Abstract
This paper examines the relationship between energy consumption and sustainable economic welfare in Organization of Petroleum Exporting Countries. Initially, the index of sustainable economic welfare (ISEW) is calculated followed by an investigation of the relationship between energy consumption and sustainable economic welfare in these countries. The calculation of the ISEW reveals the most important beneficial component and the most important cost component of ISEW is adjusted personal consumption and energy depletion, respectively. The estimated results based on the Westerlund (2007) test and considering cross-sectional dependence indicate that there is a long run relationship between energy consumption and sustainable economic welfare. Granger’s causality test results indicated a unidirectional causality running from sustainable economic welfare to energy consumption. This result has implications for energy and environmental policy makers; energy conservation policy will be useful in improving the quality of environment and it does not have adverse impact on their sustainable economic welfare.
Highlights
The limitations of energy sources and their enduring as well as environmental pollution issues have made energy consumption even more important for energy providers
Environmental degradation caused by CO2 emissions, mineral depletion, and forest depletion have the greatest role in cost components of index of sustainable economic welfare (ISEW), respectively
It is acceptable to say that sustainable economic welfare is the cause of energy consumption, and energy consumption does not lead to sustainable economic welfare in OPEC countries
Summary
The limitations of energy sources and their enduring as well as environmental pollution issues have made energy consumption even more important for energy providers. There is concern that implementing energy saving policies will have a devastating effect on the sustainable economic welfare of these countries, as energy is a productive input and is expected to decline as well. It has done extensive research to examine the relationship between OPEC’s energy consumption and economic growth, no definitive results have been obtained. These questions and their answers are significant in issues related to sustainable development and transnational justice. Examining the relationship between energy consumption and sustainable economic welfare in OPEC countries and answering the question of whether energy consumption has contributed to sustainable economic growth in OPEC countries is going to be useful and remarkable for energy economics researchers because OPEC countries hold 79.4% of the world’s oil reserves
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