Does political risk drive environmental degradation in BRICS countries? Evidence from method of moments quantile regression

A different look at the environmental Kuznets curve from the perspective of environmental deterioration and economic policy uncertainty: evidence from fragile countries

Environmental degradation is one of the most significant issues that developing nations confront and needs to be resolved right away in order for them to achieve sustainable development. Government policies are crucial in this situation since emerging nations frequently struggle with the issue of policy ambiguity, which can result in environmental deterioration. In this context, this study investigates how policy uncertainty affects environmental degradation in the five fragile emerging economies known as the Fragile Five-Brazil, India, Indonesia, South Africa, and Turkey. Using data from 1996 to 2019, we estimate a Panel Quantile Regression analysis. The empirical findings indicate that economic policy uncertainty and technology innovation increases the environmental degradation whereas environmental degradation is slowed down by financial development and renewable energy consumption. Empirical evidence also confirms the presence of EKC hypothesis in fragile economies. Based on the findings, we suggest both a policy and an environmental framework for achieving sustainable development in fragile economies.

Examination of the factors contributing to environmental degradation: does LPG consumption still matter?

Liquefied petroleum gas (LPG) is one of the energy resources that deserve to be qualified as a transition fuel for developing countries that cannot abandon their dependence on non-renewable energy use and adopt renewable alternatives. The current study examines how environmental degradation is affected by financial development, LPG use, and economic growth in the BRICS-T countries (Brazil, Russia, India, China, South Africa, and Turkiye) in the period of 1993-2018. For this purpose, four models were tested with Pedroni, Kao, PMG Panel ARDL cointegration and Dumitrescu-Hurlin causality methods. The results show that LPG consumption has a positive effect on the ecological footprint and an adverse influence on the CO2 emission of BRICS - T countries. The financial institutions exhibited to have a positive and significant impact on ecology. Economic growth displayed negative effects on environmental degradation and a positive influence on CO2. Additionally, there is significant evidence for the validity of the EKC hypothesis. Unidirectional causality exists between ecological footprint, LPG, financial market, and economic growth. The financial institution index shows bidirectional causality with the ecological footprint. There is also unidirectional causality between ecological footprint, LPG, financial market, and economic growth. Furthermore, the financial institutions' index shows a bidirectional causality with the ecological footprint. Also, economic development and financial institution index have a bidirectional relationship with CO2 emissions. On the other hand, the financial market index showed unidirectional causality with CO2 emissions. In short, our study highlights the need for a comprehensive and integrated approach to sustainable development in BRICS - T countries. Policymakers must balance economic growth with environmental protection and consider the potential trade-offs between policy options to promote sustainable and inclusive development.

Asymmetric effect of economic policy uncertainty, political stability, energy consumption, and economic growth on CO2 emissions: evidence from G-7 countries

This study deals with the asymmetric effect of economic policy uncertainty and political stability on carbon dioxide (CO₂) emissions considering also energy consumption and economic growth. In this context, the study investigates G-7 countries, which make up an important part of the world economy. Also, the study uses yearly data between 1997 and 2021 as the most available intersection data for all countries included. Besides, this study applies a novel nonlinear approach as quantile-on-quantile regression (QQR) as the base model, and quantile regression (QR) is used for robustness. The empirical results present that (i) economic policy uncertainty has a decreasing effect on CO₂ emissions in Italy, Japan, and the United States of America (USA), whereas it has a mixed effect in Canada, France, Germany, and the United Kingdom (UK); (ii) political stability also has a mixed effect on CO₂ emissions; (iii) energy consumption has an accelerating effect on CO₂ emissions while the power of effect changes at quantiles; (iv) economic growth has generally an increasing effect on CO₂ emissions, whereas it has a decreasing effect at lower quantiles in Japan, at middle quantiles in France and Germany, and at higher quantiles in Italy; and (v) the QR results support the robustness of QQR findings. Thus, the empirical results highlight that G-7 countries should consider the asymmetric and quantile-based varying effects of the economic policy uncertainty, political stability, and economic growth to reach their carbon neutrality targets.

The impact of democracy and income on CO2 emissions in MINT countries: evidence from quantile regression model

This study analyses the relationship between democracy and environmental pollution in the MINT countries using a panel data spanning 1971-2016. It also investigates the interactive effect of income and democracy on CO2 emissions. We used various estimation techniques for the analysis, ranging from the quantile regression, OLS-fixed effect and GLS-random effect regressions with Driscoll-Kraay standard errors to control for cross-sectional dependence while a panel threshold regression is used for robustness check. The results showed existence of long-run relationship between CO2 emissions and the explanatory variables. The quantile regression results for interaction model indicate that economic growth, democracy and trade openness promote environmental pollution via their positive effects on CO2 emissions. Primary energy however reduces pollution across the lower and middle quantiles but enhances it in higher quantiles. The interaction effect is negative and statistically significant across all quantiles. This implies that democracy has a significant role in moderating the impact of income on CO2 emission in the MINT countries. It thus follows that if the MINT countries radically strengthen democracy and enhance income, it would be possible for them to achieve greater economic development and reduce CO2. In addition, a single threshold model is used to identify the asymmetry in response to CO2 emissions at lower and upper levels of democratic regimes. The results showed that once the degree of democracy is above the threshold level, an increase in income would reduce CO2 emissions but once it is below the threshold level, the effect of income becomes insignificant. Based on these results, the MINT countries need to strengthen democracy, enhance income level and relax trade barriers.

