Pollution Haven Research Articles

Financial inclusion and environmental sustainability in Ghana: application of the dynamic ARDL estimator.

Numerous explorations have been conducted on the determinants of Ghana's environmental quality. However, to the best of my knowledge, there has been no research on the connection between financial inclusion and environmental sustainability in the country. This study was therefore conducted to help fill that gap. In attaining the aforestated goal, econometric techniques that yield valid and reliable outcomes were engaged. From the results, all the series were first differenced stationary and cointegrated in the long run. The DARDL estimator with the support of the conventional ARDL estimator was adopted to explore the marginal effects of the predictors on the explained variable, and from the results, financial inclusion worsened environmental sustainability in the nation via high carbon emissions. Also, foreign direct investments degraded the country's ecological quality validating the pollution haven hypothesis. Finally, trade openness, population growth, and energy consumption were detrimental to environmental sustainability in the nation. On the causal directions amidst the series, unidirectional causalities from financial inclusion and trade openness to carbon effusions were disclosed. Also, feedback causalities between foreign direct investments and carbon emissions; between population growth and carbon effluents; and between energy consumption and carbon exudates were unfolded. The study recommended among others that, financial establishments should not fund the production of carbon-intensive goods, but those that are friendly to the environment. The government can also help to improve environmental sustainability by establishing regulations to mandate financial entities to engage in eco-friendly activities.

Towards a Sustainable China-Africa Forest Products Trade; an Assessment of Environmental Implications for FOCAC Members

Forest products have become an integral component of China-Africa trade engagement. However, with increasingly global climate change warnings and the need to turn down the heat below the pre-industrial level, understanding the trade-off from forest trade in relation to CO2 emissions is paramount in shaping forest product trade sustainability in the long run. This study, therefore, tests the haven and halo hypothesis based on the FMOL technique by analyzing China-FOCAC forest products trade engagements. A balanced panel data of 20 FOCAC members were selected based on availability and consistency from 2000-2014. The variables; forest products trade (exports value), GDP per capita, FDI inflow, institutional quality, energy use and carbon emissions were gleaned from the world bank and the United Nations database. The descriptive statistics results reveal a disparity in economic growth, FDI inflow and value of forest products exports among FOCAC members. Per the FMOL estimation results, the China-FOCAC forest products trade has an insignificant impact on the level of carbon emissions in the selected countries which contributes to the ongoing debate on whether Africa is a pollution haven for China. Nevertheless, Per capita GDP and energy use are significant drivers of emissions whereas FDI’s and the quality of institutions have shown high potential for transforming the quality of the environment in the selected countries. These results are paramount in shaping existing and future forest trade agreements.

Impact of international trade, energy consumption and income on environmental degradation in Africa's OPEC member countries

AbstractThe huge endowment, exploitation and trading of carbon content energy resources by the African OPEC member countries for economic expansion substantiate the fears of increasing global warming and environmental degradation. This study explores the dynamic effects of trade flows, energy consumption and per capita income on environmental degradation in seven of Africa's OPEC member countries (Algeria, Angola, Congo, Equatorial Guinea, Gabon, Libya and Nigeria), within the framework of the environmental Kuznets curve (EKC) and the pollution haven hypothesis (PHH). By employing the bootstrap panel cointegration test and the PMG/ARDL estimation technique on panel data spanning from 1990 to 2017, the empirical results show a positive but insignificant effect of trade flows on environmental degradation. The results further show that while renewable energy dampens environmental degradation, non‐renewable energy exerts upward pressure on environmental degradation. In addition, the results provide evidence in support of a U‐shaped EKC in the long run. The study, therefore, recommends the expansion of renewable energy consumption to ensure not only environmental sustainability but also to attain the regional goal of sustainable development.

Mexico at the crossroads of natural resource dependence and COP26 pledge: Does technological innovation help?

