An assessment of the aggregated and disaggregated effects of natural resources rents on environmental sustainability in BRICS economies

Abstract

ABSTRACT This study seeks to investigate how natural resources rents impact environmental sustainability measured by CO2 emissions and PM2.5 air pollution in Brazil, Russia, India, China, and South Africa (BRICS) economies from 1995 to 2019. To enhance robust policy implications, natural resources are decomposed into disaggregated (coal, gas, oil, forest, and mineral rents) and aggregated (total natural resources rents) indicators. Besides, the intervening roles of affluence, urbanization, and green policies vectoring green technological innovation, green finance, green energy, and waste management within the theoretical underpinning of STIRPAT model are considered. The empirical verification is anchored on second-generation estimators entailing Common Correlated Effects Mean Group, Augmented Mean Group, and Panel Quantile Regression. Similarly, Fully Modified OLS is employed to gauge the country-specific effects amidst varying robustness analyses. The fallouts from the analyses reveal that natural resources rents inhibit the attainments of environmental sustainability in BRICS economies by positively driving CO2 emissions and PM2.5 air pollution. Conversely, green policies are observed to substantially drive environmental sustainability by mitigating both pollutants whereas affluence and urbanization escalate them. The distributional effects from Panel Quantile Regression and Fully Modified OLS corroborate the main findings divergently. Additionally, two channels of causality, including unidirectional and bidirectional nexuses, are apparent from the estimated models. Policy measures are suggested based on the empirical findings.