Exploring the moderating role of financial development in environmental Kuznets curve for South Africa: fresh evidence from the novel dynamic ARDL simulations approach

Breitenbach

2023

Financ Innov

Self Cite

The argument over fiscal decentralization and carbon dioxide emission (CO2) reduction has received much attention. However, evidence to back this claim is limited. Economic theory predicts that fiscal decentralization affects environmental quality, but the specifics of this relationship are still up for debate. Some scholars noted that fiscal decentralization might lead to a race to the top, whereas others contended that it would result in a race to the bottom. In light of the current debates in environmental and development economics, this study aims to provide insight into how this relationship may function in South Africa from 1960 to 2020. In contrast to the existing research, the present study uses a novel dynamic autoregressive distributed lag simulation approach to assess the positive and negative changes in fiscal decentralization, scale effect, technique effect, technological innovation, foreign direct investment, energy consumption, industrial growth, and trade openness on CO2 emissions. The following are the main findings: (i) Fiscal decentralization had a CO2 emission reduction impact in the short and long run, highlighting the presence of the race to the top approach. (ii) Economic growth (as represented by the scale effect) eroded ecological integrity. However, its square (as expressed by technique effect) aided in strengthening ecological protection, validating the environmental Kuznets curve hypothesis. (iii) CO2 emissions were driven by energy utilization, trade openness, industrial value-added, and foreign direct investment, whereas technological innovation boosted ecological integrity. Findings suggest that further fiscal decentralization should be undertaken through further devolution of power to local entities, particularly regarding environmental policy issues, to maintain South Africa’s ecological sustainability. South Africa should also establish policies to improve environmental sustainability by strengthening a lower layer of government and clarifying responsibilities at the national and local levels to fulfill the energy-saving functions of fiscal expenditures.

Section: Methodsmentioning

confidence: 99%

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

Revisiting the nexus between fiscal decentralization and CO2 emissions in South Africa: fresh policy insights

Breitenbach

2023

Financ Innov

Self Cite

“…In order to help countries achieve their "nationally determined contribution" (NDC) goals while fostering sustainable growth and eliminating pollution, nations should ultimately receive detailed, balanced, and consolidated non-market initiatives that are planned and implemented effectively. Additionally, it has been documented in several recent case studies that the boost in economic growth leads to an increase in energy consumption, which leads to excessive reliance on fossil fuels and an increase in CO 2 emissions, which ultimately degrades environmental quality (Udeagha and Breitenbach, 2022). These studies have emphasized the significance of ecologically friendly inventions, renewable resources, energy efficiency, and economic growth, which is ecologically sustainable.…”

Section: Introductionmentioning

confidence: 99%

Can public–private partnership investment in energy (PPPI) mitigate CO2 emissions in South Africa? Fresh evidence from the novel dynamic ARDL simulations approach

Ngepah

2023

Front. Environ. Sci.

Self Cite

Global warming presents a worrisome condition that necessitates important actions across the planet. One promising strategy is encouraging investments through public–private partnership investment (PPPI) in green ventures. The Environmental Kuznets Curve (EKC) hypothesis framework is used in the current study to examine the relationship between the aforementioned factor and the level of carbon dioxide (CO2) emissions in South Africa between 1960 and 2020. Using the recently developed novel dynamic autoregressive distributed lag (ARDL) simulations framework, the results showed that (i) public–private partnership investment in energy contribute to deteriorating environmental quality; (ii) while the technique effect (TE) improves environmental quality, the scale effect (SE) largely contributes to escalating CO2 emissions, thus confirming that the EKC hypothesis holds; iii) energy consumption, foreign direct investment, trade openness, and industrial growth escalate CO2 emissions, but technological innovation reduces it; and iv) public–private partnership investment in energy, technological innovation, scale effect, technique effect, foreign direct investment, energy consumption, industrial growth, and trade openness Granger-cause CO2 emissions in the short, medium, and long run, showing that these variables are fundamental to determining environmental quality. Our empirical findings suggest that PPPIs should be accomplished in environmentally friendly sectors and industries, and South Africa’s government and policymakers should take further initiatives to ensure the implementation of policies that enable the change from non-renewable energy sources to renewable ones to promote efficiency in the production processes and curtail CO2 emissions in the country.

“…In any situation (economic, political, and financial), the risk is inversely correlated with the total risk point: the higher the point, the lower the risk; the lower the point, the higher the risk. Economic activities that provide possibilities and raise income levels increase with the development of economic growth (Udeagha & Breitenbach, 2023e). As a result of this expansion, economies use more energy to power their domestic industries during a period of transition.…”

Section: Introductionmentioning

confidence: 99%

Achieving green environment in Brazil, Russia, India, China, and South Africa economies: Do composite risk index, green innovation, and environmental policy stringency matter?

Sustainable Development

Muchapondwa

2023

Self Cite

The Paris Accord has brought the world's governments together to begin implementing plans for their individual economies to become carbon‐free. The goal of attaining low‐carbon growth is not, however, as simple as it would appear since the world economies, which are dependent on fossil fuels and are fast expanding, are concentrated on accelerating economic expansion at the price of worse environmental effects. In light of this, the study aims to investigate the combined effects of the composite risk index (CRI), green innovation (GINOV), and environmental policy stringency (EPS) on carbon dioxide (CO2) emissions in the context of Brazil, Russia, India, China, and South Africa (BRICS) countries while controlling for gross domestic product (GDP) and renewable energy research and development (RERD) over the period from 1960 to 2020. The research addresses the problems of cross‐sectional dependence and slope heterogeneity in the data set used for analysis by using the second‐generation cross‐sectionally augmented autoregressive distributed lags framework to evaluate long‐ and short‐run models. The corresponding findings show cointegrating relationships between the research variables. Additionally, the results of the regression demonstrate that EPS, GINOV, and RERD contribute to a long‐term decrease in CO2 emissions. CRI and GDP, however, increase CO2 emissions. It is suggested that environmental policies be tightened, GINOV and RERD expenditures be promoted, political stability and institutional quality be maintained, and clean economic growth strategies be adopted in order to help the BRICS countries reduce sectoral risks, create a sustainable environment, and decarbonize their respective economies.