Do the Kyoto Protocol, geopolitical risks, human capital and natural resources affect the sustainability limit? A new environmental approach based on the LCC hypothesis

Abstract

India's declaration at COP26 not to progressively reduce its coal consumption makes the analysis of the environmental quality, i.e., load capacity factor (LCF), important for the country. Therefore, this study aims to investigate the impact of human capital, geopolitical risk, globalization, natural resources, urbanization, and income on the LCF in India under the load capacity curve (LCC) hypothesis. To this end, the study applies the novel augmented ARDL approach by considering a dummy variable that includes the effects of the Kyoto Protocol over the period 1988–2018. The results of the study demonstrate that (i): natural resource rents, human capital, and globalization support environmental quality improvement, (ii) urbanization has a negative impact on LCF, and (iii) geopolitical risk has no effect on LCF. In addition, the augmented ARDL estimator shows that (iv) the LCC hypothesis is valid for India and that (v) the Kyoto Protocol has a negative impact on LCF in the short-term but no long-term environmental impact. In light of the study's findings, it is recommended that the Indian government take advantage of the environmental opportunities presented by globalization, natural resource rents, human capital development, and income growth, and revise urban planning in an environmentally friendly manner to achieve its environmental sustainability goals.