Going Away or Getting Green in BRICS: Investigating the EKC Hypothesis with Human Capital Index, Nuclear Energy, Urbanization, and Service Sectors on the Environment

Abstract

Rising industrialization, urbanization, and the vast economic size of Brazil, Russia, India, China, and South Africa (BRICS) are generating CO2 emissions, and these countries are struggling to deal with environmental degradation. Before it is too late, the BRICS need to identify variables that reduce pollution to maintain long-term sustainable growth. The study tries to test EKC in the BRICS area and analyzes the dynamic linkages between nuclear energy, urbanization, the service sector, human capital consumption, and CO2 emissions. The newly developed Cross Section Autoregressive Distributed Lag (CS-ARDL) approach, which incorporates both slope heterogeneity (SH) and cross-sectional dependence (CSD), is used to examine annual time series data from 1972 to 2021. After confirming SH and CSD problems, the paper applied second-generation unit root and cointegration tests. The EKC represents an inverted U-shaped quadratic relationship identified between environmental pollution and GDP in the BRICS countries. In terms of environmental damage, however, GDP in quadratic form has a relatively small impact. As a result, it is vital to consider the effects of other variables. Urbanization is a major contributor to the contamination of the environment. On the other hand, nuclear power can minimize emissions in the long run. Research suggests that the service sector's development and human capital investments are essential to keep environmental degradation to a minimum in the BRICS. Overall, the study shows crucial findings for pollution control and achieving sustainable development goals. This study also demonstrates that simply increasing the nation's wealth is inadequate to satisfy environmental demands.