Natural resources and environmental quality: Exploring the regional variations among Chinese provinces with a novel approach

Abstract

Environmental quality became the major concern as the world shifted towards sustainable development. The environmental quality related natural resource literature mostly used ecological footprints and CO2 emission to represent environmental quality. This paper developed a comprehensive environmental quality indicator and explored the impact of natural resources on environmental quality among Chinese provinces from 1995 to 2017. Considering cross sectional dependence, second generation unit root and co-integration tests with the Pooled Mean Group are used as a benchmark model. The robustness of results is checked with the Fully Modified Ordinary Least Squared and causality test. The aggregate sample outcomes confirmed the adverse impact of natural resources, economic development, urbanization, industrialization, income inequality, nonrenewable energy and population growth on environmental quality in the long-run. However, technological progress, environmental regulations and renewable energy improve environmental quality. Furthermore, natural resources deteriorate the environment in central and western provinces but improve environmental quality in the eastern region in the long-run. The causality analysis confirmed a unidirectional causality among variables. The robustness results also established that the impact of natural resources on environmental quality varies among regions. This study offers substantial policy suggestions for central and local governments to promote sustainable development.