**1. Introduction**

Ecological efficiency (eco-efficiency) at the country level is an important ecological indicator for tracking the progress of how countries' environmental-adjusted economic activity changes over time [1,2]. The basic idea of eco-efficiency is to produce more goods and services while using fewer material inputs and generating less waste and pollution. In 1992, the World Business Council for Sustainable Development released their landmark publication "Changing Course", which introduced the terminology of eco-efficiency [2]. In the context of climate change at the country level, the eco in eco-efficiency often refers to CO<sup>2</sup> emissions, and this is the definition used in this paper. CO<sup>2</sup> emissions is an important indicator in discussions on climate change and transitioning to a low-carbon economy [1,3–5]. A positive trend in eco-efficiency indicates that eco-efficiency is increasing over time, while a negative trend indicates that eco-efficiency is decreasing over time. Ecoefficiency can be calculated using either non-parametric techniques such as data envelope analysis (DEA) or parametric methods such as stochastic frontier analysis (SFA) [6]. As discussed below, each method has its advantages and disadvantages. Changes in ecoefficiency over time can be analyzed using a Malmquist productivity index (MPI) [1,5,7]. The existing literature on eco-efficiency MPI at the country level reveals there is much room for improving eco-efficiency [1,5,7].

While the existing literature has calculated eco-efficiency at the country level, there are still some important unanswered questions. How does eco-efficiency compare across a large group of CO2-emitting countries? Which countries are experiencing improvements

**Citation:** Sadorsky, P. Eco-Efficiency for the G18: Trends and Future Outlook. *Sustainability* **2021**, *13*, 11196. https://doi.org/10.3390/ su132011196

Academic Editor: Antonio Boggia

Received: 23 September 2021 Accepted: 8 October 2021 Published: 11 October 2021

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**Copyright:** © 2021 by the author. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

in eco-efficiency over time, and which countries are experiencing decreases? What does the future trend in eco-efficiency look like?

The purpose of this present paper is to estimate and forecast changes in eco-efficiency over time using the Malmquist productivity index (MPI) for a group of 18 large polluting countries. These 18 countries along with Saudi Arabia and the European Union form the group of countries known collectively as the G20. The G20 is an important group of countries that accounts for 85% of global economic output, two-thirds of the world's population, and 75% of international trade [8]. Comprised of important developed and developing countries that span the world, participation and leadership from the G20 is vital for international energy and climate change policy [9]. DEA is used to calculate eco-efficiency, and MPI used to calculate eco-efficiency over time. DEA is a non-parametric approach that does not specify a parametric functional form between the inputs and outputs nor does it consider noise in the data [10,11]. SFA is an alternative approach to estimating eco-efficiency and energy efficiency that requires an explicit parametric functional form and allows for noise in the data [12–15]. Many existing studies of eco-efficiency use DEA because it is a more flexible approach, and this is the method used in this paper [10]. The DEA provides efficiency values for each year. Efficiency is a level concept, and measures of efficiency can be used to compare the performance of countries at a given point in time. Efficiency changes (or productivity changes) refer to movements in the efficiency or productivity of a country over time. To see how efficiency changes across time, these efficiency values are chained together using MPI [1,5,7]. The MPI is the product of an efficiency change component and a technical change component. The efficiency change component measures how a country's efficiency changes between time periods, and the technical change component refers to the movement of the efficient frontier between time periods. The analysis is conducted for the period 1996 to 2040. Actual data are used for the period 1996 to 2019, and forecasts are used for the period 2020 to 2040. Forecasts of eco-efficiency are made under a business as usual (BAU) scenario that assumes no major changes in economic structural or policy changes.

The analysis from this paper reveals some interesting results. Over the period 1997 to 2040, eco-efficiency varies widely between these countries with some countries reporting positive growth in eco-efficiency and other countries reporting negative growth. Ecoefficiency leaders over the sub-periods (1997 to 2019 and 2019 to 2040) include Australia, Brazil, France, Germany, Great Britain, Italy, Japan, Russia, and the United States. Laggards include Canada, China, India, and Indonesia. These laggard countries recorded negative growth rates in over the period 1997 to 2019 and 2019 to 2040. Negative eco-efficiency growth is particularly troublesome because it reflects a worsening of environmental sustainability. Large variations in eco-efficiency between countries make it more difficult to negotiate international agreements on energy efficiency and climate change.

This paper is organized as follows. The following sections of the paper set out the literature review, the methods and data, results, and discussion. The last section of the paper provides the conclusions and some policy implications.
