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Does environmental policy stringency improve nature’s health in BRICS economies? Implications for sustainable development

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Abstract

In our groundbreaking exploration, we meticulously delve into the relationship between environmental policy stringency, international trade dynamics, and financial openness within the BRICS group (Brazil, Russia, India, China, and South Africa) spanning from 1996 to 2021. With a focus on critical variables such as economic growth and technological innovation, our empirical findings challenge conventional wisdom. Surprisingly, we found that those stringent environmental policies, when standing alone, do not invariably lead to reduce CO2 emissions. Equally interesting is our startling discovery that the anticipated moderating influence of environmental policy stringency, catalyzed by trade and foreign direct investment, on the well-being of our environment does not materialize; contrarily, both trade and foreign direct investment moderating channels exhibit unanticipated positive correlations with CO2 emissions. These revelations provoke us with the presence of a “pollution haven” phenomenon within the BRICS economies. Furthermore, our investigation reveals that, when examined individually, trade and foreign direct investment also appear to contribute to elevated emission levels. These findings provide a resolute solution to our research quandary, underlining the indispensable requirement for cutting-edge and robust environmental policies. These policies must possess the prowess to effectively counteract the adverse environmental consequences stemming from the amalgamation of global trade and financial integration. In doing so, they shall propel BRICS nations toward a future firmly grounded in principles of sustainability and ecological integrity.

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Data availability

The data and materials used in this study can be made available by the corresponding author upon reasonable request.

Notes

  1. Russia’s Environmental Policy: The Impact of the Oil and Gas Sector, The Oxford Institute for Energy Studies, 2014.

  2. Brazil’s Amazon Deforestation Surges to 12-Year High, The Guardian, 2020.

  3. https://sdg.iisd.org/news/brics-environment-ministers-discuss-green-economy-climate-change/

  4. All the independent variables except EP span up to 2021; therefore, we have extended all the variables till 2021.

  5. We express our gratitude to the esteemed reviewer for providing valuable input. The reviewer recommended the exclusion of outlier years, specifically 2020 and 2021, to enhance the robustness of the long-run tests. Intriguingly, our analysis also pinpointed the years 2020 and 1997 as critical structural breaks in the context of trade, foreign direct investment (FDI), economic growth, and the environmental policy stringency index. In response to this insight, we have duly removed the years 2020 and 2021 as well as conducted a thorough examination of the long-run analysis using Driscoll and Kraay’s (1998) standard error approach, and the result is tabulated in Table A2. Notably, the robust results remained consistent with the original findings reported in Tables 7 and 8, reaffirming the absence of any significant impact associated with these structural breaks. This underscores the stability and reliability of our research outcomes in the face of potential outlier years.

  6. This is supported by the formerly renowned Porter Hypothesis, which supports view that a stringent policy enhances environmentally friendly technology and thus a positive impact on the environment (Porter and Van der Linde 1995).

  7. This is similar to the study of Ulucak (2020) where innovative technology is considered as the standard for producing and consuming fossil fuels that are non-renewable and emit environmentally unfriendly gases into the atmosphere.

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Authors and Affiliations

  1. Department of Humanities and Social Sciences, Indian Institute of Technology Kharagpur, Kharagpur, West Bengal, India

    Mantu Kumar Mahalik & Shreya Pal

  2. School of Business and Management, Christ University (Deemed to be University), 560029, Bengaluru, India

    Shreya Pal

  3. VinFuture Foundation, Hanoi, Vietnam

    Thai-Ha Le

  4. IPAG Business School, Paris, France

    Thai-Ha Le

  5. School of Rural Management, XIM University, Bhubaneswar, India

    Sagarika Mishra

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  1. Mantu Kumar Mahalik
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Contributions

Mantu Kumar Mahalik: provided supervision; contributed to conceptualization; and wrote and edited the original draft. Shreya Pal: collected data; performed formal analysis and investigation; and wrote the original draft. Thai-Ha Le (corresponding author): wrote and edited the original draft. Sagarika Mishra: conducted literature survey and reviewed the original draft.

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Appendix 

Appendix 

Table 10 Summary statistics and pairwise correlation
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Table 11

Table 11 Regression results with Driscoll-Kraay standard errors (DKSEs)
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Mahalik, M.K., Pal, S., Le, TH. et al. Does environmental policy stringency improve nature’s health in BRICS economies? Implications for sustainable development. Environ Sci Pollut Res 31, 509–528 (2024). https://doi.org/10.1007/s11356-023-31134-y

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