The nexus between economic growth, renewable energy use, agricultural land expansion, and carbon emissions: New insights from Peru

Abstract

Global climate change caused by Greenhouse gasses (GHGs), particularly carbon dioxide (CO2) emissions, poses incomparable threats to the environment, development, and sustainability. This research investigates the dynamic impacts of economic growth, renewable energy use, and agricultural land expansion on CO2 emissions in Peru. Time series data from 1990 to 2018 were utilized applying the autoregressive distributed lag (ARDL) bounds testing approach followed by the Dynamic Ordinary Least Squares (DOLS) method. The DOLS estimate findings show that the coefficient of economic growth is positive and significant with CO2 emissions, indicating a 1% increase in economic growth is related to a 0.59% rise in CO2 emissions. Moreover, the coefficient of renewable energy use is negative and significant, implying that increasing renewable energy use by 1% results in a 0.52% reduction in CO2 emissions in the long run. Furthermore, the estimated long-run coefficient of agricultural land is positive and significant which reveals that agricultural land expansion by 1% is associated with an increase in CO2 emissions by 1.58% in the long run. The empirical findings reveal that economic growth and agricultural land expansion increase CO2 emissions while increased renewable energy use improves environmental quality by reducing CO2 emissions in Peru. The estimated results are robust to alternative estimators such as fully modified least squares (FMOLS) and canonical cointegrating regression (CCR). This article provides policy recommendations aimed at a low-carbon economy, promoting renewable energy use and climate-smart agriculture to achieve emission reduction and environmental sustainability.