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Abstract
Background: Environmental deterioration is the alarming situation that results from rapid urbanization and development. The rising temperature and climate volatility are accounted for by the massive carbon dioxide (CO2) emissions. The research on climate-change mitigation is trying to curtail the situations before they become irreversible and unmanageable. This study explores the role of institutions in mitigating climate change by moderating the impact of environmental quality on climate change risk. Methodology: Global data sets have been collected from world big data depositories like the World Economic Forum (WEF), the World Development Indicators (WDI), and the International Country Risk Guide (ICRG). Countries that are listed in WEF were used as the sample of the study. An analysis was based on 114 countries that are based on the availability of data. For estimation, descriptive statistics, correlation analysis, change effects, and a Panel Feasible Generalized Least Squares (FGLS) model were used for estimating the results. Results: The global assessment indicates that CO2 emissions increase the climate risk, but its impact can be reduced by increasing the quality of institutions. Additionally, an increase in renewable energy consumption and economic growth reduces the climate risk. Implications: It is an instrumental study that empirically investigated the role of institutions in reducing climate risk by moderating CO2 emissions. The results of this study will help policymakers to formulate policies regarding environmental protection.
Highlights
The empirical results show a positive association between carbon emissions and climate risk. These results indicate that a 1 unit increase in CO2 emissions will increase the climate risk by 3.29 units
When there is an increase in the institutional quality, it places a higher cost of CO2 emissions in the society; the economy resorts to other carbon-saving production measures
Economic growth decreases the vulnerability of climate change, as the developed countries have done by financing climate-resilient and sustainable systems [13]
Summary
Climate presents as a “hazard” and a “resource.” “Climate resource” is the characteristics of climate that put constraints or allow activity. Seasonal temperature cycles affect the heating/cooling demand of energy, and rainfall patterns affect the production of crops. Where this resource is excessively used, the occurrence of some discrete events present itself as hazardous consequences. These events are drought, windstorms, floods, hot and cold spells discussed in terms of magnitude, frequency, duration, likelihood timing, spatial extent and variability [1]
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