Natural resources, remittances and carbon emissions: A Dutch Disease perspective with remittances for South Asia

Abstract

Several academic studies and policy discussions have been prompted by the intricate relationship between natural resources, remittances, and carbon emissions. It has been shown that the exploitation of natural resources (including mineral, forest, natural gas and coal rents) and the influx of remittances significantly contribute to the expansion of economic output. Yet, these variables affect production growth in various ways, and their interactions with carbon emissions have significant environmental effects. This study fills the knowledge gap by studying the connections between natural resources, remittances, and CBCE for the panel of India, Bangladesh, Pakistan, and Sri Lanka from 1988 to 2021. This study examines the links between natural resource rents, remittances, GDP, trade openness, and CBCE in a few South Asian countries using the Augmented Mean Group (AMG) technique. The findings indicate that while forest resources, remittances, GDP, and imports increase CE, overall natural resources and exports decrease. To put it another way, while preserving all natural resources is crucial, the quality of the ecosystem is significantly impacted by the use of remittances. The study also shows that imports harm the environment while exports have a positive one. The fully modified ordinary least squares (FMOLS), which verify the significant influence of identified factors on CBCE in the chosen panel, provide evidence of the robustness of the findings. Furthermore, the Granger panel causality test developed by Dumitrescu and Hurlin (2012) shows that GDP and CBCE, exports and CBCE, forest resources and CBCE, and remittances and CBCE are all causally linked in both directions. These conclusions have significant policy ramifications for South Asian countries and address that the combination of education and awareness, sustainable product choices, sustainable transportation strategies, promoting sustainable economic growth, addressing the impact of imports, focusing on forest conservation, encouraging sustainable personal remittances, fostering low-carbon exports, and managing overall resource rents can lead to significant progress in achieving a sustainable and low-carbon future and mitigating the detrimental effects of consumption on the environment.