The nexus between natural resource depletion and environmental quality has been a heated topic of debate among policy experts in recent years. This nexus is crucial to achieve Sustainable Development Goal (SDG) 13 which deals with climate change mitigation. However, the extant literature has not paid due attention to this nexus, particularly in the case of Mexico. Against this backdrop, the present study examines the relationship between ecological footprint and natural resource depletion, economic growth, energy consumption, technological innovation, and foreign direct investment in the Mexican economy. The present research leverages the novel dynamic autoregressive distributed lag (ARDL) simulations approach and uses annual frequency data from 1980 to 2018. Empirical findings from the ARDL bounds test substantiate the presence of long-run association among studied variables. Furthermore, the result of the novel dynamic ARDL simulation does not validate the Environmental Kuznets curve (EKC) hypothesis. Thus, implying that Mexico's economy remains at the scale stage, with a scope of economic expansion relative to environmental quality. However, the Pollution Haven Hypothesis (PHH) is validated. Interestingly, natural resource rent accompanied with energy use and foreign direct investment deteriorate the environmental quality in the short-and long-run. However, technological innovation seems to emanate as a panacea for environmental degradation in the long-run. Result analysis also demonstrates that 10% positive and negative simulation graphs for the studied variables. The Frequency Domain Causality analysis also corroborates the above findings. These findings have far-reaching policy implications for Mexico's sustainable environment amid prudent use of natural resources, which are prescribed in the final section.

The impact of environmental regulations on the location choice of newly built polluting firms: based on the perspective of new economic geography

Based on the unique micro-data of newly built polluting firms for the period of 2009–2018, this paper adopts the conditional logit model to empirically evaluate the impact of environmental regulations on the location choice of polluting firms. Moreover, we extend the theoretical model by considering that the environment regulations not only influence the pollution cost but also the level of technological innovation and labor cost. The empirical results show that polluting firms tend to flow into areas with stringent environmental regulations, which supports the Porter hypothesis, but the effect of environmental regulations have a divergent impact on heavily polluting firms. Heterogeneous analysis indicates that environmental regulations have shown a positive impact on the location choice of private and foreign-funded firms but no significant impact on that of state-owned firms; the impact of environmental regulation is consistent with pollution haven hypothesis for firms in the central region but is in line with Porter hypothesis for firms in other regions. Meanwhile, the probability of air polluting firms entering areas with stricter environmental regulations is higher than that of water-polluting ones. Finally, this paper further empirically tests the conduction mechanism, that is, environmental regulations can affect the location choice of polluting firms by affecting the regional technological innovation capabilities and labor cost.

Social and environmental accounting research in vulnerable and exploitable less-developed countries: a theoretical extension

ABSTRACT Research on social and environmental accountability (SEA) and transparency in less-developed countries may generate deeper insights, if theoretical underpinnings which are consistent with the social, political and economic realities found in these countries are used. This paper revisits “vulnerability and exploitability” framework introduced by [Belal, A. R., Cooper, S. M., & Roberts, R. W. (2013). Vulnerable and exploitable: The need for organisational accountability and transparency in emerging and less developed economies. Accounting Forum, 37(2), 81–91]. The paper refines, builds on and extends the theoretical context of the framework with a view to strengthening its ability to describe, explain and predict corporate SEA and transparency practices in less-developed countries. The study utilises analytical review of the relevant multidisciplinary literature from environmental economics, vulnerability and openness, and SEA in less-developed countries. In doing this, firstly, the paper derives three postulates and presents a diagram depicting the conditions which make less-developed countries vulnerable and exploitable. Secondly, as the main contribution of the study, pollution haven theory is integrated into the framework as an additional element. This leads to the derivation of five additional postulates and a modified diagram depicting the conditions for pollution haven and the outcomes of vulnerability’s causal link with exploitability and pollution haven. These outcomes take the form of poor SEA and transparency indicated by low corporate social and environmental performance, disclosure level and disclosure quality. The postulates developed are put forward for further debate and empirical tests.

The nexus between economic growth, renewable energy and ecological footprint: An empirical evidence from most oil-producing countries

