Going Sustainable or Going Extinct: The Consequences of Clean Technologies, Green Finance, and Natural Resources on the Environment

Abstract

Although “green” and “clean” are key terms in sustainable environmental development, the literature on the relationship between green finance, clean environmental technology, and a sustainable environment is lacking. Furthermore, the exploitation of natural resources may provide a distinctive perspective on this interconnection, contributing to more promising policy ramifications for the future planet. Thus, this study examines the impact of sustainable environmental technologies, green finance, natural resource rents, and economic growth on environmental sustainability, proxied by the novel “Environmental Sustainability Index (ESI)”. This analysis utilizes data spanning from 2000 to 2021 for China, applying the cutting-edge “augmented autoregressive distributed lag (AARDL)” model. The findings indicate that sustainable environmental technologies do not effectively enhance long-term environmental sustainability, but rather provide a positive contribution to the environment in the short term. In addition, economic expansion and the exploitation of natural resources have adverse effects on environmental sustainability, both in the near term and over an extended period. Nevertheless, green finance has a significant role in promoting environmental sustainability in China. This study further reveals the causal relationship between the chosen variables. This study highlights the necessity of developing a comprehensive strategy aimed at enhancing environmental sustainability and green finance. This can be achieved by allocating funds towards the advancement of clean environmental technology and the extraction of eco-friendly natural resources.