Environmental Kuznets Curve Framework Research Articles

The symmetric and asymmetric effect of financial development on ecological footprint in South Africa: ARDL and NARDL approach

Introduction: The literature on the finance–emission nexus offers conflicting conclusions. This study resolves this inconsistency by investigating the symmetric and asymmetric effect of financial development on ecological footprint in South Africa, using the Environmental Kuznets Curve framework as a guide. Given the coexistence of ecological deficits and world-class financial development systems in South Africa, it is essential to explore and evaluate potential solutions to mitigating these deficits. Our empirical analysis contributes to the body of literature on the impact of financial development and ecological footprint by using a comprehensive measure of financial development and disaggregates it into its sub-indices to provide a nuanced analysis.Method: This study employs the linear auto regressive distribution lag and nonlinear auto regressive distribution lag techniques to explore the complex interactions of financial development and ecological footprint.Results and Discussion: The findings of this research indicate that financial markets and institutions seem to have varying effects on the ecological footprint. Financial market indices promote environmental quality, while financial institutions exacerbate environmental quality. These results call for policymakers to craft a watertight process that will encourage both financial markets and institutions to allocate capital to projects that are pro-environmental.

Shaping a greener tomorrow: Analysing the impact of environment-friendly technology on ecological footprints in emerging asian economies

The impact of environment-friendly technology on environment quality is an unsettled debate having generated more heat than light. Given this context, the study explores the impact of environment-friendly on ecological footprints using the Environmental Kuznets Curve framework. Utilizing Panel Autoregressive Distributive Lag model for aggregate ecological footprint doesn't show the evidence of environment-friendly technology improving environmental quality. However, disaggregated analysis reveals significant reductions in footprints related to Built-up, Crop, Fishing Grounds, and Grazing lands, with positive impacts observed on Forest and Carbon footprints. We also estimate the turning points of per capita income, confirming heterogeneous and footprint-specific Kuznets curves. Notably, we show that environment-friendly technology plays a crucial role in delaying depletion in Built-up land and contracting the depletion phase of Fishing Grounds along the Kuznets curve trajectory. The study, therefore, underscores the importance of environment-friendly technology in addressing environmental challenges and promoting environmental sustainability.

Revisiting the EKC framework concerning COP-28 carbon neutrality management: Evidence from Top-5 carbon embittering countries

In the aftermath of the 28th Conference of the Parties (CoP) climate summit in the UAE, the majority of developing countries encounter challenges in attaining their objectives of carbon neutrality for a sustainable economy. The association of economic factors such as economic growth, governance structures, forest area, renewable energy consumption, technological innovation, and urbanization with environmental elements (carbon footprint) is vital for sustainable economic development and environmental management strategies. Therefore, this research reveals this association in five selected high-emitting countries spanning from 1990 to 2022. This research utilizes the Environmental Kuznets Curve (EKC) framework to investigate the interrelationship between these variables. To do so, this study employs the cross-sectional autoregressive distributed lags (CS-ARDL) statistical technique to determine the short- and long-term impacts of the variables under investigation on carbon footprint. In contrast, the mean group (MG) and common correlated effect mean group (CCEMG) have been applied for robustness. The findings revealed that GDP, urbanization, and forest area have positive associations with carbon footprints, whereas GDP square, renewable energy consumption, technological innovation, and governance effectiveness have inverse relationships with carbon footprints. These findings provide all stakeholders with valuable policy recommendations and management advice for accelerating the transition of renewable energy to low-carbon and green growth.