Although the impact of fossil fuel consumption is known worldwide, oil-producing countries stay away from using renewable energy sources due to commercial concerns, which causes an increase in global warming. We investigated the relationship between economic growth, renewable energy consumption, and ecological footprint in the oil-producing USA, Russia, Saudi Arabia, Canada, China, Brazil, Kuwait, and Nigeria for 1999–2017 using a dynamic panel data analysis and panel causality analysis. Our motivation was to demonstrate the oil-producing countries' growing ecological footprint/environmental pollution and the influence on global warming. Our objective is to analyze how economic growth and renewable energy consumption contribute to the ecological footprint in countries whose growth is based on oil production. We employed a dynamic Two-Step System Generalized Method of Moments test and Dumitrescu-Hurlin Heterogenous Panel Causality Test. Our findings demonstrate a significant effect of economic growth on ecological footprint, confirming the Pollution Haven Hypothesis and no significant effect of renewable energy consumption on ecological footprint. Future researchs based on our analysis may determine the optimum distribution of conventional and renewable energy production that guarantees economic growth while reducing global warming. The first contribution of our study to the literature is to examine the related nexus through dynamic panel data analysis, unlike the studies using static analysis. The second contribution is to identify the damage done to our planet by oil-producing countries' efforts to maintain their economic growth despite environmental degradation. In other words, by combining these two, our study's contribution is identifying the Pollution Haven Hypothesis by dynamic and causality analyses for oil-producing countries. Our findings demonstrate that; a) renewable energy consumption does not influence and is not a cause of the ecological footprint, b) economic growth is a cause and has an influence on the ecological footprint for most oil-producing countries. In our test results, it has been found out that a 1% increase in economic growth will increase the ecological footprint by 0.02828%.

Determinants of target location selection for acquirers in the manufacturing sector: Pollution intensity, policy enforcement, and civic environmentalism

This study tests the pollution haven hypothesis to identify the determinants of target location selection in cross-border mergers and acquisitions (CBAs). Under the pollution haven hypothesis, it argues that the high pollution intensity of the acquirer’s industry in the manufacturing sector makes acquirers more likely to select target countries with relatively lax environmental policies than those in the home country to gain location-specific advantages. This effect is more substantial with increased home-country government-policy enforcement but weaker with increased host-country civic environmentalism. Using 3,087 completed CBAs (2001–2013) from 49 acquirer countries, we find evidence that supports the pollution haven hypothesis.

Digitalization, Financial Development, Trade, and Carbon Emissions; Implication of Pollution Haven Hypothesis During Globalization Mode

In the modern era of globalization, information and telecommunication technologies (ICTs) have become an important factor influencing carbon dioxide (CO2) emission; however, the specific effect produced by ICTs is still not clear. Therefore, the study examines the nexus between ICTs, foreign direct investment, globalization, and CO2 emission in 77 developing countries. The novel attribute of this research is the ICTs with financial development and the international trade interaction term. The results of this study are based on the pooled regression and generalized method of moment (GMM) techniques from 1990 to 2016. The subsequent empirical findings are established as follows: first, the ICTs positively contribute to reducing CO2 emission. Second, globalization significantly increases the CO2 emission; third; the interaction between ICTs and financial development increases CO2 emissions, and the moderating effect of ICTs and international trade performs the similar role. Fourth, the empirical finding verifies the presence of the pollution haven hypothesis. Fifth, our robustness tests confirmed that our empirical results were consistent. We suggest that policymakers should be using ICTs as a policy tool to mitigate CO2 emission and should invite such investments in ICT sectors, which help maintain the environment quality.

Air pollution trajectories and life expectancy in Nigeria

PurposeThe purpose of the study is to examine the relationship between air pollution and life expectancy considering the roles of institutional quality, agricultural output, foreign direct investment (FDI) and other socio-economic variables in Nigeria from 1981Q1 to 2019Q4.Design/methodology/approachThe study employed spliced quarterly data from annual series collected from the World Bank development indicators and Central Bank of Nigeria. The dynamic multivariate models were analysed using the vector error correction mechanism (VECM), variance decomposition and Granger causality techniques.FindingsThe VECM result indicated a statistically significant adverse effect of air pollution on life expectancy. However, institutional quality, gross domestic product per capita, agricultural output, government social expenditure and school enrolment rate ameliorate the adverse health effects of air pollution, while FDI had mixed effects on life expectancy at different significance levels and at varying lag lengths. The Granger causality result revealed a uni-directional causality from air pollution to life expectancy; bidirectional causal chain between agriculture, FDI, government social expenditure and life expectancy, while a uni-directional causal linkage run from life expectancy to income per head and from school enrolment to life expectancy respectively. However, there is no evidence of causation between institutional quality and life expectancy due to weak institutional quality, but foreign direct invest causes carbon emission in a uni-directional manner in line with pollution haven hypothesis.Research limitations/implicationsThe study's modelling is limited by not considering the resource curse variable in the model due to paucity of data. Nigeria is the biggest crude oil exporter in Africa and ranks 13th globally with daily output of about 2.4 m barrels. Thus, the negation of resource curse in air pollution–life expectancy nexus de-emphasises the effectiveness of rich resources on health and environment. Future studies could address this limitation by incorporating resource curse in environmental-health models for Nigeria.Practical implicationsIt is imperative for the country to adopt stringent anti-air pollution strategies that would establish a balance between FDI attraction and agricultural expansion to the benefits of her citizens' longevity. Also, education should be considered as a strategic action to enhance life expectancy through expansion in the provision, accessibility and affordability to improved school enrolment rate. The choice of quarterly time series over annual data helped to establish the current relationship between air pollution and life expectancy using efficient estimators.Originality/valueThe study contributes to literature by disaggregating yearly series into quarterly series, which has implications for the efficiency of the estimates, unlike earlier studies which ignored this fundamental process. The result of this study produced reliable policy direction for improvement in life expectancy in an emerging economy since quarterly estimates are more robust and reliable for forecasting than its yearly counterpart. The outcome of the study extended the original tenets of the Grossman's health stock theory using the environmental Kuznets curve (EKC) and pollution haven hypotheses (PHH).

