With the growing concerns for environmental quality the reconciliation of economic progress with environmental sustainability has become a challenging imperative. In particular, the tension to strike a balance between the two has sparked the attention of researchers worldwide, with a focus on top-emitting nations. Towards this realm, our study aims to explore the link between the explanatory variables like economic growth, forest rents, oil price uncertainty and electricity generation from renewable sources and the response variables like carbon emission and ecological footprint (EF) for robust and comprehensive results.
Utilizing the framework of the environmental Kuznets curve (EKC), this study employed the analysis on the variables from 1992 to 2021 in the top-five carbon-emitting nations. To do so, this study employs dynamic common correlated effects to investigate the long run effects of these variables on carbon emission and EF. Besides, the Dumitrescu and Hurlin (2012) panel causality test is run to determine direction and magnitude of relationship between variables for policy making.
Empirical evidence reveals that (1) EKC is valid in China, India and Japan when carbon emission is employed as a dependent variable; (2) EKC is valid in China and India when EF is employed as the dependent variable; (3) forest rents are contributing to environmental quality in Russia and China when carbon emission is a dependent variable and contributing to environmental quality in India only when EF is the dependent variable; (4) electricity generation from renewable sources is not a significant contributor in mitigating carbon emission and EF and (5) oil price uncertainty is found to be mitigating both carbon emission and EF in all countries except China.
As for as the researchers are aware, this study is a first attempt to explore the role of forest rents and oil price uncertainty on environmental performance within the EKC framework for top-five carbon-emitting nations.
