Effects of geopolitical risk on environmental sustainability and the moderating role of environmental policy stringency

This study investigates the impact of geopolitical risk (GPR) on consumption-based carbon (CCO2) emissions as well as the moderating role of environmental policy stringency (EPS) on the above relationship. Based on data collected from 27 countries from 1990 to 2020, the basic results from the sample of the study indicate that GPR accelerates CCO2 emissions. Quantile regression results reveal that the effect of GPR is more pronounced in countries with higher CCO2 emissions. Moreover, EPS weakens the escalating effect of GPR on CCO2 emissions. The robust test results validate the findings reported in the basic regression model. The heterogeneity test indicates that the impact of GPR on CCO2 emissions is greater in developing countries compared in developed countries. The study also proposes these policy implications based on the findings: (1) countries should ensure a stable political environment, establish a robust legal system and promote energy transition; and (2) the scope of environmental taxes should be expanded where different tax rates should be imposed in order to be useful in reducing CCO2 emissions.

Effects of macroprudential policies on ecological footprint: the moderating role of environmental policy stringency in the top 11 largest countries

This study investigates the impact of macroprudential policies on ecological footprint (EF) in the top 11 largest countries. This study uses country-level panel data from these countries, covering the period from 1992 to 2020. Findings indicate that macroprudential policies alleviates ecological footprint in the sample. Macroprudential policies primarily reduce the ecological footprint before medium quantile (50%) while the environmental benefits of the policies end in the later quantiles. Moreover, environmental policy stringency (EPS) amplifies the positive influence of macroprudential policies on environmental sustainability. Estimate results stay the same with basic regression results in the post-global financial crisis (GFC) period while the impact is positive in the pre-GFC period. Finally, other robust tests validate the findings reported in basic regression model. This study suggests that governments should customize various types of macroprudential policies while also considering environmental concerns. The achievement of a sustainable environment can be facilitated by the combined effects of macroprudential policies and EPS.

Environmental law, environmental policy stringency, and development of environmental technologies in China

China's fast industrialization and economic expansion has led to environmental degradation, prompting the government to implement a slew of environmental regulations and laws. This article examines how China's stringent environmental policies and legislation have impacted the development of environmental technology. The study's panel of Chinese companies confirmed that more stringent regulations really spurred innovation in green technology. This research lends credence to the premise that stricter environmental regulations are helpful in inspiring the development of cleaner technology that may help mitigate environmental issues. Research also shows that tighter environmental legislation increases environmental policy's effect on technological development. According to these results, environmental law may improve the efficiency of environmental policy by providing a hospitable framework for the application of technological innovation. The findings of this research have significant implications for Chinese policymakers committed to fostering sustainable development. The need of rigorous environmental rules to support comprehensive environmental policies that promote the development of greener technology is emphasized. The results shed even more light on how crucial it is to enforce environmental laws in order to ensure that environmental policies are effectively implemented. In essence, this study contributes to the expanding body of knowledge on the link between environmental policy and technical advancement by illuminating the potential for China's environmental policy and law to work together to encourage sustainable development. China's investment in green tech research and development may mitigate the environmental damage caused by its rapid economic growth.

How does environmental policy stringency influence green innovation for environmental managements?

In the struggle to limit global climate change and rising temperatures, the United Nations Climate Change Conference (COP27) was held in Egypt last November. Bringing together nations to recognize climate change as a global concern and to create new "building blocks" to enhance the implementation of the Paris Agreement through actions that can move the world toward a greener, and carbon free future. This study examines a panel of high-income economies from the Organization for Economic Cooperation and Development (OECD) to investigate the empirical linkage between Green Innovations (GI), Disaggregated trade (exports and imports), Environmental policy stringency (EPS), and Consumption-based carbon dioxide emissions from 1990 to 2020. We proceed with the panel cointegration check based on the results of the diagnostic tests. The method of moment quantile regressions (MMQR) is used to investigate the relationships between CCO₂ and various variables in different quantiles. The data show that GI, export, imports, and EPS are major contributors in explaining the substantial variance in CCO₂ emissions in the chosen panel. Specifically, severe environmental rules boost the benefits of green technologies through the use of environmentally friendly technology. Imports, on the other hand, have been determined to be harmful to environmental quality. As a result, member economies should reform their environmental policies to include consumption-based emissions objectives and discourage people' desire for carbon-intensive items from developing countries. This will eventually result in a decrease in consumption-based carbon emissions, assisting in the achievement of true emissions reduction goals and COP27 targets.

Does being stricter mean doing better? Different effects of environmental policy stringency on quality of life, green innovation, and international cooperation

Nowadays, when we are facing several strict regulations, the question arises - does higher strictness lead to the desired results? This study addresses the fact that less research attention has focused on the effects of environmental policy stringency (EPS) on perceived health expressing quality of life, and on green international cooperation. In addition, previous research has provided rather mixed results on the impact of EPS on green innovation. Therefore, we fill an interesting research gap and help better understand the relationship between market-based and non-market-based EPS, perceived health, green innovations, and green international cooperation in OECD (Organization for Economic Co-operation and Development) countries. Using three complementary databases provided by OECD, Eurostat, and the World Bank and the classical linear regression model, we confirm hypotheses that strong market-based EPS and green international cooperation have positive effects on perceived health. Surprisingly, contrary to the findings of prior research, we do not confirm the positive effects of market-based and non-market-based EPS on green international cooperation. This study contributes to the literature on the Porter hypothesis, technological collaborations in green technological development, and environmental innovation theory. In addition, this study provides several practical implications for policymakers across OECD countries.