Analyzing the co-movement between CO2 emissions and disaggregated nonrenewable and renewable energy consumption in BRICS: evidence through the lens of wavelet coherence

This study investigates the time-frequency nexus of carbon dioxide (CO₂) emissions with economic growth, nonrenewable (i.e., coal, natural gas, and oil), and renewable (i.e., hydro and geothermal) energy consumption. In this context, BRICS countries (namely, Brazil, Russian Federation, India, China, and South Africa), which are leading emerging countries, are included, and quarterly data from 1990/Q1 to 2019/Q4 is used. The study employs the wavelet coherence (WC) approach to explore the co-movement between the variables at different frequencies. The empirical results show that (i) there is a strong and positive co-movement between CO₂ emission and economic growth; however, it is weak for Russia and South Africa in the medium and long-term; (ii) coal energy consumption is strongly and positively co-moved with CO₂ emission for all BRICS countries; (iii) natural gas energy consumption is strongly and positively co-moved with CO₂ emissions in Brazil, India, and China; however, it is weakly and positively co-moved in Russia and South Africa; (iv) oil energy consumption is strongly and positively co-moved with CO₂ emissions in Brazil, India, and China; however, it changes a bit for Russia and South Africa; (v) hydro energy consumption is weakly and positively co-moved with CO₂ emissions in general, whereas country-based results vary; (vi) geothermal energy consumption is also similar to hydro energy consumption. Thus, the WC results highlight the strong co-movement of economic growth and nonrenewable energy consumption with CO₂ emissions, whereas renewable energy consumption has a relatively lower co-movement. Based on the results, policy implications are also discussed for BRICS countries.

Asymmetric effect of political stability on production-based CO2 emissions in the UK: long-run evidence from nonlinear ARDL and frequency domain causality

The study deals with the effect of political stability on environmental degradation in the long run for the United Kingdom (UK). For this aim, the political stability effect on production-based carbon dioxide (CO₂) emissions is examined by considering trade openness, renewable energy, and economic growth and using quarterly data between 1995/Q1 and 2018/Q4. Nonlinear autoregressive distributed lag (NARDL), which allows the researcher to measure the asymmetric impact of explanatory indicators positively or negatively, is performed as the empirical approach. Also, Breitung & Candelon (BC) frequency domain causality test is applied to measure the causality effect of explanatory variables on CO₂ emissions. The results reveal that (i) political stability has a statistically significant effect on production-based CO₂ emissions and positive shocks have a higher power than negative shocks; (ii) economic growth has an increasing effect, whereas renewable energy has a decreasing effect on production-based CO₂ emissions; and (iii) there is frequency domain causality from political risk, economic growth, renewable energy consumption, and trade openness to production-based CO₂ emissions. Hence, empirical results highlight the asymmetric effect of political stability on environmental degradation in the long run for UK. Thus, UK policymakers should consider political stability in policy development and implementation process for limiting CO₂ emissions in the long run.

Impact of subsectors of agriculture and economic growth on CO2 emissions in Pakistan: evidence from Environmental Kuznets Curve

Modernization produces carbon dioxide (CO₂) emissions but is also able to achieve sustainable agriculture growth by introducing the concept of renewable energy into the agriculture sector, and through this process reduce the CO₂ emissions in the country. The main objective of this research is to check the environmental Kuznets curve hypothesis with CO₂ emissions and economic development in renewable energy and agriculture subsectors such as fisheries and crop production in Pakistan. This study covers the time period 1984 to 2020. We have applied the autoregressive distribution lag (ARDL) bound test. The results indicate the existence of long-term association among all variables in the model. The result of co-integration in the short run shows a negative relationship between CO₂ emissions and crop production in the current time period, and it shows a positive correlation with the first lag of CO₂ emission, which means that current crop production reduces the CO₂ emissions by 32% during a year, while in the lag period, it will increase in the short run. In the long run, a 1% increase in crop production will reduce the CO₂ emission by 86%. Renewable energy shows a negative relation with CO₂ emissions in the short run; a 1% increase in renewable energy will reduced the CO₂ by 0.017%. Our results support the existence of the EKC hypothesis for Pakistan. In light of the findings, it is suggested that policy makers should focus more on renewable energy to decrease the level of CO₂ as much as possible. Moreover, the government must provide subsidies for machines used for cropping and give special attention to subsectors such as livestock and fisheries.

