Investigation of the effect of natural resource dependence on environmental sustainability under the novel load capacity curve hypothesis

Abstract

ABSTRACT The concern that over-depleting natural resources (NAT) may somehow be costly for environmental quality is a recurrent topic in empirical analysis. However, the literature has predominantly focused on studying the effects of increases in NAT use on the environment, ignoring potential non-linear interactions. The current study seeks to expand the previous literature by examining the non-linear environmental ramifications of NAT in Russia, home to one of the world’s richest natural resource reserves. In this regard, adopting the load capacity factor (LCF) as an environmental indicator, the study examines how the positive and negative changes in NAT affect the country’s environmental well-being within the framework of the N-ARDL model for 1992–2021. This study uses artificial intelligence unit root and asymmetric Fourier causality approach for robustness analysis. Empirical evidence suggests that positive shocks to NAT have a deleterious influence on the LCF, while negative changes in NAT contribute to environmental well-being. Nonetheless, the long-term influence of a unit positive shock in NAT decreases the LCF by a greater amount than a unit negative shock increases it. The results also demonstrate a ‘U-shaped’ connection between income growth and ecological well-being, confirming the validity of the LCC hypothesis. Furthermore, the outcomes reveal that renewable energy consumption and human capital upgrade environmental quality. Therefore, Russian policymakers should focus on the SDG 7, 12, and 13 targets, which refer to substantially increasing the quality of primary and secondary education, the share of green energy in the total energy mix, and effective resource management and utilization.