The role of fiscal decentralization and natural resources markets in environmental sustainability in OECD

Abstract

Environmental sustainability is a global priority. Fiscal decentralization and natural resources markets have become essential for combating climate change and ecological degradation. This study looks at how markets for natural resources and fiscal decentralization affected environmental sustainability in OECD nations between 1995 and 2021. It examines how fiscal decentralization (revenue and expenditure) relates to environmental indicators like carbon dioxide (CO2) emissions and ecological footprint. The study also examines how exports and resource abundance mediate in the natural resource markets. Regression analysis(STIRPAT) is carried out while accounting for institutional and economic variables. According to the findings, more significant revenue and expenditure decentralization results in lower CO2 emissions and an ecological footprint, improving environmental sustainability. Furthermore, a healthy market for natural resources strengthens this connection. These results demonstrate how fiscal decentralization and efficient resource management are crucial for fostering environmental sustainability in OECD nations.