Towards Sustainability: Understanding Norway’s Ecological Footprint Through the Framework of the Environmental Kuznets Curve

Abstract

With rising concerns about environmental sustainability, examining the economic-environmental nexus is essential. This study investigates the relationship between economic growth (GDP), renewable energy consumption (RENC), urbanization (URB), and foreign direct investment (FDI) with Norway’s ecological footprint from 1990 to 2023. Guided by the Environmental Kuznets Curve (EKC) hypothesis, we aim to understand how these factors influence Norway’s environmental impact over time. Using an Autoregressive Distributed Lag (ARDL) model, the study captures both the short- and long-term effects of these variables on the ecological footprint, and model stability is confirmed through the Cumulative Sum of Squares (CUSUM) test. The findings reveal a U-shaped EKC pattern, where initial economic growth reduces the ecological footprint, but beyond a certain GDP threshold, environmental pressures increase. Renewable energy consumption is shown to lower the ecological footprint significantly, supporting Norway’s sustainability goals. Conversely, FDI is associated with increased environmental impact, potentially due to resource-intensive projects. These insights underscore the need for balanced policies that harmonize economic development with environmental preservation. Policymakers are encouraged to foster green FDI, prioritize renewable energy investments, and implement sustainable urban planning to maintain Norway’s trajectory toward ecological sustainability.