Do renewable energy, urbanisation, and natural resources enhance environmental quality in China? Evidence from novel bootstrap Fourier Granger causality in quantiles

Abstract

Carbon emissions and ecological footprint (EF) have been criticized recently for being used in some empirical studies as a stand-in for assessing pollution. Ecological footprint ignores how nature meets ecological needs or biocapacity and solely represents environmental deterioration brought on by human demand for natural resources. As a result, the current study deviate from prior studies by utilizing load capacity factor (LF), as a gauge of ecological quality. The LF takes into account both the demand and supply sides of nature. Therefore, the current study fills the gap in the literature by utilizing LF, which permits a thorough ecological quality evaluation through the simultaneous analysis of EF and biocapacity. Utilizing the newly created Bootstrap Fourier Granger causality in quantiles (BFGC-Q) test, this paper evaluates the impact of urbanization, renewable energy, natural resources and economic growth on environmental proxies (EF, LF, and CO2) for China during 1990Q1–2018Q4. The BFGC-Q offers a thorough and flexible approach for evaluating causal linkages, unlike the FTY causality test, which does not reveal information about non-linear causalities and tail-causal interrelationships. Empirical findings show that REC, URB and NR promote ecological quality while GDP decreases ecological quality. Based on the findings, the paper formulates vital policy ramifications for China to accomplish SDGs 7, 8, 11 and 13.