Relating fiscal decentralization and financial inclusion to environmental sustainability: Criticality of natural resources

This study deals with a novel perspective on how natural resource dependence (NRD) and natural resource abundance (NRA) moderate the effects of fiscal decentralization and financial inclusion on energy and carbon intensity. Our work develops on the Stochastic Impacts by Regression on Population, Affluence, and Technology framework, considering the selected seven Organization for Economic Co-operation and Development members as the investigative laboratory from 1995 through 2018. Employing a panel Method of Moments Quantile Regression with fixed effects, we find that fiscal decentralization is beneficial for environmental sustainability, especially across the countries with a higher level of energy and carbon intensity; however, enhanced financial inclusivity is detrimental to the environmental quality, with more visible effects in more energy-efficient economies. As per the direct effects, NRD and NRA mitigate energy and carbon efficiency, with more substantial contributions in less energy- and carbon-intensive countries. Concerning the indirect effects, NRD and NRA positively moderate the influence of fiscal decentralization and financial inclusion on energy and carbon intensities, displaying more substantial effects in more energy-efficient economies. Among other control variables, environmental innovation, renewable electricity, employment to population ratio, and economic progress enhance environmental sustainability. We suggest fiscal decentralization should be built on a more transparent and accountable subnational governmental setup to prevent rent-seeking and fragile environmental protection. We also recommend inclusive finance should enhance the access to and affordability of financial services to economic agents for green consumption and investment ventures to achieve environmental sustainability, among other Sustainable Development Goals.

Exploring the nature of EKC hypothesis in Asia's top emitters: role of human capital, renewable and non-renewable energy consumption

The present study uses both carbon dioxide emission and ecological footprints as proxies for environmental degradation to examine the environmental Kuznets curve hypothesis for the top three emitters from Asia, i.e., China, India, and Japan. To this end, the autoregressive distributed lag model for time series and panel estimation is used for a period spanning over 1980-2016. For carbon dioxide emission, China presents an inverted-U shape of the environmental Kuznets curve, while a U-shape relationship is found for India and Japan. Similarly, when the hypothesis is tested with the ecological footprint, Japan offers an inverted U-shape and U-shaped association is detected for China and India. The panel analysis indicates the existence of the environmental Kuznets curve with both proxies of environmental degradation. Besides, human capital and renewable energy promote environmental sustainability, while non-renewable energy use hinders environmental quality. The findings of this study suggest that in order to meet the combined goals of economic growth and environmental protection, the three economies, i.e., China, India, and Japan, should employ renewable energy-enabled technology.

An empirical assessment of electricity consumption and environmental degradation in the presence of economic complexities

To a large extent, the theories and concepts behind the effect of ecological footprint have been the paramount concern of the recent literature. Since the rising and falling of environmental degradation have been a continuous issue since the first phase of development, determinants such as economic complexity may play a critical role in achieving long-term sustainable development in the framework of environmental Kuznets curve (EKC) paradigm. Therefore, this research expands on the notion of an EKC paradigm for the world's top ten most complex economies by considering four variables, such as real GDP per capita, electricity consumption, trade openness, and a new putative factor of environmental obstacle, the economic complexity index (ECI). This is one of the first studies to look at the impact of ECI on the ecological footprint of a specific sample from 1998 to 2017. The findings demonstrate a continuous inverted U-shaped link between real GDP per capita, the square of real GDP per capita, and ecological footprint. The EKC hypothesis is found to be valid in the long term in the examined complex economies. The findings of the panel autoregressive distributed lag (ARDL) of the pooled mean group (PMG) and fully modified ordinary least squares (FMOLS) estimations demonstrate that in the long term, electric power usage contributed to the carbon footprints. Furthermore, the economic complexity index and trade openness increase environmental performance over time. To determine if there is causation between the variables, we employ the panel vector error correction model (VECM) framework. Particularly, the results show unidirectional causality running from electric power consumption to ecological footprint and bidirectional causal relationship between (1) economic growth and ecological footprint; (2) square of economic growth and ecological footprint; (3) economic complexity index and ecological footprint; and (4) trade openness and ecological footprint.

The anthropogenic consequences of energy consumption in the presence of uncertainties and complexities: evidence from World Bank income clusters

In environmental management, many studies have examined the energy consumption-emission nexus in detail. However, for the first time in the literature, this study considers how the Economic Complexity Index (ECI) and economic policy uncertainty (EPU) moderate the contribution of energy consumption to emissions for the four World Bank Income clusters. The system generalised methods of moments are applied to data for 109 countries from 1996 to 2016. Based on the main model (grouped clusters) estimations, the result revealed the existence of the environmental Kuznets curve (EKC) hypothesis. Also, an increase in air transport and consumption of energy releases more carbon emissions to the climate. Interestingly, ECI decreases carbon emission significantly while EPU does not have a significant impact. Moreover, the study revealed that ECI moderated the impact of other variables on emission, but EPU is not a significant moderator. Furthermore, a comparative analysis among the four incomes suggests that the EKC hypothesis holds only in the high-income clusters; ECI is a significant predictor of carbon emission in the four clusters, but it only decreases the emission in high-income clusters. This corroborates the debate on climate change and the productive capacity of high-income countries. Given the foregoing, several policy measures were recommended.

