.edu/>
II
APPENDIX
C. EPI, Environmental Health and Ecosystem Vitality Score
Figure C.1 EPI Score
Figure C.2 Environmental Health Score
III
APPENDIX
Figure C.3 Ecosystem Vitality Score
Source: Own processing according to 2018 Environmental Performance Index. Global Metrics for the Envi-
ronment: Ranking Country Performance on High-Priority Environmental Issues. Yale Center for Environmental
Law & Policy, Yale University. URL: <https://epi.yale.edu/>
IV
APPENDIX
D. HDI Index, 2017 (Map of world and Europe)
Figure D.1 World: HDI - Human Development Index, 2017
Figure D.2 Europe: HDI - Human Development Index, 2017
Source of maps: Own processing according to UNDP (2018) United Nations Development programme. HDI
Index by Max Roser, November 2019. URL: <https://ourworldindata.org/human-development-index>
Source of data: Own processing according to UNDP (United Nations Development Programme: HDI Index.
Dimension: Composite indices. URL: <http://hdr.undp.org/en/indicators/137506#>.
V
APPENDIX
Table D.1 Segmentation data

Country Environ- EP_confi- EP_mem- E_im- E_demon-
ment_vs_Growth dence bership portance stration
Argentina 0.4845 3.1805 0.0410 5.0110 0.0746
Australia 0.6783 3.1824 0.0926 5.0020 0.0798
Armenia 0.4374 2.7016 0.0603 5.0320 0.0241
Brazil 0.6642 3.2535 0.0272 5.7898 0.0743
Belarus 0.4760 3.2091 0.0976 4.6897 0.0110
Chile 0.5793 3.2052 0.0845 5.1371 0.1398
China 0.7225 3.7380 0.0266 4.9001 0.0061
Taiwan 0.6358 3.5150 0.1095 5.0311 0.0312
Colombia 0.7011 3.0170 0.2290 6.1812 0.1814
Germany 0.7090 3.2918 0.0937 4.6166 0.0350
Hong Kong 0.5409 3.2840 0.1070 5.1383 0.0887
Iraq 0.4472 2.4405 0.0701 5.4980 0.0302
Japan 0.5926 3.0342 0.0235 4.1610 0.0032
Kazakhstan 0.5081 3.3006 0.0259 4.5954 0.0340
Jordan 0.5102 2.8809 0.2853 5.9990 0.0281
South Korea 0.5746 3.3280 0.0236 4.6740 0.0611
Libya 0.5062 2.4508 0.1636 5.9789 0.1036
Malaysia 0.6345 3.7147 0.1695 5.5730 0.0840
Mexico 0.5648 2.5495 0.1061 5.8627 0.1441
Morocco 0.5522 2.8062 0.1304 5.2602 0.0334
Netherlands 0.6742 3.0000 0.0652 4.4925 0.0151
New Zealand 0.7054 3.2707 0.1210 4.9546 0.0480
Nigeria 0.4135 3.2012 0.1563 5.6096 0.1720
Pakistan 0.4301 3.1974 0.1133 5.0714 0.1278
Peru 0.5977 2.7485 0.0343 5.3344 0.2143
Philippines 0.6704 3.8689 0.1582 5.8412 0.0542
Romania 0.4529 2.6882 0.0316 5.6094 0.0929
Russia 0.5152 2.9930 0.0137 5.1988 0.0181
Singapore 0.6078 3.4589 0.0301 4.7958 0.0931
Thailand 0.5513 3.4241 0.2227 5.1563 0.0517
Turkey 0.5777 3.0676 0.0291 5.6200 0.0363
Ukraine 0.5629 2.7897 0.0557 4.6883 0.0280
Egypt 0.3665 2.3320 0.0035 5.4825 0.0120
United States 0.5663 3.1036 0.1242 4.7156 0.0629
Source: World Values Survey (2022); own processing
VI
APPENDIX
Table D.2 Discrimination data
Country PDI IDV MAS UAI LTO IND

