Do Environmental Stringency Policies and Human Development Reduce CO2 Emissions? Evidence from G7 and BRICS Economies

Abstract

This study explores the impact of environmental policies and human development on the CO₂ emissions for the period of 1995-2015 in the Group of Seven and BRICS economies in the long run through panel cointegration and causality tests. The causality analysis revealed a bilateral causality between environmental stringency policies and CO₂ emissions for Germany, Japan, the United Kingdom, and the United States of America, and a unilateral causality from CO₂ emissions to the environmental stringency policies for Canada, China, and France. On the other hand, the analysis showed a bilateral causality between human development and CO₂ emissions for Germany, Japan, the United Kingdom, and the United States of America, and unilateral causality from CO₂ emissions to human development in Brazil, Canada, China, and France. Furthermore, the cointegration analysis indicated that both environmental stringency policies and human development had a decreasing impact on the CO₂ emissions.

Keywords: CO2 emissions; environmental stringency policies; human development; panel cointegration and causality analyses.