Environmental Taxation and Economic Growth: An Analysis on Panel Data ARDL Model, Applied to BRICS Countries
DOI:
https://doi.org/10.64229/mb4msh74Keywords:
Environmental Taxation, Economic Growth, CO2 Emissions, BRICS Countries, ARDL Model, Environmental Kuznets CurveAbstract
This study investigates the relationship between environmental taxation, economic growth, and CO2 emissions in BRICS countries (Brazil, Russia, India, China, and South Africa) from 1990 to 2021 using the Autoregressive Distributed Lag (ARDL) model. The findings reveal a significant long-term cointegrating relationship among the variables, indicating that economic growth is positively correlated with CO2 emissions, consistent with the Environmental Kuznets Curve (EKC) hypothesis. Specifically, while initial economic growth leads to increased emissions, a turning point is identified beyond which further growth may contribute to emissions reduction. The analysis also highlights the effectiveness of environmental taxation in mitigating CO2 emissions, suggesting that higher tax rates are associated with lower emissions. This underscores the importance of implementing robust fiscal policies to promote sustainable development. The study concludes with policy recommendations aimed at enhancing environmental sustainability while fostering economic growth in BRICS nations, emphasizing the need for a balanced approach that integrates economic and environmental objectives.
References
[1]Danish, R., & Ulucak, Z.S. (2020). How do environmental technologies affect green growth? Evidence from BRICS economies. Science of The Total Environment, 712, 136504. https://doi.org/10.1016/j.scitotenv.2020.136504
[2]Skeiryte, A., Krikstolaitis, R., & Liobikiene, G. (2022). The differences of climate change perception, responsibility, and climate-friendly behavior among generations and the main determinants of youth's climate-friendly actions in the EU. Journal of Environmental Management, 323, 116277. https://doi.org/10.1016/j.jenvman.2022.116277
[3]Tian, Y., & Feng, C. (2022). The internal-structural effects of different types of environmental regulations on China's green total-factor productivity. Energy Economics, 113, 106246. https://doi.org/10.1016/j.eneco.2022.106246
[4] Liu, B., & Ge, J. (2023). The optimal choice of environmental tax revenue usage : Incentives for cleaner production or end-of-pipe treatment ? Journal of Environmental Management, 329, 117106. https://doi.org/10.1016/j.jenvman.2023.117106
[5]Dinda, S. (2020). Environmental Kuznets Curve Hypothesis: A Survey. Ecological Economics, 49(4), 431-455. https://doi.org/10.1016/j.ecolecon.2020.02.029
[6]Liu, Y., & Lu, Y.Y. (2015). The economic impact of different carbon tax revenue recycling schemes in China : A model-based scenario analysis. Applied Energy, 141(1), 96–105. https://doi.org/10.1016/j.apenergy.2014.12.032.
[7]Zhu, X.H., Chen, Y., & Feng, C. (2018). Green total factor productivity of China’s mining and quarrying industry: A global data envelopment analysis. Resources Policy, 57, 1–9. https://doi.org/10.1016/j.resourpol.2018.01.006
[8]Li, X.Y., Yao, X.L., Guo, Z., & Li, J.Y. (2020). Employing the CGE model to analyze the impact of carbon tax revenue recycling schemes on employment in coal resource-based areas: Evidence from Shanxi. Science of The Total Environment, 720, 137192. https://doi.org/10.1016/j.scitotenv.2020.137192
[9]Timilsina, G., Pang, J., & Chang, Y.H. (2022). Economic impacts of meeting China’s NDC through carbon taxes with alternative schemes for recycling tax revenues. World Bank Policy Research Working Paper No. 10087. https://documents.worldbank.org/
[10]Weng, Z.X., Wu, Y.F., Li, B.H., & Gu, Y.F. (2021). Impact of differentiated industrial carbon taxes on China’s economy and environment. China Population, Resources and Environment, 31(3), 75–86. https://doi.org/10.12062/cpre.20201106
[11]Jia, Z.J., Lin, B.Q. (2020): Rethinking the choice of carbon tax and carbon trading in China ; Technol. Forecast. Soc. Change 159, 120187. https://doi.org/10.1016/j. techfore.2020.120187.
[12]Robert, N.S. (2019). Carbon Taxes vs. Cap and Trade: Theory and Practice. Harvard Kennedy School.
[13]Xu, W. (2021). Study on carbon tax under carbon peak, carbon neutralization target. Journal of Taxation Research, 8, 22–27. https://doi.org/10.19376/j.cnki.cn11-1011 (In Chinese)
[14]Sun, Y.Y., Mao, X.Q., Yin, X.N., Liu, G.Y., Zhang, J., & Zhao, Y.W. (2021). Optimizing carbon tax rates and revenue recycling schemes: Model development, and a case study for the Bohai Bay area, China. Journal of Cleaner Production, 296, 126519. https://doi.org/10.1016/j.jclepro.2021.126519
[15]Malerba, D., Gaentzsch, A., & Ward, H. (2021). Mitigating poverty : The patterns of multiple carbon tax and recycling regimes for Peru. Energy Policy, 149, 111961. https://doi.org/10.1016/j.enpol.2020.111961.