Argentina 49 46 56 86 20 62
Australia 38 90 61 51 21 71
Armenia 85 22 50 88 61 25
Brazil 69 38 49 76 44 59
Belarus 95 25 20 95 81 15
Chile 63 23 28 86 31 68
China 80 20 66 30 87 24
Taiwan 58 17 45 69 93 49
Colombia 67 13 64 80 13 83
Germany 35 67 66 65 83 40
Hong Kong 68 25 57 29 61 17
Iraq 97 31 53 96 12 23
Japan 54 46 95 92 88 42
Kazakhstan 88 20 50 88 85 22
Jordan 70 30 45 65 16 43
South Korea 60 18 39 85 100 29
Libya 100 35 66 67 15 74
Malaysia 100 26 50 36 41 57
Mexico 81 30 69 82 24 97
Morocco 70 46 53 68 14 25
Netherlands 38 80 14 53 67 68
New Zealand 22 79 58 49 33 75
Nigeria 80 30 60 55 13 84
Pakistan 55 14 50 70 50 0
Peru 64 16 42 87 25 46
Philippines 94 32 64 44 27 42
Romania 90 30 42 90 52 20
Russia 93 39 36 95 81 20
Singapore 74 20 48 8 72 46
Thailand 64 20 34 64 32 45
Turkey 66 37 45 85 46 49
Ukraine 92 25 27 95 86 14
Egypt 80 37 55 55 42 0
United States 40 91 62 46 26 68
Source: Hofstede Insights (2022); own processing
VII
APPENDIX
Table D.3 Classification data

Country PDI IDV MAS UAI LTO IND
Albania 90 20 80 70 61 15
Algeria 80 35 35 70 26 32
Azerbaijan 85 22 50 88 61 22
Austria 11 55 79 70 60 63
Bangladesh 80 20 55 60 47 20
Bolivia 78 10 42 87 25 46
Bosnia and Herzegovina 90 22 48 87 70 44
Bulgaria 70 30 40 85 69 16
Canada 39 80 52 48 36 68
Croatia 73 33 40 80 58 33
Czechia 57 58 57 74 70 29
Denmark 18 74 16 23 35 70
Estonia 40 60 30 60 82 16
Finland 33 63 26 59 38 57
France 68 71 43 86 63 48
Georgia 65 41 55 85 38 32
Greece 60 35 57 100 45 50
Hungary 46 80 88 82 58 31
Iceland 30 60 10 50 28 67
Indonesia 78 14 46 48 62 38
Iran 58 41 43 59 14 40
Italy 50 76 70 75 61 30
Lebanon 62 43 48 57 22 10
Latvia 44 70 9 63 69 13
Lithuania 42 60 19 65 82 16
Montenegro 88 24 48 90 75 20
Norway 31 69 8 50 35 55
Poland 68 60 64 93 38 29
Portugal 63 27 31 99 28 33
Puerto Rico 68 27 56 38 0 90
Serbia 86 25 43 92 52 28
Slovakia 100 52 100 51 77 28
Vietnam 70 20 40 30 57 35
Slovenia 71 27 19 88 49 48
Spain 57 51 42 86 48 44
Sweden 31 71 5 29 53 78
Switzerland 34 68 70 58 74 66
North Macedonia 90 22 45 87 62 35
United Kingdom 35 89 66 35 51 69
Venezuela 81 12 73 76 16 100
Ghana 80 15 40 65 4 72
India 77 48 56 40 51 26
South Africa 49 65 63 49 34 63
Trinidad and Tobago 47 16 58 55 13 80
Uruguay 61 36 38 98 26 53
Source: Hofstede Insights (2022); own processing
VIII
APPENDIX
Table D.4 Segment membership
Country Segment
Argentina 1
Australia 1
Armenia 2
Brazil 3
Belarus 1
Chile 3
China 1
Taiwan 1
Colombia 3
Germany 1
Hong Kong 3
Iraq 2
Japan 1
Kazakhstan 1
Jordan 3
South Korea 1
Libya 3
Malaysia 3
Mexico 3
Morocco 3
Netherlands 1
New Zealand 1
Nigeria 3
Pakistan 3
Peru 3
Philippines 3
Romania 2
Russia 1
Singapore 1
Thailand 3
Turkey 1
Ukraine 1
Egypt 2
United States 1
IX
APPENDIX
Table D.5 Model predictions
Country Prob(cluster 1) Prob(cluster 2) Prob(cluster 3) Predicted Actual Correct

