Environmental performance concerns in Latin America
Determinant factors and multivariate analysis
Abstract
There is now a great concern for environmental problems and countries around the world are trying to take steps to foster economic growth without compromising future generations. In this research, we use indicators proposed in the Environmental Performance Index (EPI) based on two essential issues related to sustainable development: (i) environmental stresses on human health; (ii) protecting ecosystems and natural resources. The objective of this research focuses on analysing the EPI and the variables that can influence it. This is important because of the potential repercussions at the macroeconomic level, for example the influence it may have on the valuation of certain agents in assessing the policies of a certain country, as well as at the microeconomic level due to its relationship with other types of indexes that can be related directly to the company's valuation and the effect on investment. We conducted multivariate analysis using the HJ-Biplot method to contextualize the countries grouped by geographic area and the variables related to the environmental indicators included in the EPI. The sample comprised 24 countries in Latin America. The findings obtained from the empirical analysis point to socioeconomic factors, such as education, determining factors of environmental performance in the countries analyzed. In addition, political ideology influences environmental performance when analysing the environmental health of the countries. Size also positively influences the EPI. From the biplot analysis, we also find that the variables for environmental health are more closely related to the countries located in the geographic area of the Caribbean (Cuba, the Dominican Republic, Haiti, Jamaica and Trinidad and Tobago). Other variables associated with ecosystem vitality, such as air pollution (effects on nature), are more closely related to Mesoamerica (Costa Rica, Honduras and Panama, among other countries). Countries in South America, however, are shown to be more concerned about climate change; these countries include Argentina, Chile and Brazil.
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