Analysing the Role of Globalisation in Environmental Degradation of West African Countries: A Method of Moments Quantile Regression Approach

Abstract Motivated by the need to achieve a sustainable environment as entrenched in the Sustainable Development Goals and the conflicting evidence in the literature, this study scrutinises the effect of different components of globalisation on the environmental degradation of West African nations within the Environmental Kuznets Curve framework. Fully modified ordinary least squares, dynamic ordinary least squares, and the method of moments quantile regression of Machado and Silva (2019) are deployed as the estimation techniques. In the panel, cross-sectional dependence and non-normality are established. The findings from the quantile regression reveal a significant positive impact of economic growth on environmental degradation. The square of economic growth has an insignificant negative influence on environmental degradation. Thus, the EKC hypothesis is not valid in West African nations. Aggregate globalisation significantly influences environmental degradation, while economic and political globalisation significantly negatively impacts environmental degradation across the quantiles. However, social globalisation negatively impacts environmental degradation at a lower quantile (10–50 %), while at a higher quantile, the impact is positive. Natural resources significantly affect environmental degradation, while energy consumption in the region benefits the environment. Nevertheless, urbanisation has a different impact on environmental degradation in the area. The results of these studies are robust to other methods of estimation. The implications of the study are discussed.

Testing the nuclear energy induced environmental Kuznets curve for Bulgaria: An ARDL bounds test with sharp and smooth breaks

AbstractAttaining sustainable development entails extensive use of clean energy and low levels of carbon emissions. Hence, nuclear energy is considered an avenue to reach higher levels of sustainable development. However, the existing literature documents the ambivalent conclusion on the nuclear energy‐emissions nexus. To solve this puzzle, the present study re‐investigates the nuclear energy‐emissions nexus for Bulgaria using the Environmental Kuznets Curve framework. We adopt the methodology of novel bootstrap ARDL with sharp and smooth structural breaks. The findings document that nuclear energy is responsible for waning emissions across the long and short‐run. Also, we validate the EKC hypothesis. To provide robust empirical findings, we perform a sensitivity analysis, which reports results similar to the baseline findings. Hence, we propose to escalate the adoption of nuclear energy to curb emissions.

Assessing the Impact of Digitalization, Tax Revenues, and Energy Resource Capacity on Environmental Quality: Fresh Evidence from CS-ARDL in the EKC Framework

This study examines the dynamic relationships between digitalization, environmental tax revenues, and energy resource capacity within the framework of the Environmental Kuznets Curve (EKC), focusing on their combined impact on environmental quality. It employs a cross-sectional augmented autoregressive distributed lag (CS-ARDL) approach, an advanced technique for complex panel data that is specifically designed to address issues of cross-sectional dependence and slope heterogeneity inherent in panel data analysis. The research covers 88 countries, including both low- and middle-income countries (LMICs) and high-income countries (HICs), to understand how digitalization, as a driving force of the Fourth Industrial Revolution, interacts with environmental taxation and energy resource management to affect greenhouse gas emissions. The results reveal distinct effects of environmental taxes and energy capacity on environmental quality, with marked differences between LMICs and HICs. In HICs, technological progress, especially in information and communication technology (ICT), is found to contribute significantly to environmental quality. For LMICs, the effects are less evident, and the findings suggest the need for tailored strategies in environmental policy and energy management. By providing empirical evidence on the differential impacts of digitalization and energy policies in different economic contexts, this research enriches the environmental economics discourse. It highlights the need for policy frameworks tailored to specific contexts that effectively balance economic growth with sustainable development goals, thereby providing insightful implications for achieving the Sustainable Development Goals (SDGs).

Impact of remittance on economic growth and environmental quality in the purview of energy use, regulatory quality, and financial development

AbstractThis study investigates the asymmetric effects of remittance on economic growth (EG) and environmental quality in the purview of energy use, regulatory quality (REQ), and financial development (FD) in the top 20 remittance‐earning countries. It employs panel data from 1996 to 2020 and utilizes the generalized least square (GLS) estimation and the Dumitrescu–Hurlin causality test. The GLS result shows that remittance inflow has an asymmetric effect on EG as well as environmental quality, validated by a long run asymmetric test. Remittance shocks are beneficial for both EG and maintaining environmental quality in the context of the Environmental Kuznets Curve framework. Energy use; FD, and REQ all positively affect EG, whereas FD, REQ, and gross domestic product (GDP) are favorable for the environment except for energy use. According to a supplemented analysis, remittance and regulatory quality's combined influence on EG and CO2 are favorable, but regulatory quality's impact on the former is detrimental for both models. The results of the GLS estimation are endorsed by the causality analysis, which affirms their reliability. Positive remittance shock and financial development have bidirectional causality with EG, and both shocks of remittance and financial expansion have a two‐way association with CO2 emissions. Only REQ is affected by CO2 emissions. The outcomes have important policy implications for enhancing remittance inflow, ensuring smooth energy availability, a prudential financial system, and improving REQ to influence EG and control CO2 emissions effectively.