Argentina 100% 0% 0% 1 1 1
Australia 100% 0% 0% 1 1 1
Armenia 0% 100% 0% 2 2 1
Brazil 0% 0% 100% 3 3 1
Belarus 100% 0% 0% 1 1 1
Chile 0% 0% 100% 3 3 1
China 100% 0% 0% 1 1 1
Taiwan 100% 0% 0% 1 1 1
Colombia 0% 0% 100% 3 3 1
Germany 100% 0% 0% 1 1 1
Hong Kong 0% 0% 100% 3 3 1
Iraq 0% 100% 0% 2 2 1
Japan 100% 0% 0% 1 1 1
Kazakhstan 100% 0% 0% 1 1 1
Jordan 0% 0% 100% 3 3 1
South Korea 100% 0% 0% 1 1 1
Libya 0% 0% 100% 3 3 1
Malaysia 0% 0% 100% 3 3 1
Mexico 0% 0% 100% 3 3 1
Morocco 0% 0% 100% 3 3 1
Netherlands 100% 0% 0% 1 1 1
New Zealand 100% 0% 0% 1 1 1
Nigeria 0% 0% 100% 3 3 1
Pakistan 0% 0% 100% 3 3 1
Peru 0% 0% 100% 3 3 1
Philippines 0% 0% 100% 3 3 1
Romania 0% 100% 0% 2 2 1
Russia 100% 0% 0% 1 1 1
Singapore 100% 0% 0% 1 1 1
Thailand 0% 0% 100% 3 3 1
Turkey 100% 0% 0% 1 1 1
Ukraine 100% 0% 0% 1 1 1
Egypt 0% 100% 0% 2 2 1
United States 100% 0% 0% 1 1 1
X
APPENDIX
E. Air pollution and emissions

