What is Right and What is Wrong in the Environmental Governance Model? Environmental Regulations for Improving Environmental Sustainability Ratings

Abstract

The improper allocation of economic and environmental resources damages the United Nations sustainable development Agenda, which remains a challenge for policymakers to stop the rot through efficient governance mechanisms. The study designed an efficient environmental governance framework by extending the different governance factors linked to the environmental sustainability ratings in the cross-section of 67 countries. The results of the two-regime based estimator show that environmental corruption (regime-1), environmental politics (regime-2), and environmental laws (regime-2) negatively correlated with the environmental sustainability rating, whereas environmental democracy (regime-1 & 2) positively correlated with the environmental sustainability agenda across countries. The government effectiveness and the country’s per capita income both escalates environmental sustainability ratings. The results align with the Demopolis theory, the effective regulatory theory, and the theory of law and politics. The causality estimates show that environmental corruption and government effectiveness causes environmental politics and economic growth. In contrast, environmental democracy and environmental regulations cause a country’s per capita income. The bidirectional causality is found between environmental regulations and environmental corruption on the one hand, while environmental regulations and environmental politics Granger cause each other on the other hand. The results show the importance of environmental regulations in managing ecological corruption and politics across countries. The variance decomposition analysis suggested that environmental politics likely influenced the environmental sustainability agenda, followed by government effectiveness and environmental democracy for the next ten years. The study emphasized the need to design an efficient environmental governance framework that minimizes environmental corruption and enables them to move towards environmental democracy, stringent environmental laws, and regulations. Government effectiveness would mainly be linked to reducing corruption and political instability to achieve clean, green and sustainable development.