Effects of energy consumption and economic growth on environmental quality: evidence from Qatar.

Abstract

This study examines the empirical effects of four variables: economic growth, energy consumption, foreign direct investment, and financial development on environmental quality in Qatar. Three environmental quality indicators, namely, per capita CO2 emissions, energy intensity (EI), and Adjusted National Savings (ANS) are used to examine the interactions between the variables using a time series dataset for the period 1980-2016. Following an appropriate multiple structural breaks unit root and cointegration tests, short- and long-run coefficients were estimated through the application of Autoregressive Distributive Lag (ARDL) model. The Toda-Yamamoto (TY) causality test was conducted to determine the causal link, if any, among the variables. Estimated results suggest a detrimental long-run effect of energy consumption on all three indicators of environmental quality. FDI has a negative long-run effect on environmental quality when it is measured by EI only. Financial development has no significant effect on any of the indicators. Bidirectional causality are noted between three variables: economic growth, energy consumption, and financial development and all three indicators of environmental quality. Policy implications are discussed.