The Slovak Republic
Table E.1 Air pollution and emissions associated with output – change in 2004 – 2014 in the Slovak Republic
Table E.2 Air pollution and emissions associated with intermediate use – change in 2004 – 2014 in the Slovak
Republic
APQF_14 Agr Coal Oil Gas Oil_pcts Electricity En_Int_ind Oth_ind_ser Total
BC 0% 9% 0% -10% -17% 0% 0% 0% -16%
CO 0% 3% 0% -63% -49% 0% 0% 0% -46%
NH3 0% 100% 0% 37% 14% 0% 1% 0% 3%
NMVOC 0% -4% 0% -35% -47% 0% 27% 0% -15%
NOX 0% -61% 0% -55% -16% 0% 12% 0% -35%
OC 0% -1% 0% -30% -36% 0% 0% 0% -34%
PM10 0% -9% 0% -5% -15% 0% -10% 0% -14%
PM2_5 128% -29% 0% -27% -29% 0% -13% 738% -16%
SO2 0% -53% 0% -53% -42% 0% 0% 0% -53%
Total 128% -49% 0% -53% -36% 0% 12% 738% -37%
NC_QF Agr Coal Oil Gas Oil_pcts Electricity En_Int_ind Oth_ind_ser Total
N2O 0% -38% 0% -33% 31% 0% 48% 0% 19%
CH4 0% 18% 0% 14% -35% 0% 0% 0% 2%
FGAS 0% 0% 0% 0% 0% 0% 0% 0% 0%
Total 0% -3% 0% 5% -23% 0% 48% 0% 12%
XI
APPENDIX
the Slovak Republic
APQP_14 Agr Coal Oil Gas Oil_pcts Electricity En_Int_ind Oth_ind_ser Total
BC 0% -80% 0% -25% 2% 0% 0% 0% -1%
CO 0% -76% 0% -15% -58% 0% 0% 0% -58%
NH3 0% 0% 0% -29% 3% 0% 0% 0% -2%
NMVOC 0% -78% 0% -23% -62% 0% -11% 0% -27%
NOX 0% -82% 0% -36% -4% 0% 0% 0% -15%
OC 0% -90% 0% -62% -25% 0% 0% 0% -29%
PM10 0% -81% 0% -35% 16% 0% 0% 0% 11%
PM2_5 -21% -83% 0% -42% 5% 0% 0% 0% -1%
SO2 0% -82% 0% -47% 1% 0% 0% 0% -69%
Total -21% -78% 0% -28% -49% 0% -11% 0% -44%
NC_QP Agr Coal Oil Gas Oil_pcts Electricity En_Int_ind Oth_ind_ser Total
N2O 0% -67% 0% -4% 22% 0% 0% 0% -13%
CH4 0% -83% 0% -49% -47% 0% 0% 0% -64%
FGAS 0% 0% 0% 0% 0% 0% 0% 0% 0%
Total 0% -82% 0% -47% -31% 0% 0% 0% -60%
The Netherlands
Table E.4 Air pollution and emissions associated with output – change in 2004 – 2014 in the Netherlands
APQO_14 Agr Coal Oil Gas Oil_pcts Electricity En_Int_ind Oth_ind_ser Total
BC -2% -30% 0% -100% -100% 0% -50% -38% -35%
CO 0% -20% 0% -96% -96% 0% -17% -90% -18%
NH3 -18% -70% 0% 41% 33% 0% -69% -26% -53%
NMVOC -20% -59% -12% -18% 14% 0% 11% 36% 13%
NOX 2% 0% -100% -100% -100% 0% -41% -99% -71%
OC 1% -33% 0% -100% -100% 0% -100% -35% -24%
PM10 0% -62% -100% -100% -100% 0% -38% -29% -32%
PM2_5 0% -38% -100% -90% -100% 0% -28% -43% -35%
SO2 2% 0% -100% -100% -100% 0% -36% -32% -35%
Total -6% -23% -14% -19% 10% 0% -15% -10% -13%
NC_QO Agr Coal Oil Gas Oil_pcts Electricity En_Int_ind Oth_ind_ser Total
N2O -3% 0% 0% 0% -100% 0% -30% -17% -28%
CH4 -10% -21% -31% -35% -12% 0% 14% -27% -22%
FGAS 0% 0% 0% 0% 0% 0% 24% 75% 64%
Total -5% -21% -31% -35% -12% 0% -19% -27% -23%
XII
APPENDIX
Table E.5 Air pollution and emissions associated with intermediate use – change in 2004 – 2014 in the Neth-
erlands
BC 0% 22% 0% 0% -12% 0% 0% 0% -12%
CO 0% 33% 0% -4% -53% 0% 0% 0% -50%
NH3 0% 0% 0% -5% -33% 0% 4% 0% 0%
NMVOC 0% 49% 0% -4% -20% 0% 0% 0% -16%
NOX 0% -20% 0% -38% -13% 0% -10% 0% -15%
OC 0% 24% 0% -6% -14% 0% 0% 0% -14%
PM10 0% 48% 0% -4% -5% 0% -4% 0% -5%
PM2_5 36% 22% 0% -23% -6% 0% 3% 48% -5%
SO2 0% 1% 0% -44% 2% 0% 0% 0% 1%
Total 36% -5% 0% -28% -20% 0% 1% 48% -19%
N2O 0% 31% 0% -2% -1% 0% -26% 0% -17%
CH4 0% 27% 0% 10% -6% 0% 0% 0% 7%
FGAS 0% 0% 0% 0% 0% 0% 0% 0% 0%
Total 0% 28% 0% 10% -5% 0% -26% 0% -3%
the Netherlands
BC 0% 0% 0% 0% -16% 0% 0% 0% -16%
CO 0% -100% 0% 10% -66% 0% 0% 0% -64%
NH3 0% 0% 0% 11% -44% 0% 0% 0% -42%
NMVOC 0% -100% 0% 2% -59% 0% 15% 0% -27%
NOX 0% -100% 0% -28% -47% 0% 0% 0% -44%
OC 0% 0% 0% 0% 6% 0% 0% 0% 5%
PM10 0% 0% 0% 0% 3% 0% -17% 0% 3%
PM2_5 32% 0% 0% -36% -41% 0% 100% 0% -24%
SO2 0% -100% 0% -32% -11% 0% 0% 0% -29%
Total 32% -100% 0% -6% -63% 0% 16% 0% -56%
N2O 0% -100% 0% 3% -42% 0% 0% 0% -29%
CH4 0% -100% 0% 11% -56% 0% 0% 0% -10%
FGAS 0% 0% 0% 0% 0% 0% 0% 0% 0%
Total 0% -100% 0% 11% -52% 0% 0% 0% -12%
XIII
APPENDIX
The European Union 25