[16]Ojekemi, O.S., Rjoub, H., Awosusi, A.A., & Agyekum, E.B. (2022). Toward a sustainable environment and economic growth in BRICS economies : Do innovation and globalization matter ? Environmental Science and Pollution Research. https://doi.org/10.1007/s11356-022-19742-6.
[17]Adebayo, T.S., Ullah, S., Kartal, M.T., Ali, K., Pata, U.K., & Aga, M. (2023). Endorsing sustainable development in BRICS: The role of technological innovation, renewable energy consumption, and natural resources in limiting carbon emissions. Science of the Total Environment, 859, 160181. https://doi.org/10.1016/j.scitotenv.2022.160181
[18]Abbas, J., & Dogan, E. (2022). The impacts of organizational green culture and corporate social responsibility on employees' responsible behavior towards society. Environmental Science and Pollution Research, 29(40), 60024–60034. https://doi.org/10.1007/s11356-022-20072-w
[19]Jayanthakumaran, K., Verma, R., & Liu, Y. (2012). CO2 emissions, energy consumption, trade and income: A comparative analysis of China and India. Energy Policy, 42, 450–460. https://doi.org/10.1016/j.enpol.2011.12.010
[20]Bekun, F.V., Emir, F., & Sarkodie, S.A. (2012). Another look at the relationship between energy and income: A comparative analysis of China and India. Energy Policy, 42, 450–460. https://doi.org/10.1016/j.enpol.2011.12.010
[21]Kartal, M.T., Samour, A., & Kılıç Depren, S. (2023). Do nuclear energy and renewable energy surge environmental quality in the United States? New insights from novel bootstrap Fourier Granger causality in quantiles approach. Progress in Nuclear Energy, 155, 104509. https://doi.org/10.1016/j.pnucene.2022.104509
[22]Ekins, P., Summerton, P., Thoung, C., & Lee, D. (2011). A major environmental tax reform for the UK: Results for the economy, employment and the environment. Environmental & Resource Economics, 50(3), 447–474. https://doi.org/10.1007/s10640-011-9489-8.
[23]Shahzad, U. (2020). Environmental taxes, energy consumption, and environmental quality : Theoretical survey with policy implications. Environmental Science and Pollution Research, 27, 24848–24862. https://doi.org/10.1007/s11356-020-09051-4
[24]Fotio, H.K., Nchofoung, T.N., & Asongu, S.A. (2022). Financing renewable energy generation in SSA: Does financial integration matter? Renewable Energy, 201, 47–59. https://doi.org/10.1016/j.renene.2022.11.014
[25]Lin, B., & Li, X. (2011). The effect of carbon tax on per capita CO2 emissions. Energy Policy, 39(9), 5137–5146. https://doi.org/10.1016/j.enpol.2011.06.009
[26]Bashir, M., MA, B., Bilal et al. (2021). Analysis of environmental taxes publications: a bibliometric and systematic literature review. Environ Sci Pollut Res 28, 20700–20716 (2021). https://doi.org/10.1007/s11356-020-12123-X
[27]Ahmed, N., Sheikh, A.A., Hamid, Z., Senkus, P., Borda, R.C., Wysokin´ska-Senkus, A., & Glabiszewski, W. (2022). Exploring the causal relationship among green taxes, energy intensity, and energy consumption in Nordic countries : Dumitrescu and Hurlin causality approach. Energies, 15(14), 5199. https://doi.org/10.3390/en15145199
[28]Aldy, J.E., & Stavins, R.N. (2012). The promise and problems of pricing carbon: Theory and experience. Journal of Environment & Development, 21(2), 152-180. https://doi.org/10.1177/1070496512442508
[29]Dogan, B., Chu, L.K., Ghosh, S., Truong, H.H.D., & Balsalobre-Lorente, D. (2022). How environmental taxes and carbon emissions are related in the G7 economies ? Renewable Energy, 187, 645–656. https://doi.org/10.1016/j.renene.2022.01.102
[30]Shahzad, U., Radulescu, M., Rahim, S., Isik, C., Yousaf, Z., & Ionescu, S.A. (2021). Do environment-related policy instruments and technologies facilitate renewable energy generation? Exploring the contextual evidence from developed economies. Energies, 14(3), 690. https://doi.org/10.3390/en14030690
[31]Ulucak, R., Danish, & Kassouri, Y. (2020). An assessment of the environmental sustainability corridor: Investigating the non-linear effects of environmental taxation on CO2 emissions. Sustainable Development. https://doi.org/10.1002/sd.2057
[32]Chien, F., Ananzeh, M., Mirza, F., Bakar, A., Vu, H.M., & Ngo, T.Q. (2021). The effects of green growth, environmental-related tax, and eco-innovation towards carbon neutrality target in the US economy. Journal of Environmental Management, 299, 113633. https://doi.org/10.1016/j.jenvman.2021.113633
[33]Hu, H.S., Dong, W.H., & Zhou, Q. (2021). A comparative study on the environmental and economic effects of a resource tax and carbon tax in China: Analysis based on the computable general equilibrium model. Energy Policy, 156, 12460. https://doi.org/10.1016/j.enpol.2021.112460
[34]Alexeev, M., & Zakharov, N. (2022). Who profits from windfalls in oil tax revenue ? Inequality, protests, and the role of corruption. Journal of Economic Behavior & Organization, 197, 472–492. https://doi.org/10.1016/j.jebo.2022.01.013
[35]Abdelwahed, L. (2020). More oil, more or less taxes? New evidence on the impact of resource revenue on domestic tax revenue. Resources Policy, 68, 101747. https://doi.org/10.1016/j.resourpol.2020.101747
[36]Bourgain, A., & Zanaj, S. (2020). A tax competition approach to resource taxation in developing countries. Resources Policy, 65, 101519. https://doi.org/10.1016/j.resourpol.2019.101519
[37]Afonso, O. (2023). Fiscal and monetary effects on environmental quality, growth, and welfare. Research in Economics, 77, 202–219. https://doi.org/10.1016/j.rie.2023.04.002.