Does democracy improve environmental quality of GCC region? Analysis robust to cross-section dependence and slope heterogeneity

Since the developed world's economic prosperity has been heavily reliant on excessive fossil-based energy consumption, it has posed severe environmental quality challenges. This research attempts to revisit the relationship between income and anthropogenic emissions in the context of the environmental Kuznets curve (EKC) theory by considering electric power consumption, urbanization, and democratic accountability index in the Gulf Cooperation Council (GCC) region. It employs annual frequency panel data from 1990 through 2019 and three alternative advanced econometric estimation techniques. The main findings are as follows: Firstly, the EKC results for the whole sample strongly support the proposition of an inverse U-shaped connection between anthropogenic emissions and affluence in the long run. Secondly, the country-specific results confirm EKC only in Saudi Arabia and Bahrain, while the remaining countries demonstrate a U-shaped connection. Thirdly, the democratic accountability promoted anthropogenic emissions implying that it failed to contribute to environmental protection. It means that democratic setup in the GCC region performs poorly in accomplishing climate change mitigation and Sustainable Development Goals (SDGs). Fourthly, electric power consumption and urbanization impart positive and negative impacts on anthropogenic emission, respectively. These findings are found robust across the fully modified ordinary least square (FMOLS), bias-corrected LSDV (least squares dummy variable) (LSDV), and pooled mean group (PMG) estimators. Finally, Dumitrescu-Hurlin panel causality shows that (i) income and urbanization establish a two-way causality with the anthropogenic emissions. (ii) However, a unidirectional causal connection is revealed from electric power consumption and democratic accountability index to anthropogenic emissions. The findings suggest that the GCC region should prioritize environmental protection and SDGs across the political aims' recipe since it would direct the region on the path of climate change mitigation.

Environmental Kuznets curve in Southeastern Europe: the role of urbanization and energy consumption

This paper investigates the dynamic short-term and long-term relationships among real GDP per capita, energy consumption, urbanization, and carbon dioxide emissions within the framework of the environmental Kuznets curve (EKC) hypothesis for Southeastern Europe (SEE) from 1997 to 2014. The evidence highlights an inverted U-shaped nexus between real GDP per capita and carbon dioxide emissions (i.e., the EKC hypothesis is verified in the long-run in the sample as a whole). The short-run estimates provide evidence of inverted U-shaped EKC only for Greece and Moldova. Two-way causal relationship between urbanization and pollutant emission was also established in the short-run, as well as one-way causality flowing from real GDP per capita to pollutant emission. The coefficients with the real GDP per capita and energy consumption are negative and statistically significant in the long-term. These findings indicate the existence of an error correction mechanism that drives the observed variables back to their equilibrium. Moreover, the findings show that the consistent increase in energy consumption has not reduced environmental pressures.

Does economic prosperity lead to environmental sustainability in developing economies? Environmental Kuznets curve theory

Since developing countries experience economic and environmental sustainability challenges, it is desirable digging into the linkages between economic and environmental parameters. The purpose of this work is to evaluate the existence of the environmental Kuznets curve (EKC) theory (i.e., the inverse U-shape connection between real GDP per capita and per capita carbon dioxide emissions) in the sample of 11 developing countries. By using balanced annual panel data in the period between 1992 and 2014 and two alternative estimation techniques, we explored the potential inverted U-shaped linkage between carbon dioxide emissions and real GDP per capita in the sample of interest. For analysis purposes, Pedroni and Westerlund co-integration techniques are employed. Then, fully modified ordinary least squares, pooled mean group methods are applied for long-run parameter estimations. And, the Dumitrescu-Hurlin causality approach is employed for causal directions. Firstly, this work's findings provide the supportive evidence to the inverse U-shaped linkage in the long-run, indicating that an increase in real GDP per capita and electricity consumption tends to mitigate long-run carbon dioxide emissions in the developing countries, for the whole sample. Secondly, the country-specific findings suggested the presence of EKC theory for Brazil, China, India, Malaysia, the Russian Federation, Thailand, and Turkey. It implicated that these countries are on the path of attaining environmental sustainability in the long-run. However, Mexico, Philippines, Indonesia, and South Africa failed to lend credence to the EKC theory. It manifested that these countries need to design strategies directed to reduce carbon dioxide emissions from economic activity and electricity generation through efficiency improvement or promotion of renewables. Finally, bidirectional causal links are observed among all the variables of interest. The findings suggest that country-specific targeted action plans should be implemented to ensure the environmental sustainability in the developing world.