Can green finance, green technologies, and environmental policy stringency leverage sustainability in China: evidence from quantile-ARDL estimation

Environmental sustainability is an umbrella approach depending on various climatic and economic policies. In doing so, the current study empirically evaluates the role of green finance, eco-innovation, and environmental policy stringency on the ecological footprint in China. To meet the objectives, the novel quantile autoregressive distributed lag (QARDL) approach was employed from 2000 to 2017. The outcomes reveal heterogeneous associations between the proposed variables. Manifestly, the QARDL estimation results demonstrate a positive impact between eco-innovation, green finance, and environmental policy stringency with the ecological footprints of China; however, the extent of the relationship is quantile dependent. The outcomes are further validated through the Wald test of parameter constancy. The bi-direction causality is observed among all variables at several quantiles. The current study offers policymakers helpful suggestions on enhancing the positive effects of environmentally supported innovation, green finance, and stringent environmental policies on the ecosystem.

Interrelationship among environmental policy stringency, financial globalization in OECD countries, and CO2 emission with the role of technological innovation and financial development

The study examines the nexus between financial globalization (FG), environmental policy stringency (EPS), financial development (FD), and technological innovation (INV) on CO2 emission with moderating effect of technological innovation on financial development and environmental degradation in 36 OECD countries with an updated dataset from the period of 1990 to 2020 using PMG (Pooled mean group) panel ARDL method. The results of stationarity tests; (Levin, Lin, and Chu test; ADF Fisher test) demonstrate that selected variables are stationary at level I(0) and first difference I(I); this confirms that PMG estimator can be employed. Cointegration tests indicate that cointegration exist among the variables. The empirical findings of the PMG estimator indicate that financial globalization and CO2 are negatively associated with each other. While financial development, environmental policy stringency, and technological innovation have positive impact on environmental degradation in OECD countries. Furthermore, technological innovation strengthens the association between financial development (FD) and environmental degradation (CO2 emission). In order to accelerate economic growth, the study recommends that policymakers should implement environmental policies to achieve low-carbon mechanisms, such as green infrastructure and renewable energy systems, which reduce energy consumption and greenhouse gas emissions. Therefore, it is crucial that the selected OECD countries should develop programs that increase awareness of the risks of carbon emissions.

Asymmetric effects of economic policy uncertainty and environmental policy stringency on environmental quality: evidence from China and the United States

The importance of economic policy uncertainty (EPU) and environmental policy stringency (EPS) in affecting environmental quality is gaining great attention in the literature. However, none of the existing studies has thought to investigate their combined effects on carbon dioxide (CO₂) emissions. Additionally, the individual investigations into the nexuses EPU-emissions and EPS-emissions primarily took a symmetric assumption between these variables into consideration. The current paper is an early attempt to close these gaps by examining the combined effects of economic policy uncertainty and environmental policy stringency on CO₂ emissions within asymmetric (nonlinear) frameworks in China and the United States (US). The empirical findings indicate that an improvement in EPU degrades the environmental quality in both countries. However, a negative shift in EPU decreases emissions in China while increasing them in the US. In terms of EPS, the estimates in the two nations led to similar results. A positive change in EPS is conducive to fewer emissions, whereas a negative change worsens environmental damage. These findings still hold with the sensitivity analysis using ecological footprint as an alternative gauge of environmental destruction. This study, therefore, suggests that both nations adopt stricter environmental policies. Additionally, Chinese policymakers should work to lessen uncertainty shocks, while the US government should promote more transparent economic policies.

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.

Heterogeneous effect of GHG emissions and fossil energy on well-being and income in emerging economies: a critical appraisal of the role of environmental stringency and green energy

The new Agenda 2030 for sustainable development call for initiatives to bridge the gap between environmental protection and socio-economic development. To provide insight on the relationship between socio-economics, and ecology, the current study examines the effectiveness of environmental stringency and green energy to mitigate the effects of fossil energy and greenhouse gas emissions on human well-being and income for 12 emerging economies. The outcomes from dynamic heterogeneous panel estimators of cross-sectional-based auto regressive distributed lag and cross-sectional-augmented distributed lag indicate that: (i) green energy consumption and electricity consumption have a substantial positive effect on well-being and per capita income. (ii) The stringent environmental policy is found to decrease per capita income, but it increases well-being, while the square of environmental stringency is found to increase per capita income. (iii) Fossil energy consumption and greenhouse gas emissions have a negative effect on well-being but a positive impact on income. The outcome of U-test confirmed the presence of a U-shaped curve with a turning point (0.433) between per capita income and environmental policy stringency. This study yielded consistent results from the panel Granger causality test. Based on our findings, we may argue that it is necessary to prioritize human well-being over economic growth, and suggest several policy implications to achieve sustainable development goals.

