Population and industrial pressure on local environmental expenditure in the Italian regions

- Effects of industrial and population pressure on the environmental expenditure.
- Blundell and Bond system estimator on NUTS2 Italian regions.
- In the North-Centre population and industrial pressures are evidenced.
- In the South, local government decisions are guided by different variables.

The objective of this paper is to test for the presence of pressure by industrial groups and population on the local environmental expenditure of Italian regions in the period between 2001 and 2014, and evaluate their effects. Blundell and Bond system estimators are used to estimate the econometric model. Results evidence the presence of population pressure on government environmental services supply, and a decrease in the demand for local environmental public services in higher-wages industries for the whole sample. In the Northern and Central regions both population and industrial pressure are present, and all the regressors have the expected effect on regional environmental expenditure. Policy-makers' decision-making seems not to be driven either by population or by local industries in Southern Italy.