Dynamic interactive links among sustainable energy investment, air pollution, and sustainable development in regional China

Ahmad, Munir; Chandio, Abbas Ali; Solangi, Yasir Ahmed; Shah, Syed Ahsan Ali; Shahzad, Farrukh; Rehman, Abdul; Jabeen, Gul

doi:10.1007/s11356-020-10239-8

Research Article
Published: 25 August 2020

Dynamic interactive links among sustainable energy investment, air pollution, and sustainable development in regional China

Munir Ahmad¹,
Abbas Ali Chandio²,
Yasir Ahmed Solangi³,
Syed Ahsan Ali Shah³,
Farrukh Shahzad⁴,
Abdul Rehman⁵ &
Gul Jabeen⁶

Environmental Science and Pollution Research volume 28, pages 1502–1518 (2021)Cite this article

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Abstract

This research investigates the dynamic interactive associations among sustainable investment in the energy sector, air pollution, and sustainable development. To this end, it employs a “one-step” system-generalized method of moments (GMM) and “one-step” differential-GMM estimators, covering the period between 1996 and 2017. In this context, it utilizes the simultaneous equations of the dynamic panel data model for panel data of 27 Chinese provinces and municipalities. We have developed a new model of sustainable development, which incorporates sustainable investment in the energy sector and air pollution to offer a robust theoretical foundation for considering the underlying relations. The system-GMM estimator is used for the full data set; however, differential-GMM is utilized for the subsets of data, in order to tackle the small sample bias problem. The empirical outcomes provide several vital insights in that they yield mixed findings for the aggregated sample and subsets of data. For example, a two-way causal relationship occurs for all the panels, except the central part (medium development regions), between sustainable investment in the energy sector and sustainable development. Contrary to this, causality runs from air pollution to sustainable investment in the energy sector in a full data set and the central part (medium dev.). Nevertheless, the opposite is true in the case of the eastern part (most developed regions) of China. Still, the same relationship runs in either direction in the case of the western part (least developed regions). On the other way around, the feedback hypothesis of causality is confirmed, across all the samples, between air pollution and sustainable development. Hence, sustainable development and air pollution are overwhelmingly interdependent, in the country as well as the province and municipality level of the Chinese economy.

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Abbreviations

AO:: Aggregate output
HC:: Human capital
AP:: Air pollution
K:: Physical capital
SIE:: Sustainable investment in the energy sector
Pop:: Population
L:: Size of labor
INF:: Inflation rate
EC:: Energy consumption
FDI:: Foreign direct investment
TRO:: Trade openness
GDP:: Gross domestic product
GFCF:: Gross fixed capital formation
TP:: Total factor productivity
NBS:: National Bureau of Statistics
CNY:: Chinese Yuan (currency unit)
GMM:: Generalized method of moments
OLS:: Ordinary least squares
FMOL:: Fully modified OLS
DOLS:: Dynamic OLS
ECM:: Error correction model
VECM:: Vector-based ECM
ARDL:: Autoregressive distributed lag
“i”:: ith provincial and municipality unit
∆ :: Differential operation
“t”:: tth time
ln :: Natural logarithm
ψ, π , ϕ :: Elasticity coefficients
CV:: Coefficient of variation
C :: Vector of elasticities of independent variables
“g”:: Growth rate
Z :: Vector of independent variables
t − 1:: Lagged terms

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School of Economics, Zhejiang University, Hangzhou, 310058, China
Munir Ahmad
College of Economics, Sichuan Agricultural University Chengdu, Chengdu, China
Abbas Ali Chandio
School of Economics and Management, Nanjing University of Science and Technology, Nanjing, 210094, Jiangsu, China
Yasir Ahmed Solangi & Syed Ahsan Ali Shah
School of Economics and Management, Guangdong University of Petrochemical Technology, Guangdong, China
Farrukh Shahzad
College of Economics and Management, Henan Agricultural University, Zhengzhou, China
Abdul Rehman
School of Economics and Management, North China Electric Power University, Beijing, 102206, China
Gul Jabeen

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Munir Ahmad
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Abbas Ali Chandio
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Yasir Ahmed Solangi
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Syed Ahsan Ali Shah
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Farrukh Shahzad
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Abdul Rehman
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Gul Jabeen
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Ahmad, M., Chandio, A.A., Solangi, Y.A. et al. Dynamic interactive links among sustainable energy investment, air pollution, and sustainable development in regional China. Environ Sci Pollut Res 28, 1502–1518 (2021). https://doi.org/10.1007/s11356-020-10239-8

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Received: 19 June 2020
Accepted: 20 July 2020
Published: 25 August 2020
Issue Date: January 2021
DOI: https://doi.org/10.1007/s11356-020-10239-8

Keywords

Sustainable development
Air pollution
Sustainable investment in energy sector
Generalized method of moments
Disaggregated analysis