The effect of natural resources extraction and public debt on environmental sustainability

PurposeThe rise in public debt and the increased extraction of natural resources in Ghana at a time that environmental degradation is escalating, especially with carbon dioxide emission, is worrying. This seems to cast doubt on the country's ability to meet the goals of the Paris agreement for climate change and ensuring sustainable development. Consequently, in this study, the effect of natural resources extraction and government debt on carbon dioxide emission is investigated.Design/methodology/approachThe Environmental Kuznets Curve (EKC) hypothesis was adopted for this study. The Fully Modified Ordinary Least Square Model was used for assessing the data. An annual data from 1971 to 2018 was used for the analysis.FindingsThe long-run results based on the Fully Modified Ordinary Least Square analysis reveal that natural resources extraction increases carbon dioxide emissions. Moreover, the joint effect of post-oil production in commercial quantities and natural resources rent increases carbon dioxide emission. Further, the findings document that the initial stage of government debt improves environmental quality up to a point, beyond which an increase in debt hurts the environment. On the environmental degrading effect of economic growth, the findings validate the Environmental Kuznets Curve hypothesis. It is also observed that urbanization degrades environmental quality.Practical implicationsThe study offers appropriate recommendations policymakers need to embrace towards the attainment of lower carbon emissions from the loans and natural resources rent to achieve environmental sustainability.Originality/valueThe effect of debt on carbon dioxide emission is assessed for the Ghanaian economy. It also contributes to studies on the natural resources-carbon emission nexus.

[1]  B. Gyamfi,et al.  Energy intensity among European Union countries: the role of renewable energy, income and trade , 2022, International Journal of Energy Sector Management.

[2]  Atif Jahanger,et al.  The Impact of Hydropower Energy in Malaysia Under the EKC Hypothesis: Evidence From Quantile ARDL Approach , 2022, SAGE Open.

[3]  A. Alola,et al.  Does it take international integration of natural resources to ascend the ladder of environmental quality in the newly industrialized countries? , 2022, Resources Policy.

[4]  Siying Yang,et al.  The impact of local government debt on urban environmental pollution and its mechanism: Evidence from China , 2022, PloS one.

[5]  Stephen Taiwo Onifade.  Retrospecting on resource abundance in leading oil-producing African countries: how valid is the environmental Kuznets curve (EKC) hypothesis in a sectoral composition framework? , 2022, Environmental Science and Pollution Research.

[6]  J. Nathwani,et al.  Environmental regulation, technology innovation, and low carbon development: Revisiting the EKC Hypothesis, Porter Hypothesis, and Jevons’ Paradox in China's iron & steel industry , 2022, Technological Forecasting and Social Change.

[7]  Tian Zhao,et al.  Drivers of CO2 Emissions: A Debt Perspective , 2022, International journal of environmental research and public health.

[8]  P. Kwakwa,et al.  The interrelationships among financial development, economic growth and environmental sustainability: evidence from Ghana , 2022, Environmental Science and Pollution Research.

[9]  M. Bruckner,et al.  Dietary change in high-income nations alone can lead to substantial double climate dividend , 2022, Nature Food.

[10]  S. Andersen,et al.  THE IMPORTANCE OF STOPPING ENVIRONMENTAL DUMPING IN GHANA: THE CASE OF INEFFICIENT NEW AND USED COOLING APPLIANCES WITH OBSOLETE REFRIGERANTS , 2022 .

[11]  A. Mostafaeipour,et al.  A new model for the use of renewable electricity to reduce carbon dioxide emissions , 2022 .

[12]  Yunpeng Sun,et al.  How do renewable energy and urbanization cause carbon emissions? Evidence from advanced panel estimation techniques , 2021, Renewable Energy.

[13]  F. Bekun,et al.  Pathway to environmental sustainability: Nexus between economic growth, energy consumption, CO2 emission, oil rent and total natural resources rent in Saudi Arabia , 2021, Resources Policy.

[14]  Bangzhu Zhu,et al.  The estimation of influencing factors for carbon emissions based on EKC hypothesis and STIRPAT model: Evidence from top 10 countries , 2021, Environment, Development and Sustainability.

[15]  Yutao Wang,et al.  Energy consumption, pollution haven hypothesis, and environmental Kuznets curve: Examining the environment–economy link in belt and road initiative countries , 2021, Energy.

