The influence of energy consumption and economic growth on environmental degradation in BRICS countries: an application of the ARDL model and decoupling index

Naseem, Sobia; Mohsin, Muhammad; Zia-UR-Rehman, Muhammad; Baig, Sajjad Ahmad; Sarfraz, Muddassar

The influence of energy consumption and economic growth on environmental degradation in BRICS countries: an application of the ARDL model and decoupling index

2022

Naseem, Sobia | Mohsin, Muhammad | Zia-UR-Rehman, Muhammad | Baig, Sajjad Ahmad | Sarfraz, Muddassar

The multi-dimensional pollutions in the earth zone due to the degradation of the environmental levels have been emerging as an urgent issue in the developing economies. The BRICS group of countries holds a unique position in the emerging economies, playing a leading role in reinforcing political power globally and domestically. This study examines the annual time series over the period of 1971–2017 for Brazil, India, China, and South Africa, and 1990–2017 for Russia, to explore the relationship between environmental quality and economic growth in correspondence with the Environmental Kuznets Curve (EKC) hypothesis as well as the Decoupling Index (DI). The presence of an EKC strongly supports any of the individualistic environmental determinants effected in the long run by Autoregressive Distributed Lag (ARDL), building linkage with the approach of the co-integration and the DI, which brings about economic growth as well as CO₂ emission and environmental degradation simultaneously. A short-run relationship and presence of the EKC hypothesis are observed in Brazil, Russia, and India with 92%, while China’s (55%) and South Africa’s (79%) have a slower speed of adjustment to long-run equilibrium. This study concludes that economic expansion and environmental degradation are interrelated in the long run. Environment degradation (CO₂ emission) can be eradicated by continuous economic growth, management of energy demands and energy crises, implementation of environmentally sustainable policies, application of green technologies for the use of natural resources, and controllability of urban population growth with immediate and effective actions.

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