Moving towards a sustainable environment: The dynamic linkage between natural resources, human capital, urbanization, economic growth, and ecological footprint in China

Abstract

The relationship between natural resource abundance and environmental degradation has important environmental implications. However, this domain is insufficiently investigated, and diverse findings are evident in the literature. The significant economic growth, along with rapid urbanization and industrialization, has increased the extraction and consumption of natural resources in China. Therefore, this study investigates the effect of natural resources abundance, human capital, and urbanization on the ecological footprint in China, controlling economic growth. The study uses the famous Bayer and Hack cointegration test, and bootstrap causality technique to study cointegration and causal association among variables. The findings of the study confirm the long-run equilibrium relationship among variables. The long-run results reveal that natural resource rent increases the ecological footprint. Urbanization and economic growth contribute to environmental degradation, whereas human capital mitigates environmental deterioration. Interestingly, the interaction between urbanization and human capital helps in alleviating environmental degradation, which indicates a moderating effect of human capital in promoting sustainable urbanization. The estimates of the bootstrap causality method disclose unidirectional causality from natural resources to the ecological footprint. Urbanization also Granger-causes ecological footprint without any feedback. The results are also compared and verified using carbon footprint as an additional proxy for environmental degradation. Lastly, comprehensive policy measures are proposed to improve environmental quality.