Assessing the Effectiveness of Fiscal Incentives in Promoting Green Investments: A Stochastic Frontier Analysis (SFA) Approach

This paper aims to evaluate the effectiveness of fiscal incentives in promoting green investments, focusing on their economic and environmental impacts. Using a Stochastic Frontier Analysis (SFA) approach, this study assesses how different forms of fiscal support, including tax credits, subsidies, and accelerated depreciation, influence the efficiency of green investments across multiple sectors. Data is sourced from a global database of green projects with a focus on renewable energy, energy efficiency, and carbon reduction initiatives. The results suggest that fiscal incentives play a significant role in improving the adoption of sustainable technologies but also highlight inefficiencies in the allocation of these incentives. Recommendations for improving policy design and implementation are discussed, based on findings related to the cost-effectiveness and performance of current green investment strategies.