THE FISCAL IMBALANCE AND CLIMATE CHANGE OBLIGATIONS: WHAT IS FEASIBLE FOR DEVELOPING ECONOMIES?

Abstract

The developing world is facing multidirectional challenges of socioeconomics in the era of Sustainable Development Goals (SDGs-2030). Fiscal indicators like fiscal imbalance and debt financing are the key hurdles in financing sustainable environment projects. This study attempted to probe the impact of the fiscal indicators on the environmental conditions of the South Asian region. For a comprehensive analysis, the study utilized a dataset of all eight countries of South Asia for 19 years. Per capita greenhouse gas emission has been used as a dependent indicator, while fiscal imbalance anddebt to gross domestic product (GDP) have been taken as independent indicators along with energy consumption, energy intensity and GDP growth rate. The generalized least squares and quantile autoregressive distributive lag methods have been adopted from econometric for this empirical analysis. Both ways confirm that fiscal imbalance and debt financing play a significant role in greenhouse gas emissions accumulation in the entire region of South Asia. Energy consumption and the cost of producing energy (energy intensity) are the other sources of greenhouse gas emissions accumulation in the area. This study suggested that developing economies of South Asia may not be able to fulfill their commitments regarding SDGs-2030 if their issues of fiscal imbalance and debt financing have not been treated initially.