Table E.7 Air pollution and emissions associated with output – change in 2004 – 2014 in the EU 25
APQO_14 Agr Coal Oil Gas Oil_pcts Electricity En_Int_ind Oth_ind_ser Total
BC -1% -14% 0% -67% 64% 0% -17% -11% -6%
CO -2% -21% 0% -61% 130% 0% -22% -11% -16%
NH3 3% 22% 51% -68% 33% 0% 1% 6% 5%
NMVOC -3% -35% -46% -53% 1% 0% 1% -1% -7%
NOX -1% 0% -48% -63% 102% 0% -9% -11% -6%
OC 0% -11% 0% 0% -43% 0% -69% -3% 0%
PM10 -1% 23% -62% -82% 36% 0% -21% -1% -7%
PM2_5 0% -19% -65% -69% 18% 0% -14% -2% -5%
SO2 1% 0% -61% -82% 67% 0% -2% -6% -4%
Total -1% -25% -46% -53% 2% 0% -18% -3% -12%
NC_QO Agr Coal Oil Gas Oil_pcts Electricity En_Int_ind Oth_ind_ser Total
N2O 0% 8% -70% -67% 60% 0% -27% 9% -13%
CH4 -4% -39% -43% -43% 12% 0% 6% -21% -19%
FGAS 0% 0% 0% 0% 0% 0% 15% 104% 86%
Total -2% -39% -43% -43% 12% 0% -12% -21% -18%
Table E.8 Air pollution and emissions associated with intermediate use – change in 2004 – 2014 in the EU 25
BC 0% 18% 0% 45% -18% 0% 0% 0% -16%
CO 0% 8% 0% 55% -51% 0% 0% 0% -47%
NH3 0% 140% 0% 51% -5% 0% 2% 0% 2%
NMVOC 0% 21% 0% 45% -31% 0% -9% 0% -24%
NOX 0% -36% 0% -22% -21% 0% 0% 0% -22%
OC 0% 10% 0% 48% -17% 0% 0% 0% -15%
PM10 0% 8% 0% 46% -16% 0% -15% 0% -13%
PM2_5 31% -1% 0% 14% -19% 0% -10% 91% -14%
SO2 0% -42% 0% -37% -15% 0% 0% 0% -29%
Total 31% -35% 0% -1% -31% 0% -2% 91% -28%
N2O 0% -8% 52% 20% -13% 0% 0% 0% -3%
CH4 0% 22% 65% 49% -7% 0% 0% 0% 6%
FGAS 0% 0% 0% 0% 0% 0% 0% 0% 0%
Total 0% 14% 63% 48% -8% 0% 0% 0% 2%
XIV
APPENDIX
the EU 25
BC 0% 38% 0% 60% -2% 0% 0% 0% 2%
CO 0% 22% 0% 60% -53% 0% 0% 0% -46%
NH3 0% 43% 0% 55% -10% 0% 0% 0% -8%
NMVOC 0% 13% 0% 45% -51% 0% 0% 0% -25%
NOX 0% 22% 0% -14% -40% 0% 0% 0% -39%
OC 0% 38% 0% 56% 17% 0% 0% 0% 20%
PM10 0% 39% 0% 58% 17% 0% -32% 0% 21%
PM2_5 21% 44% 0% 5% -21% 0% 119% 0% 11%
SO2 0% -12% 0% -30% -30% 0% 0% 0% -19%
Total 21% 16% 0% 31% -49% 0% 0% 0% -39%
N2O 0% -11% 0% 12% -21% 0% 0% 0% -14%
CH4 0% 21% 0% 32% -38% 0% 0% 0% 17%
FGAS 0% 0% 0% 0% 0% 0% 0% 0% 0%
Total 0% 20% 0% 31% -34% 0% 0% 0% 15%
XV
APPENDIX
F. Carbon dioxide emissions decomposition

Table F.1 Carbon dioxide emissions from government consumption of domestic and imported products
Table F.2 Carbon dioxide emissions from private households’ consumption of domestic and imported prod-
ucts
Table F.3 Carbon dioxide emissions from firms’ usage of domestic products in the European Union 25
gco2fd[**EU25] 1 Agr 2 Coal 3 Oil 4 Gas 5 Oil_pcts 6 Electricity 7 En_Int_ind 8 Oth_ind_ser
1 Agr -6% -68% -20% -99% -40% -34% -18% -4%
2 Coal -81% -99% -65% -99% -5% -81% -82% -82%
3 Oil -66% -98% -17% -99% -25% -63% -85% -98%
4 Gas -97% -100% -100% -100% -85% -98% -97% -99%
5 Oil_pcts -33% -98% -18% -99% -38% -26% -26% -35%
6 Electricity -13% -98% -33% -99% -43% -68% -37% -20%
7 En_Int_ind -9% -69% -22% -99% -41% -36% -20% -6%
8 Oth_ind_ser -6% -68% -20% -99% -39% -34% -16% -2%
Table F.4 Carbon dioxide emissions from firms’ usage of imported products in the European Union 25
gco2fm[**EU25] 1 Agr 2 Coal 3 Oil 4 Gas 5 Oil_pcts 6 Electricity 7 En_Int_ind 8 Oth_ind_ser
1 Agr -2% -67% -16% -99% -37% -31% -14% 1%
2 Coal -42% -91% -18% -100% -46% -70% -73% -58%
3 Oil -49% -96% -30% -100% -40% -16% -15% -73%
4 Gas -53% -98% -3% -99% -36% -55% -63% -58%
5 Oil_pcts -46% -99% -45% -99% -40% -47% -24% -50%
6 Electricity 96% -96% 51% -99% 27% -29% 41% 80%
7 En_Int_ind -2% -67% -16% -99% -36% -31% -13% 2%
8 Oth_ind_ser -5% -68% -19% -99% -39% -33% -16% -2%
Table F.5 Carbon dioxide emissions from firms’ usage of domestic products in the Slovak Republic
XVI
APPENDIX
gco2fd[**SK] 1 Agr 2 Coal 3 Oil 4 Gas 5 Oil_pcts 6 Electricity 7 En_Int_ind 8 Oth_ind_ser