[16]  S. Nathaniel,et al.  The relationship between external debt and ecological footprint in SANE countries: insights from Kónya panel causality approach , 2021, Environmental Science and Pollution Research.

[17]  Recep Ulucak,et al.  Mitigating energy production-based carbon dioxide emissions in Argentina: the roles of renewable energy and economic globalization , 2021, Environmental Science and Pollution Research.

[18]  B. Gyamfi.  Consumption-based carbon emission and foreign direct investment in oil-producing Sub-Sahara African countries: the role of natural resources and urbanization , 2021, Environmental Science and Pollution Research.

[19]  Adewale Andrew Alola,et al.  Does crude oil output aid economy boom or curse in Nigeria? An inference from “Dutch disease” , 2021, Management of Environmental Quality: An International Journal.

[20]  S. Nathaniel,et al.  Linking external debt and renewable energy to environmental sustainability in heavily indebted poor countries: new insights from advanced panel estimators , 2021, Environmental Science and Pollution Research.

[21]  P. Kwakwa,et al.  Natural resources and economic growth: Does political regime matter for Tunisia? , 2021 .

[22]  Husam Rjoub,et al.  Assessment of the role of trade and renewable energy consumption on consumption-based carbon emissions: evidence from the MINT economies , 2021, Environmental Science and Pollution Research.

[23]  Chinazaekpere Nwani,et al.  Breaking the carbon curse: The role of financial development in facilitating low‐carbon and sustainable development in Algeria , 2021, African Development Review.

[24]  Avik Sinha,et al.  The role of information and communication technology in encountering environmental degradation: Proposing an SDG framework for the BRICS countries , 2021, Technology in Society.

[25]  D. Fonchamnyo,et al.  Primal–dual approach to environmental Kuznets curve hypothesis: A demand and supply side analyses of environmental degradation , 2021, Environmental Science and Pollution Research.

[26]  H. Alhassan.  The effect of agricultural total factor productivity on environmental degradation in sub-Saharan Africa , 2021, Scientific African.

[27]  A. Hashemizadeh,et al.  Unpacking the role of public debt in renewable energy consumption: New insights from the emerging countries , 2021, Energy.

[28]  Eyup Dogan,et al.  How renewable energy consumption and natural resource abundance impact environmental degradation? New findings and policy implications from quantile approach , 2021 .

[29]  H. Friday,et al.  THE EFFECT OF EXTERNAL DEBT ON EMISSIONS: EVIDENCE FROM CHINA , 2020, International Journal of Energy Economics and Policy.

[30]  A. Alola,et al.  Crude oil production in the Persian Gulf amidst geopolitical risk, cost of damage and resources rents: Is there asymmetric inference? , 2020 .

[31]  K. Jermsittiparsert,et al.  The role of natural resources, globalization, and renewable energy in testing the EKC hypothesis in MINT countries: new evidence from Method of Moments Quantile Regression approach , 2020, Environmental Science and Pollution Research.

[32]  W. Yamaka,et al.  Does the Environmental Kuznets Curve Exist? An International Study , 2020, Sustainability.

[33]  Anwar Khan,et al.  Natural resources, tourism development, and energy-growth-CO2 emission nexus: A simultaneity modeling analysis of BRI countries , 2020 .

[34]  P. Kwakwa,et al.  The carbon dioxide emission effects of domestic credit and manufacturing indicators in South Africa , 2020 .

[35]  Danish,et al.  Nexus between carbon emission, financial development, and access to electricity: Incorporating the role of natural resources and population growth , 2020 .

[36]  Pornkul Suksod,et al.  THE IMPACT OF NATURAL RESOURCES, RENEWABLE ENERGY, ECONOMIC GROWTH ON CARBON DIOXIDE EMISSION IN MALAYSIA , 2020 .

[37]  F. Bekun,et al.  The path to achieving environmental sustainability in South Africa: the role of coal consumption, economic expansion, pollutant emission, and total natural resources rent , 2020, Environmental Science and Pollution Research.

[38]  P. Appiah-Konadu,et al.  Economic Expansion and Environmental Degradation in Ghana: A Sector Decomposition Analysis , 2020 .

[39]  M. Azam,et al.  Income heterogeneity and the Environmental Kuznets Curve hypothesis in Sub-Saharan African countries , 2020, GeoJournal.

[40]  E. F. Oteng-Abayie,et al.  Industrial growth and emissions of CO2 in Ghana: The role of financial development and fossil fuel consumption , 2019, Energy Reports.

