Understanding the role of mineral resources and inflation in promoting sustainable development under the inflation reduction act

Jingwen Li, Dawei Wang and Meng Qin

Resources Policy, 2024, vol. 90, issue C

Abstract: The Inflation Reduction Act (IRA) is aimed at achieving significant reductions in greenhouse gas emissions, targeting a range of 31 %–44 % by 2030. As the utilization of natural resources (NTR) for economic activities can have environmental implications, assessing their impact within the context of the IRA and developing effective strategies is crucial. Interestingly, inflation (INF) can unintentionally contribute to reducing environmental pollution. Consequently, this study explores the contributions of NTR and INF in mitigating environmental pollution. The analysis also examines the presence of the Environmental Kuznets Curve (EKC), which investigates the relationship between economic development, environmental degradation, and subsequent improvement. Employing the DYARDL method, counterfactual shocks are assessed for each factor's impact on environmental pollution while keeping other variables constant. The results confirm the existence of the EKC curve, indicating that environmental degradation initially increases with NTR usage but diminishes as inflationary pressures decrease pollution levels. Overall, the findings emphasize the significance of properly implementing the IRA in achieving notable environmental improvements. Policymakers are recommended to focus on effective strategies that manage natural resource utilization while leveraging the potential benefits of inflation in reducing environmental pollution. These insights contribute to ongoing efforts in the United States to combat global warming, aligning with the goals outlined in the IRA.

Keywords: Inflation reduction act; Environment pollution; Mineral resources; Inflation; Environment kuznets curve; Dynamic ARDL (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:90:y:2024:i:c:s0301420724001247

DOI: 10.1016/j.resourpol.2024.104757

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