Decoupling or contagion? Unraveling the ecological footprint dynamics and contagion analysis in the Iberian Peninsula

This paper examines whether ecological footprint (EF) dynamics in the Iberian Peninsula reflect convergence or contagion between Spain and Portugal over the period 1990–2023 using econometrics. We ask whether economic growth, urbanization, innovation, trade openness, emissions and renewable energy use shape EF trajectories similarly across the two countries, and whether environmental shocks spill over across borders. Our findings reveal asymmetric adjustment paths. Economic growth increases ecological pressure in the short run but improves efficiency in the long run in both countries, while urbanization delivers temporary efficiency gains before becoming a long-run source of environmental pressure. Innovation, proxied by patent activity, does not consistently translate into ecological improvement. A counterfactual increase in renewable energy use reduces Portugal’s EF immediately, whereas Spain experiences transitional inertia before benefits materialize. Essentially, dynamic dependence analysis shows no persistent contagion between Spanish and Portuguese EF. Instead, episodic co-movements and negatively correlated volatility indicate divergent adjustment mechanisms rather than synchronized environmental cycles. These results suggest that Iberian sustainability outcomes are shaped less by shared shocks than by national economic structures and transition frictions, implying that coordinated policy is most valuable in managing cross-border volatility rather than enforcing uniform environmental strategies.