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Oil rents and greenhouse gas emissions: spatial analysis of Gulf Cooperation Council countries

Haider Mahmood () and Maham Furqan ()
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Haider Mahmood: Prince Sattam Bin Abdulaziz University
Maham Furqan: S&P Global Market Intelligence

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2021, vol. 23, issue 4, No 69, 6215-6233

Abstract: Abstract The dependence of oil production in the Gulf Cooperation Council (GCC) region may have environmental consequences. This research explores the nonlinear effects of oil rents and the economic growth of six GCC countries on their per capita CO2, CH4, N2O, and Greenhouse Gas (GHG) emissions, considering spatial linkages through 1980–2014. We apply fixed effects (FE) and corroborate the spatial dependency in all estimated pollution models. Spatial Durbin model (SDM) is utilized to estimate the direct and spillover effects. We find the inverted U-shaped relationship of economic growth with CO2, CH4, N2O and GHG emissions, and of oil rents with CH4 and GHG emissions. Monotonic positive effects of oil rents on CO2 emissions and U-shaped relationship between oil rents and N2O emissions are also found. Urbanization has positive effect on the CO2, CH4 and GHG emissions and has negative effect on N2O emissions. Financial market development (FMD) has negative effects on all types of investigated emissions. Foreign direct investment (FDI) has negative effects on CO2 and N2O emissions. Energy use has positive effects on CO2 and N2O emissions. Further, the neighboring spillover effects of economic growth, oil rents, urbanization, FDI, energy use and FMD are found statistically significant for some investigated emissions. Hence, oil rents, energy use, urbanization and economic growth are responsible for environmental degradation of home and neighboring countries in the GCC region, and we recommend implementing tighter laws to protect the environment.

Keywords: Greenhouse gas emissions; Oil rents; Economic growth; Spillovers (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10668-020-00869-w

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