Is there a trade-off between financing current account deficits and environmental deterioration in developing countries? An empirical investigation for the validity of the pollution haven hypothesis.

The impact of foreign direct investment (FDI) on environmental quality has been discussed in the environmental economics literature over the last decades. Within this scope, the pollution haven hypothesis (PHH) postulates that FDI inflows can cause environmental degradation in developing countries. Using data over the period 1993-2018 for 10 developing countries with current account deficits, this paper aims to test the validity of the PHH. Therefore, the paper examines whether or not developing countries face off a trade-off between financing current account deficits and environmental deterioration. The paper employs panel data methods that consider cross-sectional dependence. The empirical findings show that foreign direct investment inflows have no impact on environment, meaning the PHH does not dominate for these countries. Hence, the findings indicate that there is no trade-off between financing current account deficits and environmental deterioration.

SO2 emissions trading and firm exports in China

The pollution haven hypothesis and Porter hypothesis provide two distinct views on the relationship between environmental regulation and exports. Our study aims to contribute to this debate by examining the impact on firm exports of China's SO2 emissions trading scheme (SO2 ETS), a market-based environmental regulation. By adopting a difference-in-difference-in-differences (DDD) estimation approach, we find that in more polluting industries, the SO2 ETS has a positive impact on firm exports. We investigate the mechanism behind this effect suggesting that SO2 ETS triggers firms to engage in more innovation activities, which subsequently leads to increased exporting performance. Heterogeneous analysis suggests that this positive effect is present only for non-state-owned enterprises (non-SOEs) and enterprises in more competitive industries. Moreover, we find that there is a lagged effect of the SO2 ETS on exporting performance, and the effect fades slowly over time. Overall, our findings support the strong version of the Porter hypothesis. We can cautiously conclude that the market-based environmental regulations could result in “win-win” outcomes for both economic growth and environmental protection.

CO2 Emissions in Indonesia: The Role of Urbanization and Economic Activities towards Net Zero Carbon

This study aims to analyze the nexus between CO2 emissions, urbanization, and economic activity, as well as identify whether the pollution haven hypothesis is proven in Indonesia. It utilized time series data of Indonesia during the 1971–2019 period. Furthermore, the vector error correction model (VECM) was used to determine the long-run and short-run interplay using cointegration and Granger causality approaches. The empirical results showed the pollution haven hypothesis occurred in Indonesia. A long-term relationship with CO2 emissions was observed from the model. In addition, unidirectional causality occurred from urbanization, economic growth, exports, and foreign direct investment to CO2 emissions in the short term. It was concluded that the achievement of the Paris Agreement will be successful when the committed countries are courageous in transforming their economy. However, major adjustments are needed, where all parties need to have the same vision towards net zero carbon.

