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A system-GMM approach to examine the renewable energy consumption, agriculture and economic growth’s impact on CO2 emission in the SAARC region

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Abstract

This study aims to investigate the relationship between renewable energy consumption, agriculture, economic growth, and CO2 emission in the South Asian Association for Regional Cooperation (SAARC) countries. We used annual cross-sectional data from 2000 to 2017 and applied panel fixed effect regression and two-step system Generalized Method of Moments (GMM) estimator to check the robustness of the variables. Results of panel fixed regression indicate that the value of renewable energy consumption has a significant but negative effect, whereas economic growth shows substantial positive relation with carbon dioxide (CO2) emission, while no relationship exists between agriculture and CO2 under this method. However, agriculture and renewable energy consumption have a negative and considerable association in GMM estimation, and the impact of economic growth is positive and significant. The results imply that renewable energy consumption and agriculture with emission-free methods were essential drivers in lessen the CO2 emission, and regional cooperation may accelerate the progress to achieve ecological benefits and sustainable atmosphere in the SAARC countries. Furthermore, in the future, most of the regional states are planning to invest in non-renewable energy to impulse economic growth and to meet the necessary energy demands of growing population that will bring more CO2 in the environment.

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Notes

  1. International Panel on Climate Change (IPCC), UN Climate Action Summit, United Nations Framework Convention on Climate Change (UNFCCC), United Nations Environment Programe (UNEP).

  2. Under the Kyoto protocol agreement, it was decided that CO2 emission must be less than 8%.

  3. There are total eight-member countries of SAARC including Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.

  4. South Asian Association for Regional Cooperation.

  5. Bangladesh, India, Pakistan and Sri-Lanka.

  6. Canada, Japan, Spain, Switzerland, France, UK, Netherlands, USA and Sweden.

  7. Some countries don’t have up to date database (until 2019), therefore, we consider most recent available data from all countries.

Abbreviations

FDI:

Foreign direct investment

REC:

Renewable energy consumption

AVA:

Agriculture value added

AMOS:

Analysis of a moment structures

EU:

European Union

WB:

World Bank

SAARC:

South Asian Association for Regional Cooperation

IEA:

International energy agency

EPA:

Environmental protection agency

APIM:

Asia-Pacific integrated model

CGE:

Computable general equilibrium

SVAR:

Structural vector autoregressive approach

FMOLS:

Fully modified ordinary least squares

GMM:

Generalized method of moments

PMG:

Pooled mean group

VECM:

Vector error correction model

EKC:

Environment Kuznets curve

ARDL:

Autoregressive distributed lag

GC:

Granger causality

IAA:

Innovative accounting approach

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Funding

This study was funded by Heilongjiang Provincial Philosophy and Social Sciences Planning Office Project, the implementation mechanism of agricultural capacity cooperation between China and other countries under the initiative of “one belt and one road” (Grant No.: 18JLD310).

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  1. College of Economics and Management, Northeast Forestry University, No. 26, Hexing Road, Xiangfang District, Harbin, 150040, People’s Republic of China

    Snovia Naseem & Tong Guang Ji

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  1. Snovia Naseem
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  2. Tong Guang Ji
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Correspondence to Tong Guang Ji.

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Naseem, S., Guang Ji, T. A system-GMM approach to examine the renewable energy consumption, agriculture and economic growth’s impact on CO2 emission in the SAARC region. GeoJournal 86, 2021–2033 (2021). https://doi.org/10.1007/s10708-019-10136-9

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