Revisiting the nexus between economic growth and disaggregated greenhouse gases in India: Evidence from necessary and sufficient conditions

For India, achieving environmental sustainability in the midst of faster growth remains a challenging objective. Therefore, we are revisiting the nature of the Environmental Kuznets Curve (EKC) at different stages of economic growth through both necessary and sufficient conditions under the cubic model specifications in India. Further, we extend the EKC framework by incorporating energy consumption, agricultural value added, trade, the world uncertainty index, and geopolitical risk as additional variables into the three preferred disaggregated greenhouse gas emission (GHG) models. This study employs an auto-regressive distributed lag model (ARDL). The empirical findings show evidence of the valid N-shaped EKC through both necessary and sufficient conditions for carbon dioxide (CO2) and nitrous oxide (N2O) and exhibit the presence of two real and distinct income turning points for both valid EKCs. In contrast, only the necessary condition supports the N-shaped EKC for methane (CH4) emissions in India. Further, the results highlight that trade has a positive impact, whereas the world uncertainty index has a negative impact on disaggregated GHGs. Similarly, geopolitical risk has a negative effect on CH4 and N2O, whereas energy consumption has a positive impact on CO2 emissions. Moreover, agricultural value added has a negative effect on CH4 and a positive effect on N2O emissions. Our empirical findings suggest policy recommendations that can collectively work as a roadmap for India to become emission-neutral by 2070.

Can increased economic complexity and reduced carbon emissions of the logistics industry go hand in hand? Evidence from countries along the Belt and Road

At present, the main focus of research lies in examining the connection between economic complexity and carbon emissions as a whole, but there is a scarcity of quantitative investigations on the link between the above variables within specific industries. Therefore, this study introduces economic complexity as a new variable to build a panel model within the traditional Environmental Kuznets Curve framework. Based on the data of the countries along the Belt and Road from 1998 to 2018, we used the Granger causality test to examine the causal relationship between variables, and use the Fully Modified Ordinary Least Square and Dynamic Ordinary Least Square methods to estimate the coefficients of variables. The key factor linking economic complexity and carbon emissions in the logistics industry is technology innovation Economic complexity can explain and predict the changes in carbon emissions of logistics industry more reasonably, and the relationship between them in line with the environmental kuznets curve hypothesis. Only high-income countries can increase economic complexity while reducing carbon emissions of logistics industry. Based on the empirical analysis, it is suggested that upper-middle income and lower middle-income countries can formulate relevant policies and regulations, and high-income countries can improve the relevant policies and regulations to promote the reduction of carbon emissions of the logistics industry. Studying the impact of economic complexity on carbon emissions in the logistics industry can help better predict and respond to the impact of climate change on the logistics industry.

Do natural resources and green technological innovation matter in addressing environmental degradation? Evidence from panel models robust to cross-sectional dependence and slope heterogeneity

