Analyzing the impact of natural resources and rule of law on sustainable environment: A proposed policy framework for BRICS economies

Abstract

Industrialization is fueled by economic development, which raises the value of obtained natural resources. However, exploitation and excessive usage of natural resources in various sectors can have a negative impact on the environment. This paper examined the impact of Carbon dioxide emissions (CO₂), natural resource rents, rule of law, digitalization, and economic growth (GDP) in (Brazil, Russia, India, China, and South Africa) BRICS between 1990 and 2021. The empirical findings based on the Method of Moment Quantile Regression (MMQREG) confirm that GDP and natural resources have a negative association with CO₂ emissions, indicating that these two variables adversely affect carbon emissions in BRICS countries. Interestingly, the outcomes also reveal that digitalization and effective rule of law tackle the issue of CO₂ emissions effectively throughout all quantiles. Moreover, the robustness checks of Fully-Modified Ordinary Least Square (FMOLS), and Dynamic Ordinary Least Square (DOLS) confirm and support the outcomes of MMQREG. Based on the study findings, we propose that the current environmental policies of BRICS member countries do not efficiently tackle CO₂ emissions. To cope with carbon emissions and resource exploitation, the selected nations should restructure their natural resources-related policies for a sustainable environment by prioritizing the efficient utilization of natural resources and adopting clean and green energy for sustainable economic growth.