Environmental Degradation, Economic Growth and Non-renewable Energy in Selected South Asian Countries: Trivariate Analysis From DCCE-MG Approach

Abstract

This study investigates and provides evidence on the impact of economic growth and non-renewable energy on environmental degradation. Using unbalanced panel data from 1990 to 2018 on five South Asian countries and engaging the dynamic common correlated effects-mean group (DCCE-MG) technique of Ditzen (2016, 2018), findings support the energy-led degradation hypothesis while the growth-led degradation hypothesis does not hold but both are supported from FMOLS and DOLS robustness checks. In order words, non-renewable energy and economic growth significantly drive environmental degradation. Country-level results are mixed with Nepal evidencing energy-led degradation, Pakistan shows growth-led degradation while India indicates growth-led sustainability. Supportively, the Dumitrescu-Hurlin (2012) non-Granger causality test establishes: (1) energy-led and growth-led degradation, (2) feedback causal relation between environmental degradation and non-renewable energy, and (3) unidirectional causality from growth to non-renewable energy i.e. “conservation” hypothesis. Policy implications are discussed.