Eco-innovation and exports in heterogeneous firms: pollution haven effect and Porter hypothesis as competing theories

ABSTRACT The effects of environmental policies on eco-innovation and trade performance are studied separately in the literature, and varying inferences across the studies are reported. This paper sheds light on this debate as it theoretically and empirically studies the pollution haven effect and strong Porter hypothesis in a unified framework that accounts for productivity and size heterogeneity at the firm level. The present study discusses a detailed analysis of theoretical predictions and empirical outcomes, based on the regulation–innovation–trade nexus, to assess the specific channels through which such effects might operate. Based on German and East European cross-sectional data at the firm level, results show that an eco-innovation that a regulation induces can generate either a positive effect or a detrimental effect on exporting propensity. Results also suggest that productivity, size and geographical heterogeneity of firms are extremely relevant.

The influence of FDI on GHG emissions in BRI countries using spatial econometric analysis strategy: the significance of biomass energy consumption.

Indeed, the Belt and Road Initiative (BRI) plays an increasingly important role in global economic and climate change mitigation. However, scientists have insufficient attention to the issues related to the elements that contribute to justifying these impacts and bolstering its response in BRI nations. Accordingly, the existent study executed an in-depth examination of the spatial direct and spillover effects of foreign direct investment inflows (FDI) and biomass energy consumption (BEC) on greenhouse gas emissions (GHG) for 57 BRI countries (1992-2012). We applied the spatial lag model (SLM), the spatial error model (SEM), and the spatial Durbin model (SDM) with five different weights matrices to verify the existence of the pollution haven hypothesis (PHH), the pollution halo hypothesis (P-HH), and the N-shaped environmental Kuznets curve (EKC). We linked the study results with the implementation level of the sustainable Development Goals (SDGs). The findings of local Moran's I (LMI) and Lagrange Multiplier (LM) tests confirm the existence of spatial autocorrelation (SAR). The empirical results revealed that FDI has a positive direct and spillover influence on GHG emissions, which supports the presence of PHH. Also, the nexus between economic growth and GHG emission is an N-shaped curve. The results revered that BEC has a negative sign for direct and spillover effects. In contrast to BEC, Fossil Fuel Energy Consumption (FFEC) and population positively sign for direct and indirect impact. Some policy proposals and future research directions are discussed for BRI countries.

Can intra-regional trade, renewable energy use, foreign direct investments, and economic growth mitigate ecological footprints in South Asia?

ABSTRACT Environmental degradation has become a severe concern across South Asia. Hence, it is imperative to model the macroeconomic determinants of environmental quality across this region. The traditional fossil fuel dependency of the major South Asian nations is alleged to have persistently deteriorated the quality of the environment across this region. Under such circumstances, it can be hypothesized that intra-regional trade within South Asia can facilitate renewable electricity trade to enhance environmental well-being. Accordingly, this study aims to evaluate the impacts of intra-regional trade integration, renewable energy transition, economic growth, and foreign direct investment inflows on the ecological footprints of selected South Asian economies. The econometric methods used in this study are suited for handling cross-sectionally dependent heterogeneous panel datasets. The overall results reveal that promoting intra-regional trade, stimulating renewable energy transition, expediting economic growth, and impeding inflows of dirty foreign direct investments are imperative for reducing the ecological footprint figures of the South Asian nations of concern. Besides, the results also verify the environmental Kuznets curve hypothesis for the South Asian panel as well as for Bangladesh, Sri Lanka, Nepal, and Bhutan but not for India and Pakistan. Moreover, the pollution haven hypothesis is also verified for both the panel and the individual South Asian countries. In line with these findings, several environmental welfare improvement-related policies are recommended.

The carbon emission and life expectancy nexus: mediating roles of agriculture and foreign direct investment in Nigeria

PurposeThis study evaluates the impact of carbon emission on life expectancy in Nigeria. The study also investigates the mediating role of agricultural output and foreign direct investment as suggested by the environmental Kuznets curve (EKC) and the pollution haven hypothesis (PHH), respectively.Design/methodology/approachThe hypotheses and theories were tested using structural equation modeling (SEM). Primary data were collected using cross-sectional survey design. Questionnaires were distributed and responses were used to measure the latent variables of the study. A confirmatory factor analysis (CFA) was used to evaluate the measurement models, while path analysis was used to estimate the coefficients of the structural equations.FindingsCarbon emission was found to have a negative and significant impact on life expectancy. This impact constituted both direct and indirect effects that were mediated by both foreign direct investment and agricultural output. Carbon emission and agricultural output were found to play significant roles that lead to a further negative- and significant-mediated relationship of carbon emission with life expectancy.Originality/valueUnlike many previous studies on air pollution, this study investigates carbon emission in particular as well as the mediating role of agricultural output and foreign direct investment in the carbon emission and life expectancy relationship. The use of SEM also fills a methodological gap as it computes coefficients of mediation and controls for measurement bias and multicollinearity.

