Non-linear impact of natural resources, green financing, and energy transition on sustainable environment: A way out for common prosperity in NORDIC countries

Abstract

In a couple of decades, the immense interest of scholars and policymakers is to identify the factors that support environmental sustainability without sacrificing economic well-being. Nordic countries with huge natural resource reserves are known as the top countries of the “European GDP per capita league table.” However, with the lofty climate targets, these countries are still responsible for environmental impairments through their incessant contribution to the global energy supply network. Therefore, to defeat this predicament, the study investigates the role of natural resources (NTR), green finance (GFN), green energy (GEC), and economic growth (GDP) in Nordic countries from 1990 to 2018. The study employed the novel quantile-based econometrics approach of “Method of the Moments Quantile Regression” (MMQR), which provides the direction and magnitude of the asymmetric association of NTR, GFN, GEC, and GDP with the ecological footprint. The results of this test revealed that the NTR and GDP have a significantly positive influence, while GEN and GEC have significantly negative associations with an ecological footprint across all quantiles. This has implied that green finance and green energy work as the solution, whereas natural resources and economic growth are key drivers of environmental degradation. Further, the “Augmented Mean Group” (AMG) and “Common Correlated Effect Mean Group” (CCEMG) are used as the robustness check, which endorsed the same association of NTR, GFN, GEC, and GDP with the EFP suggested by MMQR. Based on these findings, the study suggests policy implications for controlling the ecological footprint in Nordic countries.