Associating drivers of economic development with environmental degradation: Fresh evidence from Western Asia and North African region

Abstract This study quantifies the Environment Kuznets curve's validity against two different environment proxies, the ecological footprint and carbon emissions for selected seventeen Western Asia and North African countries over the period 1980 to 2017. The study employs the Interactive Fixed Effect (IFE) and Dynamic Common Correlated Effect (D-CCE) to quantify the long-run association among variables in a multiplicative framework. The empirical outcomes indicate that the inverted U-shaped hypothesis is not valid for carbon emission; however, it holds for ecological footprint. The results show that energy intensity and financial development are environment-friendly indicators. Likewise, biomass energy consumption exposes a negative and statistically significant influence on proxies of environmental degradation. Causality findings reveal bidirectional causal links between economic development and its square to emission, biomass energy consumption, and financial development; also, bidirectional causality has been observed from energy intensity to biomass energy in the first model. Moreover, for the second model, causality has been seen from biomass energy consumption, economic development, and its square to ecological footprint, keeping the same two-way relationship among explanatory variables as in the first model. Policymakers should focus on the policy options to increase energy efficiency to get a clean environment.