An analysis of the impact of clean and non-clean energy consumption on economic growth and carbon emission: evidence from PIMC countries.

This study empirically estimates the impact of clean and non-clean energy consumption on economic growth and carbon dioxide emissions within the framework of the environmental Kuznets curve and pollution haven hypothesis in the case of PIMC countries from 1980 to 2019. The results of the panel cointegration test proposed by Westerlund (2007) show a long-term equilibrium relationship among the variables of each designated model. The long-term elasticities of economic growth and carbon emission estimated by AMG, CCEMG, and MG estimators indicate that both clean and non-clean energy consumption has a significant impact on economic growth, while carbon emission hinders growth. The results also reveal that economic growth, non-clean energy consumption, and interaction between trade openness and non-clean energy consumption have a driving effect on carbon dioxide emission; however, clean energy consumption is found to reduce carbon emission. In addition, the analysis confirms the existence of the inverted U-shaped environmental Kuznets curve and pollution haven hypothesis in the panel of PIMC economies. Finally, there is a one-way causality from non-clean energy consumption to economic growth, but no such causation exists between clean energy consumption and economic growth. The objective of sustained economic growth with a safe environment may be achieved by encouraging clean energy consumption in the PIMC economies.

Investigating the existence of asymmetric environmental Kuznets curve and pollution haven hypothesis in China: Fresh evidence from QARDL and quantile Granger causality.

This study aims to analyze the asymmetric long-run relationship between economic growth (EG), foreign direct investment (FDI), and carbon emissions (CO2) within the context of the environmental Kuznets curve (EKC) and the pollution haven hypothesis (PHH) in China. Employing the quarterly data from 1982Q1 to 2018Q4, we have used novel techniques to meet the stated objectives of our study, named quantile ARDL and quantile Granger causality. The study provides novel outcomes using the advanced quantile ARDL and quantile Granger causality tests. The significant implication of this method is that it provides locational asymmetry. We find strong evidence of the EKC and PHH for China based on the empirical results of linear and nonlinear ARDL models. Similarly, findings of quantile Granger causality validate the bidirectional relationship among all variables in upper and lower quantiles. Moreover, the results of the Wald test confirm the asymmetric long-run relationship between FDI and carbon emissions (CO2). Thus, legal measures must be enhanced, accepted, rigorously imposed, and monitored in all provinces to assure a further reduction in carbon emissions. This study will be conducive for the policymakers to combat environmental contamination concerning economic growth and FDI inflow in China.

Renewable energy, economic globalization and foreign direct investment linkage for sustainable development in the E7 economies: revisiting the pollution haven hypothesis

AbstractThis present study is motivated by the United Nations Sustainable Development Goals (UN‐SDGs) that concerns pertinent issues that comprises environmental sustainability (SDG‐13), sustainable development (SGD‐8), and responsible consumption (SDG‐11), among others. To this end, this study examines the long‐run and causality linkage between renewable and non‐renewable energy, foreign direct investment, and economic globalisation in a carbon‐income framework by use of both carbon dioxide emission and ecological footprint as a determinant for environmental degradation for E7 countries. Furthermore, a series of panel econometrics panel tests in conjunction with quantile regression is used to explore the relationship between the outlined variables for annual frequency data from 1990 to 2016. Empirical results trace a long‐run equilibrium relationship among the highlighted variables as reported by Westerlund (2007). Additionally, this study gives credence and validates the pollution haven for the emerging (E7) countries examined, thus, implying the detrimental effect of foreign direct investment (FDI) on quality of environment in E7 economies. Interestingly, we observe that investment in renewable energy consumption will improve environmental quality. This outcome resonates with the advocacy of UN‐SDGs‐7, 11, 12, and 13, where emphasis is placed on responsible energy consumption (renewables), access to clean energy, and climate change mitigation. Conclusively, these revelations suggest the chase for adoption of low‐carbon development technologies and strategies in E7 countries.