This study investigates the impact of natural resources and green technological innovation on environmental degradation via carbon dioxide emissions within the framework of environmental Kuznets curve (EKC) with renewable energy consumption and urbanization as control variables. Current econometric techniques are engaged for accuracy and reliability, and the study panel is revealed to be heterogeneous and cross-sectionally based, with yearly data from Asian countries from 1990 to 2019. The Augmented Mean Group (AMG) and Dynamic Common Correlated Effects Mean Group (DCCEMG) estimators are employed to examine the connection between the variables, and the findings affirm that increasing green technological innovation and renewable energy consumption mitigate environmental degradation, while urbanization exacerbates it. Natural resources are found to have both increasing and decreasing impacts on environmental degradation. The EKC hypothesis is validated in Asia, indicating that environmental degradation rises with economic expansion until it peaks, then declines, forming an inverted U-shaped curve. The study established bi-directional causalities between economic growth and environmental degradation, natural resources and environmental degradation, renewable energy consumption and environmental degradation, and urbanization and environmental degradation. Nevertheless, uni-directional causality from green technological innovation to environmental degradation is affirmed. Therefore, it is recommended that Asian countries prioritize policies that promote the development and implementation of green technologies, such as hybrid vehicles, energy-efficient building systems, and smart grids, among others, to enable sustainable energy consumption. This will reduce resource consumption, waste production, and pollution while achieving significant cost savings.

Unraveling the Interrelationship of Digitalization, Renewable Energy, and Ecological Footprints within the EKC Framework: Empirical Insights from the United States

The study seeks to better comprehend the ecological footprint of the United States by analyzing the effects of digital financial inclusion (FinTech) as well as renewable and non-renewable energy usage. Data from 2005 Q1 to 2020 Q4 were analyzed using the quantile autoregressive lag (QARDL) method. It also used Granger causality in quantiles to analyze the correlation between variables and draw conclusions about their relative importance. Quantile-wise, the error correction parameter is statistically significant with the predicted negative sign, as shown by the results obtained using the QARDL method. Indications are mounting that the relationship between these variables and the United States’ ecological footprint is returning to its long-term equilibrium. However, in the long/short-run period, across all quantiles, economic growth and consumption of non-renewable energy have a positive impact on the ecological footprint. The environmental Kuznets curve (EKC) theory was also examined, which holds that an inverted U-shaped link exists between economic growth and environmental degradation. The QARDL study’s findings corroborated the presence of an EKC in the US, lending credence to the theory that while economic growth at first promotes environmental deterioration, further progress ultimately promotes environmental improvement. The study additionally checked the results of the QARDL test for robustness using the ARDL approach. Recommendations for public policy are included in the paper for consideration by legislators and policymakers.

Green versus conventional growth in the EKC framework of top pollutant footprint countries: Evidence based on advanced panel data techniques

Green growth has become the most credible solution to deal with the deterioration of the environment and excessive use of natural resources. Many studies have investigated the relationship between conventional economic growth and environmental degradation in Environmental Kuznets Curve (EKC) framework. However, in this analysis, we have investigated the EKC hypothesis by including green growth instead of conventional growth. Moreover, we have relied on the ecological footprint to represent environmental degradation in this analysis. Hence, the primary focus of the research is to investigate the association between green economic growth and ecological footprint in the EKC framework of top footprint economies for 1991–2017. The study employed the CS‐ARDL model and other advanced panel data techniques to estimate the model. The analysis confirmed the EKC hypothesis in top ecological footprint economies when we use conventional economic growth; however, the estimated coefficients of green growth and its square are negatively significant. The findings imply that green growth can help reduce the environmental burden, and renewable energy, eco‐innovations, and human capital also support the cause.

The asymmetric effect of ICT on CO2 emissions in the context of an EKC framework in GCC countries: the role of energy consumption, energy intensity, trade, and financial development.

This study examines how "information and communication technology (ICT)" affects carbon dioxide (CO2) emissions in Gulf Cooperation Council (GCC) nations asymmetrically, controlling energy consumption, its intensity, trade, and financial development following an environmental Kuznets curve (EKC) approach. It employs panel data covering 1995-2019, 2nd generation unit root, Westerlund cointegration tests, nonlinear pooled mean group (PMG) estimate, and Dumitrescu-Hurlin causality check. The Westerlund test validates a long-run association among variables. The study confirms the EKC proposition for the GCC countries. It reveals that a decrease in CO2 emissions is associated with both positive and negative parts of ICT and the expansion of financial development. While per capita GDP increases pollution, squared GDP per capita reduces it; energy consumption, intensity, and trade amplify carbon emissions. D-H causality check yields several bidirectional and one-way causalities and verifies the robustness of PMG outcomes. Our findings suggest that promoting ICT becomes one of the critical techniques to decrease CO2 emissions in GCC nations due to its significant negative influence on CO2 emissions.