Realizing the Sustainable Development Goals through technological innovation: juxtaposing the economic and environmental effects of financial development and energy use

The BRICS comprise of group of emerging market economies which are committed to achieving the Sustainable Development Goals agenda of the United Nations by the end of the year 2030. In this regard, it is critically important for these nations to sustain their annual rise in their economic growth rates while simultaneously declining the rate of discharge of carbon dioxide emissions. Against this backdrop, this study aims to investigate how financial development, greater primary energy consumption, and technological innovation affect the prospects of the BRICS nations in achieving economic and environmental sustainability. Considering the period from 1990 to 2020 and utilizing methods that are robust to working with cross-sectionally dependent, heterogeneous, and endogenous panel data, the key analytical findings derived in this study reveal that higher levels of financial development, primary energy consumption, and technological innovation boost the per capita economic growth rates of the BRICS nations. Besides, technological innovation also moderates the financial development-economic growth and the primary energy consumption-economic growth nexuses by jointly boosting economic growth rates with these two macroeconomic variables. On the other hand, financial development and higher primary energy consumption are seen to boost the annual per capita carbon dioxide emission growth in these emerging nations, while technological innovation is observed to do the opposite. Furthermore, technological innovation is witnessed to moderate the nexus between energy use and economic growth to further reduce the emission growth rate in the BRICS nations. Accordingly, a set of policies are recommended to the concerned governments in order to enable the BRICS nations to attain the Sustainable Development Goals agenda.

Asymmetric and long-run impact of political stability on consumption-based carbon dioxide emissions in Finland: Evidence from nonlinear and Fourier-based approaches

The study investigates the asymmetric and long-run impact of political stability on consumption-based carbon dioxide (CCO₂) emissions in Finland. In this context, the study examines the impact of political stability, economic growth, renewable energy consumption, and trade openness; includes quarterly data between 1990/Q1 and 2019/Q4, and applies nonlinear and Fourier-based approaches. The empirical outcomes reveal that (i) there is a long-run cointegration between CCO₂ emissions and political stability as well as other controlling variables; (ii) positive changes in political stability have statistically significant impacts on CCO₂ emissions, whereas negative shocks in political stability are not statistically significant. Also, positive shocks are more powerful than negative shocks; (iii) positive shocks in economic growth have significantly increasing impacts; (iv) positive and negative shocks in renewable energy have decreasing impacts on CCO₂ emissions, while positive shocks are more powerful; (v) positive (negative) shocks in trade openness have decreasing (increasing) impacts on CCO₂ emissions. Overall, the empirical results highlight the role of political stability on CCO₂ emissions. Thus, consideration of political stability by policymakers of Finland in the policy development and implementation processes is highly recommended to achieve a carbon-neutrality target by 2035.

Environmental regulations, political risk and consumption-based carbon emissions: Evidence from OECD economies

The staggering rise in global temperature and abrupt change of climate are the responses of nature alerting humanity to limit the emissions of hazardous gases and adopt environmentally-benign life style. The present study explores empirically whether any changes in environmental policy stringency (EPSI), political risk (PR), and the interaction term of EPSI*PR result in any alteration of consumption-based carbon emissions (CBCE) of the 24 advanced OECD economies over the period of 1990-2020. Prior to the empirical estimations, various diagnostic tests are employed. The empirical techniques include, panel cointegration check, Cross-sectional Augmented Autoregressive Distributed Lags (CS-ARDL), and Dumitrescu & Hurlin panel causality test. The findings confirm that imports, gross domestic product, and stringency of environment policies activate CBCE in short-run. Whereas, a unit improvement in political risk and its interaction with environmental policy stringency give rise to 0.231 MtCO₂ of CBCE in long run. Interestingly, the squared term of environmental policy stringency effectively tackles such emissions. Based on the findings, we conclude that the present environment related policies of OECD member states does not effectively limit CBCE. In order to achieve genuine emissions reduction goals, the selected nations should restructure their environment related policies by prioritizing increments in environmental policy stringency along with minimizing the risks involved in the political system.

Economic growth, technology, and CO2 emissions in BRICS: Investigating the non-linear impacts of economic complexity

Upgrading economic structures and producing less pollution-intensive goods are indispensable for achieving Sustainable Development Goals (SDGs) in BRICS (Brazil, Russia, India, China, and South Africa) that produce 41% of global CO₂ emissions. Economic complexity (ECC), which measures the sophistication of productivity and economic structure, has important environmental repercussions. Theoretically, the environmental impacts of economic complexity at higher levels and lower levels of complexity vary from each other. However, the majority of previous studies have overlooked these theoretical underpinnings while assessing the environmental repercussions of economic complexity. In addition, technological competencies are necessary to boost the economic complexity levels. Accordingly, this study uncovers the non-linear effects of economic complexity on CO₂ emissions including technology, population density, and economic growth in a STIRPAT model. To this end, the panel data from 1992 to 2018 is analyzed using the Continuously Updated Fully Modified method (CuP-FM) in the context of BRICS. The long-run results uncovered that CO₂ emissions intensify at a lower level of economic complexity. On the flip side, a higher level of economic complexity is beneficial in mitigating CO₂ in BRICS. Hence, the economic complexity and CO₂ connections follow an inverted U-shaped curve. The results also disclosed that expanding the level of technology lessens CO₂ and stimulates the quality of the environment. Further, population density and economic growth are evidenced to intensify CO₂. Moreover, economic complexity and technology Granger cause CO₂. Lastly, strategies are directed in the context of Sustainable Development Goals 9 and 13 to control CO₂ emissions by upgrading technology and products complexity.