Assessing long run asymmetric effect of urbanization, fossil energy consumption and regulatory quality on environmental degradation in the Black Sea Region: A dynamic analysis

Abstract

Sustainable development policies of the Black Sea Region is vital to European Union given increasing environmental disturbances by dynamic and heterogenous factors across the enclave beginning from 1990s. This study assesses long run asymmetric effect of urbanization, energy consumption and regulatory quality on environmental degradation, with data from 1998Q1 to 2017Q4. First pooled mean group (PMG) estimates suggest short-run nonlinear and asymmetric effects of the independent variables on carbons emissions. Second, (i) long-run PMG estimates indicate improvements in regulatory quality reduces carbon dioxide emissions; (ii) increases in both urbanization and fossil energy consumption lead to corresponding rise in carbon dioxide emissions. Third, outcomes of Dumitrescu Hurlin causality estimates indicate (i) both fossil energy consumption and urbanization have unidirectional causal effects on carbon dioxide emissions; and (ii) increases in both urbanization and carbon dioxide emissions cause changes in regulations quality. These findings provide environmental regulatory insights for the Black Sea regions, especially to the European Union. Towards the future, the EU could ensure increased funding, research and policy inter-linking. Cooperation and formal exchanges among the economies in implementation of Danube River and Black Sea Conventions could be strengthened to preserve commercial marine resources; biodiversity and Habitat resources and reduce eutrophication. Additionally, fossil energy-guzzling industries could be regulated by the EU to use efficient technologies toward saving energy. To address urban-driven carbons emission across the region, economies across the region could invest in natural gas; while heavy investments are made in energy productivity.