Kuznets and the cities: Urban level EKC evidence from Europe

This paper empirically explores the extent to which European cities are on track to sustainable development by examining the environmental performance of a large sample of cities observed during the last two decades. The paper builds on the Environmental Kuznets Curve framework and leverages satellite data to build a set of environmental indicators as varied and as granular as possible. Evidence suggests that European cities are, on average, on track to sustainable development, meaning that the contribution of their economic growth to environmental degradation is already negative or close to becoming so. The paper also examines Transnational City Networks as accelerators of environmental transition. The results suggest that cities participating in such networks anticipate the transition with respect to their peers.

The role of government spending within the environmental Kuznets curve framework: evidence from G7 countries.

This study assesses the role of government spending on environmental sustainability based on a framework that combines the environmental Kuznets curve (EKC) hypothesis with the Armey curve hypothesis. Specifically, the inverted U-shaped relationships between carbon (CO2) emissions and economic growth (EKC hypothesis) and between government spending and economic growth (Armey curve hypothesis) are analyzed using a composite EKC model tested for cross-sectional dependence and heterogeneity, panel unit root, panel co-integration, and the augmented mean group estimation. In so doing, this study pursues a potential transmission mechanism leading from government spending to CO2 emissions through the growth channel and presents a novel way to develop a better understanding of how economic growth policy and energy policy can be synchronized. Empirical results show that economic growth acts as a transmitter between government spending and CO2 emissions in the USA, UK, and Canada. However, the composite EKC hypotehesis is confirmed only for the USA and Canada, where the optimal level of government spending that maximizes CO2 emissions is 29.87% and 29.22% of GDP, respectively. In contrast, the optimal level of government spending equivalent to 28.30% of GDP minimizes CO2 emissions in the UK. The key policy implication is that governments can achieve sustainable economic growth by setting standards for their spending levels.

The Impact of Institutions on Economic and Environmental Performance: Evidence From Europe

Abstract Within the Environmental Kuznets Curve framework, we investigate whether the effect of institutions on environmental quality differs among the Western Balkans, the other European post-socialist states, and Western Europe. We estimate both direct and indirect effects of institutions on air pollution for each respective sub-sample and for the whole European region (45 countries during 1996-2014). The negative direct effect is greater for non-post-socialist states, compared to post-socialist ones. Regarding the indirect effect, improving the quality of economic institutions induces an increase in the scale of economic activity, leading to an increase in CO2 emissions per capita. Estimated elasticities of CO2 emissions with respect to institutions, for all sub-groups, uncover a total positive effect, which is larger for Central-eastern and South-eastern European states. Improving the quality of institutions should go hand in hand with stricter formation and implementation of policies designed to decouple economic growth from CO2 emissions.

The energy-growth nexus in 3 Latin American countries on the basis of the EKC framework: in the case of Argentina, Brazil, and Chile

In this paper, the effects of economic growth and four different types of energy consumption (oil, natural gas, hydroelectricity, and renewable energy) on environmental quality in terms of carbon dioxide (CO2) emissions were examined within the framework of the Environmental Kuznets Curve (EKC) for three Latin American countries, namely, Argentina, Brazil, and Chile, from 1975 to 2018. The autoregressive distributed lag (ARDL) in the form of Error Correction Mechanism (ECM) was used to verify the validity of the EKC hypothesis and the impacts of the variables in the short and the long run alike. Furthermore, the Toda-Yamamoto Granger causality test was carried out to identify the direction of causality between the variables. From ARDL-ECM estimation, the EKC was confirmed (inverted U-shaped curve between income growth and CO2 emissions) only in Argentina in the long run but not in Brazil and Chile. Based on the findings, renewable energy can have a great potential in reducing CO2 emissions in the future, but this advantage has not been fully exploited yet since a significant negative impact on CO2 emissions was only found in Chile. Also, the use of other less carbon-intensive energy sources such as natural gas and hydropower if they could be combined with renewable energy would be of great benefit and contribute to enhancing environmental quality and energy security in the short and the medium term and to successful low-carbon energy transition in the long run in Argentina, Brazil, and Chile.