1 Agr -3% -76% -42% -4% -50% -16% -34% -2%
2 Coal -94% -97% -97% -10% -47% -98% -99% -96%
3 Oil -62% -95% -65% -54% -42% -51% -72% -67%
4 Gas -99% -100% -54% -97% -99% -99% NA -99%
5 Oil_pcts -33% -93% -55% -2% -49% -13% -44% -39%
6 Electricity 8% -94% -57% -6% -50% -46% -33% 0%
7 En_Int_ind -16% -79% -47% -12% -57% -28% -42% -14%
8 Oth_ind_ser -3% -76% -42% -4% -50% -16% -33% -1%
Table F.6 Carbon dioxide emissions from firms’ usage of imported products in the Slovak Republic
gco2fm[**SK] 1 Agr 2 Coal 3 Oil 4 Gas 5 Oil_pcts 6 Electricity 7 En_Int_ind 8 Oth_ind_ser
1 Agr -3% -76% -42% -4% -50% -15% -33% -1%
2 Coal 1% -52% -54% -3% -50% -65% -79% -33%
3 Oil -54% -93% -57% -4% -50% -41% -81% -97%
4 Gas -56% -94% -57% 3% -50% -43% -75% -58%
5 Oil_pcts -61% -96% -76% -50% -60% -51% -57% -64%
6 Electricity 7% -94% -57% -7% -51% -46% -34% -1%
7 En_Int_ind 1% -75% -37% 6% -49% -13% -30% 3%
8 Oth_ind_ser -4% -76% -42% -4% -50% -16% -34% -2%
Table F.7 Carbon dioxide emissions from firms’ usage of domestic products in the Netherlands
gco2fd[**NL] 1 Agr 2 Coal 3 Oil 4 Gas 5 Oil_pcts 6 Electricity 7 En_Int_ind 8 Oth_ind_ser
1 Agr 1% -4% -39% -12% -14% 20% 5% 0%
2 Coal -12% -7% -42% -15% -16% 9% -13% -18%
3 Oil 50% 143% 58% 156% 214% 100% 52% NA
4 Gas -4% -8% -46% -12% -10% 23% -15% -5%
5 Oil_pcts 7% -5% -39% -1% -12% 36% 13% 8%
6 Electricity 2% -1% -46% -15% 7% 15% 1% 3%
7 En_Int_ind 3% -2% -36% -9% -12% 24% 8% 3%
8 Oth_ind_ser 1% -4% -39% -12% -14% 20% 5% -1%
Table F.8 Carbon dioxide emissions from firms’ usage of imported products in the Netherlands
gco2fm[**NL] 1 Agr 2 Coal 3 Oil 4 Gas 5 Oil_pcts 6 Electricity 7 En_Int_ind 8 Oth_ind_ser
1 Agr 1% -4% -39% -12% -14% 20% 4% -1%
2 Coal -24% -21% -49% -14% -14% -7% -21% -29%
3 Oil -54% -24% -51% -22% -20% -38% -48% NA
4 Gas -25% -16% -51% -19% -27% 13% 11% -17%
5 Oil_pcts -9% -21% -49% -18% -22% 14% 1% -7%
6 Electricity -59% -60% -78% -66% -57% -54% -59% -58%
7 En_Int_ind -4% -8% -40% -15% -18% 17% 1% -4%
8 Oth_ind_ser 1% -4% -39% -12% -14% 20% 5% 0%
XVII
Title: ENVIRONOMICS: Economic Approach to Environmental Issues
Edition: the first [1st] edition
Authors: Nora Grisáková, Radka Repiská, Veronika Miťková, Peter Štetka,
and Paulína Borovská
Number of pages: 154 p.
Volume: 100 copies
Purpose: Scientific monograph
Year: 2022
Publisher: The College of European and Regional Studies [VŠERS]
Žižkova tř. 6, 370 01 České Budějovice, ČR
ISBN 978-80-7556-116-9