Analyzing the role of environmental technologies and environmental policy stringency on green growth in China

This study aims to investigate the impact of environmental technological innovations and environmental policy stringency on green economic growth in China. The empirical analysis of the study is based on the ARDL model. Findings confirm that environmental technology positively impacts green economic growth in the short and long run. In the robust model, the estimates of all technologies appeared to be significantly positive in the short and long run. Conversely, the estimated coefficients of environmental policy stringency, in the basic and robust model, have only negatively impacted the green economic growth in China in the short run. In the long run, the environmental policy stringency has not shown any significant impact on green economic growth in China in the basic and robust model. China needs to increase environmental technology and environmental policy stringency for achieving green growth and sustainability targets.

Re-evaluating the dynamic role of shadow economy and environmental policy stringency in the energy-growth nexus in China

This paper examines the impact of shadow economy and environmental policy stringency on energy consumption and economic growth in the case of China for the period 1993 to 2019. Asymmetric ARDL empirical findings show that positive shocks in shadow economy and environmental policy stringency have a significant and positive impact on energy consumption and economic growth in the long run. However, the negative shocks in shadow economy exert positive and significant impacts on energy consumption and economic growth in the long run, but magnitudes are small compared to positive shocks. The long-run findings report no significant effect of negative shock in environmental policy stringency on energy consumption and economic growth. China should use environmental policy stringency as economic tools to maintain green economic growth and clean energy demand for sustained economic expansion. Policymakers should focus on the inclusion of environmental policy stringency in any future environment strategy.

Failure to control economic sectoral inefficiencies through policy stringency disrupts environmental performance

The developmental agenda of emerging countries often depends heavily on natural resource exploitation - a situation that hampers environmental performance. Hence, maximizing economic sectoral yield while reducing overdependence on fossil fuels and resources is essential to reducing wastage. Here, we assess the economic sectoral impact on emissions while controlling for foreign direct investment and energy utilization from 1990 to 2018. Besides, we investigate the role of environmental policy stringency in ameliorating environmental performance in a carbonized and energy-intensive economy where fossil fuels outweigh renewables. Agrarian, industrial, and energy sector dynamics are found to offshoot CO₂ emissions by 0.12%, 0.14%, and 0.20% whereas service sector productivity declines CO₂ emissions by 0.34%. We observe fossil fuel dominated energy portfolio with limited clean and renewable energy diversification that hinders long-term environmental performance. The validation of the pollution halo hypothesis implies that FDI inflows are possibly embedded with green and abatement technologies that reduce emissions while improving environmental performance. Thus, a comprehensive masterplan on climate change mitigation will comprise sectoral-specific resource investment that maximizes productivity while reducing natural resource exploitation, energy, and carbon-intensity.

Do environmental taxes and environmental stringency policies reduce CO2 emissions? Evidence from 7 emerging economies

Environmental tax and environmental policy stringency are becoming central policy instruments for combating environmental degradation but there is a lack of studies that assess their combined effectiveness in mitigating emissions especially for emerging economies. We address this important gap by assessing the effectiveness of these two policy instruments in reducing CO2 emission in a panel of 7 emerging economies for the period 1994-2015. We believe that this is the first attempt to apply these two important policy instruments in the same framework for testing their effectiveness in reducing CO2 emissions in these 7 emerging economies. We apply heterogeneous panel data considering cross-sectional dependence and slope heterogeneity tests by using the Augmented Mean Group (AMG) which is efficient and unbiased and produces consistent estimates. We found an inverted U-shaped relationship between CO2 emissions and environmental policy stringency suggesting that it takes time for environmental policy stringency to be effective. We also found unidirectional causality running from environmental policy stringency to CO2 emission. CO2 emission was negatively and significantly related to total environmental tax with causality running from total environmental tax to CO2 emission thus supporting the "green dividend" hypothesis of improving environmental quality. In contrast, CO2 emission and energy taxes were not causality related but CO2 emission was negatively and significantly related to energy taxes. Robustness checks using the FMOLS also show that both environmental policy stringency and environmental taxes can be effective in mitigating CO2 emissions.

A predictive analysis of CO2 emissions, environmental policy stringency, and economic growth in China

This study takes environmental policy stringency and economic activity as the controlling variables and forecasts the CO₂ emissions in China up to 2022. In doing so, an application of corrected grey model with convolution is used over the annual time series data between 1990 and 2012. The simulation results show that (1) between 2012 and 2022, CO₂ emissions in China is expected to increase at an average rate of 17.46% annually, raising the emissions intensity from 7.04 in 2012 to 25.461 metric tons per capita by 2022; (2) stringent environmental policies reduce CO₂ emissions-whereas, GDP tends to increase the emissions intensity in China; (3) stringent environmental policies are found to have a negative impact on GDP in China. Based on the empirical findings, the study also provides some policy suggestions to reduce emissions intensity in China.