Environmental cost of natural resources, globalization, and economic policy uncertainty in the G-7 bloc: do human capital and renewable energy matter?

Abstract

The panel of G-7 economies is considered one of the most prosperous economies, endowed with abundant natural and renewable energy resources. Due to their richness in these resources, most economic development and activities, including environmental and economic aspects, depend on and are determined by energy consumption and natural resource rents. However, the increasing dependence of G-7 economies on energy consumption and natural resources raises questions about their long-term growth and ecological policies towards achieving sustainable development goals (SDGs). Therefore, the main objective of this study is to examine the influence of natural resources, renewable energy, economic policy uncertainty, human capital, and globalization on the ecological footprint in the panel of G-7 economies from 1990 to 2020. After confirming the cross-sectional dependence issue, this study applied second-generation panel data approaches to estimate robust and reliable outcomes. The estimated evidence from this study discovered that natural resources, globalization processes, and economic policy uncertainty significantly increase the level of ecological footprint in the region. In contrast, renewable energy and human capital provide feasible solutions for ecological improvement in the study area. Likewise, the interactive role of renewable energy with economic policy uncertainty significantly protects the environmental quality in the study area. Based on the estimated findings, this study recommends various achievable policy options for policymakers and the governments of these economies to ensure environmental sustainability.