Trade off between environment, energy consumption and human development: Do levels of economic development matter?

Abstract

There have been a number of scholarly works investigating the energy-pollutant-human development nexus, however, they have failed to fully investigate the simultaneous effects of energy consumption, human development and carbon dioxin emissions. These effects need to be understood with proper consideration for the level of economic development. To fill this gap, this paper collectively estimates three simultaneous equations of human development, energy consumption and carbon dioxin emissions, employing a system-generalized method of moment approach (SGMM) covering ninety countries over the period 1990–2014. Results indicate that increased human development leads to reduced carbon emissions for the global sample and development countries. However, no significant relationship between carbon emissions and human development is found in developed countries. The results show no significant causal relationship between energy consumption and human development, neither for the global sample nor the subpanels. Given the incorporation of the non-linear term of human development in environmental equations, a U-Shape hypothesis is not valid in this study. Hence, despite some positive findings, the study shows that environmental policies related to controlling carbon emissions and energy usage are likely to have no impact on human development at any stage of economic development.