[41]  Nasir Mahmood,et al.  Effect of natural resources, renewable energy and economic development on CO2 emissions in BRICS countries. , 2019, The Science of the total environment.

[42]  Jean-Louis Combes,et al.  Public debt versus Environmental debt: What are the relevant Tradeoffs? , 2019 .

[43]  Tijjani Musa Adamu,et al.  Analyzing the Impact of Energy, Export Variety, and FDI on Environmental Degradation in the Context of Environmental Kuznets Curve Hypothesis: A Case Study of India , 2019, Energies.

[44]  Samuel Asumadu Sarkodie,et al.  Toward a sustainable environment: Nexus between CO2 emissions, resource rent, renewable and nonrenewable energy in 16-EU countries. , 2019, The Science of the total environment.

[45]  P. Kwakwa,et al.  Effect of natural resources extraction on energy consumption and carbon dioxide emission in Ghana , 2020 .

[46]  P. Kwakwa,et al.  Environmental Kuznets curve hypothesis in a financial development and natural resource extraction context: evidence from Tunisia , 2018 .

[47]  John Rogan,et al.  Resource extraction and infrastructure threaten forest cover and community rights , 2018, Proceedings of the National Academy of Sciences.

[48]  P. Kwakwa,et al.  The Effect of Energy and Urbanisation on Carbon Dioxide Emissions: Evidence from Ghana , 2018, OPEC Energy Review.

[49]  D. Roubaud,et al.  Environmental degradation in France: The effects of FDI, financial development, and energy innovations , 2018, Energy Economics.

[50]  P. K. Adom,et al.  The long-run effects of economic, demographic, and political indices on actual and potential CO2 emissions. , 2018, Journal of environmental management.

[51]  E. Broni-Bediako,et al.  The Ghana Liquefied Petroleum Gas Promotion Programme: Opportunities, Challenges and the Way Forward , 2018 .

[52]  Ayse D. Celebi,et al.  Testing the role of external debt in environmental degradation: empirical evidence from Turkey , 2018, Environmental Science and Pollution Research.

[53]  Muhammad Shahbaz,et al.  How economic growth, renewable electricity and natural resources contribute to CO2 emissions? , 2018 .

[54]  P. K. Adom,et al.  Quality of institution and the FEG (forest, energy intensity, and globalization) -environment relationships in sub-Saharan Africa , 2017, Environmental Science and Pollution Research.

[55]  Solomon Aboagye.  Economic Expansion and Environmental Sustainability Nexus in Ghana , 2017 .

[56]  William Bekoe,et al.  An empirical examination of the Environmental Kuznets Curve hypothesis for carbon dioxide emissions in Ghana: an ARDL approach , 2016 .

[57]  P. K. Adom,et al.  Urbanization, regime type and durability, and environmental degradation in Ghana , 2016, Environmental Science and Pollution Research.

[58]  P. Kwakwa,et al.  Environmental degradation effect of agricultural and industrial growth in Ghana , 2015 .

[59]  Perry Sadorsky,et al.  The effect of urbanization on CO2 emissions in emerging economies , 2014 .

[60]  Eran Shor,et al.  Debt, Structural Adjustment, and Organic Water Pollution , 2008 .

[61]  A. A. Adimado,et al.  Incidents of cyanide spillage in Ghana , 2003 .

[62]  Richard J. Smith,et al.  Bounds testing approaches to the analysis of level relationships , 2001 .

[63]  T. Panayotou,et al.  Demystifying the environmental Kuznets curve: turning a black box into a policy tool , 1997, Environment and Development Economics.

[64]  J. Kahn,et al.  Third-world debt and tropical deforestation , 1995 .

[65]  G. Grossman,et al.  Economic Growth and the Environment , 1994 .

[66]  Mark W. Watson,et al.  A SIMPLE ESTIMATOR OF COINTEGRATING VECTORS IN HIGHER ORDER INTEGRATED SYSTEMS , 1993 .

[67]  Joon Y. Park.  Canonical Cointegrating Regressions , 1992 .

[68]  Peter C. B. Phillips,et al.  Statistical Inference in Instrumental Variables Regression with I(1) Processes , 1990 .

[69]  P. Phillips.  Testing for a Unit Root in Time Series Regression , 1988 .

[70]  W. Fuller,et al.  Distribution of the Estimators for Autoregressive Time Series with a Unit Root , 1979 .