ENVIRONOMICS: Economic Approach To Environmental Issues

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ENVIRONOMICS: Economic Approach to Environmental Issues Nora Grisáková, Radka Repiská, Veronika Miťková, Peter Štetka, Paulína Borovská

Nora Grisáková, Radka Repiská, Veronika Miťková,

ENVIRONOMICS: Economic Approach

Josef KŘÍHA, Miroslav FELCAN, Jozef METEŇKO et al.

PROBLÉMOVÉ KONOTACE ODHALOVÁNÍ, DOKUMENTOVÁNÍ, DOKAZOVÁNÍ

VYSOKÁ ŠKOLA EVROPSKÝCH A REGIONÁLNÍCH STUDIÍ

9 788075 561169 2022

THE COLLEGE OF EUROPEAN AND REGIONAL STUDIES

Printed in the Czech Republic.

1.2 The interconnection of the economy and the environment ......................... 14

1.3 EU strategies in relation to the environmental economy ............................. 19

2 MEASURING GREEN GROWTH PROGRESS AND CLUSTER ANALYSIS .................... 25

2.2 Cluster analysis – method of empirical classification ................................... 37

3.6 Hierarchical clustering procedures.............................................................. 70

3.7 Hierarchical clustering analysis of attitudes towards environment across

4 MODELING AIR POLLUTION AND CARBON DIOXIDE EMISSIONS WITH A

4.2 Air pollutants and emissions ...................................................................... 93

CONCLUSION ........................................................................................................... 120

m.a.s.l. meters above sea level

1.1.1 The importance of the environment

1.1.2 Climate changes and their impact

1.1.3 Consequences of climate change in the European region

Figure 1.1 Consequences of climate change in the European region1

Continental region – increasing risk of forest fires, decrease in summer precipitation

Figure 1.2 EU climate and energy developments up to 20202

Figure 1.3 Expected progress of EU countries in the field of climate by 20303

1.2 The interconnection of the economy and the environment

Figure 1.4 Material balance model5

The environment fulfils the following economic functions:

The environmental functions mentioned above are interconnected. In the name of

1.2.1 Environmental and natural resource economics

1.2.2 Environmental economics and environment policy

1.3 EU strategies in relation to the environmental economy

• A strategy for smart, sustainable and inclusive growth - Europe 2020,

The roadmap for moving to a more competitive low-carbon economy prepares

1.3.1 The European Green Deal – more sustainable EU economy

Figure 1.6 European Ecological Convention7

1.3.2 The concept of Green Growth

Figure 1.7 Three key aspects of the effort8

Long-term forecasts suggest that continuing 'business as usual' growth without

The overall goal of green growth is to contribute to increasing human prosperity by

Table 1.2 List of evaluated indicators and their development9

2 MEASURING GREEN GROWTH PROGRESS AND CLUSTER

Figure 2.1 Location of Europe on the world map 10

ℎ     2018 890,942,470,000 

Table 2.1 Basic information: Slovakia and the Netherlands13

Country Area (km2) Population Climate 2018 GDP (billion Eur)

2.1 Selected indicators of green growth

Environmentally Adjusted Multifactor

Loss of Income Inequality Environmentally Oriented Taxation

Luxembourg Iceland Denmark Norway Netherlands

CO₂ Productivity Environmentally Oriented

Denmark Estonia United Kingdom Italy Slovakia

Figure 2.3 Overall largest improvement in green growth (2000 – 2015)15

Group of indicators Evaluated area

Figure 2.4 Socio-economic relations and groups of green growth indicators 17

environment is conditioned by several resources, including natural ones, and their

2.1.1 Human Development Index - HDI

Figure 2.5 HDI dimensions and indicators18

The HDI calculation process involve the following steps:

2.1.2 Environmental performance index - EPI

Figure 2.6 EPI Framework19

The collection process is carried out in the following steps: