Are resource-rich countries less responsive to global warming? Oil wealth and climate change policy

Abstract

Environmental degradation is recognized as a major threat to sustainable and inclusive development and therefore requires a rapid and effective political response. Political will to tackle the problem is essential, although there are wide variations in this commitment between countries. With the aim of understanding why some countries would be more committed to developing climate policies than other, this article examines whether oil dependence explains differences in the development and implementation of climate change policies. Additionally, this study investigates mechanisms through which oil wealth affects climate change policies. Our empirical analysis is based on the two-stage instrumental variable (IV-2SLS) method. The empirical findings using data for up to 82 countries suggest that oil abundance and dependence individually have a negative and significant effect on climate change policies. Thus, oil-rich countries are, on average, less inclined to adopt and implement strict policies to combat climate change. In addition, mediation analysis reveals that oil dependence has an indirect negative effect on climate change policy through its impact on corruption, democracy, women's political participation, and financial development. These findings shed new light on how oil wealth affects environmental policy outcomes and can help policymakers identify obstacles to the adoption of climate change policies.