Energy consumption, agriculture, forestation and CO2 emission nexus: an application to OECD countries

ABSTRACT The Environmental Kuznets Curve (EKC) hypothesis has been used to explain the relationship between environmental degradation and economic condition. This study formulates an augmented EKC framework to incorporate the effect of agriculture, forestation and energy consumption on CO2 emission and estimates the model using the data from 24 OECD countries between 1990 and 2018. The study utilizes individual-country analysis and panel dynamic analysis for the empirical investigation. The results show a positive relationship between CO2 emission and fossil fuel use – a 1% increase in fossil fuel consumption will increase CO2 emission by 0.76%, and a negative relationship with renewable energy – a 1% increase in renewable energy consumption will reduce CO2 emission by 0.14%. The impact of forest cover and agricultural production on CO2 emission is mixed at the single-country level. The panel fixed-effect results reveal that a 1% increase in agricultural production and forest cover leads to a 0.04% and 0.63% increase in CO2 emission, respectively. There is also strong evidence supporting the presence of the EKC hypothesis. The global CO2 emission reduction strategies, such as carbon taxes and emission trading schemes, must acknowledge and incorporate the interplay among -key macro-level variables revealed in this study to enhance their effectiveness.

Renewable energy, nonrenewable energy, and environmental quality nexus: An investigation of the N-shaped Environmental Kuznets Curve based on six environmental indicators

The current research evaluated the role of non-renewable and renewable energy consumption in environmental sustainability following the N-shaped Environmental Kuznets Curve framework controlling financial development, population density, and composite trade share. Unlike previous studies, this research used six indices to depict environmental deterioration and environmental quality. More precisely, pressures on nature, ecological footprints, environmental vulnerability, and adjusted net saving are employed to represent environmental deterioration, while environmental performances and environmental sustainability are adopted to proxy environmental quality. The Dynamic Seemingly Unrelated Regression Equations were used on panel data from 1994 to 2019 in the selected Organization of the Petroleum Exporting Countries. The findings revealed the N-shaped linkage between per capita income and environmental deterioration indicators, such as ecological footprints, adjusted net saving, pressures on nature, and environmental vulnerability. Regarding the linkage between environmental quality indicators, including environmental performances and environmental sustainability, and per capita income, an inverted N-shaped Environmental Kuznets Curve is verified. Considering all six environmental indicators, non-renewable energy tends to deteriorate the environment, while the use of renewable energy promotes environmental quality. Moreover, population density, financial development, and composite trade share raise environmental deterioration. The results are vital for achieving a green economy with better environmental quality.

Natural resources management and technological innovation under EKC framework: A glimmer of hope for sustainable environment in newly industrialized countries

The association between natural resources and environmental destruction has major ramifications for the ecosystem, and technological innovations are considered an imperative tool to address these challenges. Therefore, this study examines the dynamic association between natural resources, technological innovation, and environmental sustainability using annual data of newly industrialized countries (NICs) from 1990 to 2019. We applied advanced panel cointegration techniques and confirmed that natural resources and technological innovations have a stable long-term association with ecological sustainability. The long-run results from the Cross-Sectional ARDL estimator indicate that natural resource rent limits environmental sustainability while green technological advancements help reduce ecological deterioration. Similar findings are observed in the short run; however, the coefficients’ magnitudes are higher in the long run. Moreover, the validity of the Environmental Kuznets Curve (EKC) hypothesis is also confirmed in NICs. These results are consistent with robust alternative estimators and emphasize the significance of suitable policies for efficient natural resources management through technology innovations and the accomplishment of sustainable development goals.