Moving towards a sustainable environment: do disaggregated energy consumption, natural resources, financial development and economic globalization really matter?

Abstract

ABSTRACT The quality of the environment has become one of the primary objectives of South Asian governments. The majority of South Asian nations are susceptible to the negative effects of climate change, so it is crucial to identify factors that can contribute to environmental sustainability in the region. As a result of globalization, South Asian economies have attracted the attention of developed economies due to their abundance of mineral resources. This study fills a gap in the body of literature by analyzing the impact of economic globalization, financial development, natural resource availability, and disaggregated energy consumption on the environmental sustainability of South Asian nations from 1990 to 2020, taking into account economic growth, trade openness, and urbanization. This study employs a cross-sectional autoregressive distributed lags (CS-ARDL) estimator for short-run and long-run estimation, which accounts for slope parameter variability and country-specific dependencies. The results show that 1% increase in natural resource abundance and economic globalization improve the environmental quality in South Asian nations by 1.987% and 0.158% respectively. Furthermore, increasing the amount of renewable energy in total energy consumption minimizes CO2 emissions by 0.295% for every 1% change in renewable energy consumption. By contrast, 1% change in trade openness, financial development, urbanization, non-renewable energy consumption, and economic growth have a negative impact on the environment by 0.178%, 0.182%, 1.131%, 0.352% and 0.854% respectively. There is a unidirectional connection between natural resources and economic globalization that creates trade openness. For sustainable development goals, this study delivers new practical evidence and policy suggestions.