[38]Pesaran, M.H., & Smith, R. (1995). Estimating long-run relationships from dynamic heterogeneous panels. Journal of Econometrics, 68(1), 79-113. https://doi.org/10.1016/0304-4076(94)01644-F
[39]Pesaran, M.H., Shin, Y., & Smith, R.P. (1999). Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American Statistical Association, 94(446), 621-634. https://doi.org/10.1080/01621459.1999.10474156.
[40]Im, K.S., Pesaran, M.H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115(1), 53-74. https://doi.org/10.1016/S0304-4076(03)00092-7
[41]Levin, A., Lin, C.F., & Chu, C.S.J. (2002). Unit root tests in panel data : Asymptotic and finite-sample properties. Journal of Econometrics, 108(1), 1-24. https://doi.org/10.1016/S0304-4076(01)00098-7
[42]Pedroni, P. (2001). Purchasing power parity tests in cointegrated panels. The Review of Economics and Statistics, 83(4), 727-731. https://doi.org/10.1162/003465301753237803.
[43]Grossman, G. M., & Krueger, A. B. (1995). Economic growth and the environment. Quarterly Journal of Economics, 110(2), 353–377. https://doi.org/10.2307/2118443
[44]Omri, A., Daly, S., Rault, C., & Chaibi, A. (2015). Financial Development, Environmental Quality, Trade and Economic Growth: What Causes What in MENA Countries? Energy Economics, 48, 242-252. Organisation de coopération et de développement économiques (OCDE). (2023). Taxing Energy Use 2023: Country Notes. OECD Publishing. https://doi.org/10.1787/8eecfd1b-en
[45]Al-Mulali, U., Weng-Wai, C., Sheau-Ting, L., & Mohammed, A. H. (2016). Investigating the environmental Kuznets curve (EKC) hypothesis by utilizing the ecological footprint as an indicator of environmental degradation. Ecological Indicators, 48, 315–323. https://doi.org/10.1016/j.ecolind.2014.08.029
[46]Stern, D. I. (2017). The environmental Kuznets curve after 25 years. Journal of Bioeconomics, 19(1), 7–28. https://doi.org/10.1007/s10818-017-9243-1
[47]Rafaty, R. (2018). Perceptions of corruption, political distrust, and the weakening of climate policy. Global Environmental Politics, 18(3), 106–129. https://doi.org/10.1162/glep_a_00469
[48]Apergis, N., & Payne, J. E. (2010). The emissions, energy consumption, and growth nexus: Evidence from the Commonwealth of Independent States. Energy Policy, 38(1), 650-655. https://doi.org/10.1016/j.enpol.2009.08.029
[49]Nathaniel, S. P., Anyanwu, O., & Shah, M. I. (2021). Renewable energy, urbanization, and ecological footprint in the Middle East and North Africa region. Environmental Science and Pollution Research, 28, 28562–28573. https://doi.org/10.1007/s11356-021-12568-1
[50]Cole, M. A. (2004). Trade, the pollution haven hypothesis and the environmental Kuznets curve: Examining the linkages. Ecological Economics, 48(1), 71–81. https://doi.org/10.1016/j.ecolecon.2003.09.007
[51]Antweiler, W., Copeland, B. R., & Taylor, M. S. (2001). Is free trade good for the environment? American Economic Review, 91(4), 877–908. https://doi.org/10.1257/aer.91.4.877
[52]Van der Ploeg, F., & Poelhekke, S. (2017). The impact of natural resources: Survey of recent quantitative evidence. Journal of Development Studies, 53(2), 205–216. https://doi.org/10.1080/00220388.2016.1160069
[53]Zhang, Y., Wang, Z., & Wang, Q. (2023). Exploring the nonlinear impacts of renewable energy consumption and technological innovation on carbon emissions in G20 countries. Renewable Energy, 205, 231–243. https://doi.org/10.1016/j.renene.2023.01.105
[54]Wang, Q., Li, R., & Li, R. (2024). The dynamic relationship between economic growth, energy consumption, and carbon emissions: Evidence from BRICS countries. Energy Economics, 131, 106091. https://doi.org/10.1016/j.eneco.2024.106091
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Mohamed Riadh Cherif (Author)
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
