Natural resource depletion and carbon inequality: An empirical insight from developed and developing countries

Abstract

Despite its profound implications for sustainable development, carbon inequality remains largely overlooked by many countries. It necessitates the development of targeted strategies to address its root causes and mitigate its impact. This study examines the effects of natural resource depletion on CI in both developed and developing countries from 1990 to 2020, using a newly developed carbon inequality (CI) index. The empirical study employs sophisticated econometric approaches, namely the cross-sectional autoregressive distributed lag and augmented mean group models. These models were specifically developed to address cross-sectional dependency and slope heterogeneity in the dataset. Our findings reveal a worrisome trend, indicating that CI is on the rise in both developed and developing countries due to the depletion of natural resources. Furthermore, fossil fuel energy consumption, globalization, and population growth are significant contributors to the escalation of CI. To shed further light on the causal relationships between variables, we employ the Dumitrescu and Hurlin (2012) causality test. Based on the outcomes, we propose developing robust public monitoring systems to assess individual carbon emissions as a crucial step in addressing this issue effectively. Moreover, our study highlights the imperative for a concerted global effort to transition towards sustainable resource management, reduce consumption levels, and ensure an equitable distribution of the benefits derived from natural resources. These recommendations hold the potential to alleviate the pressing challenge of CI, aligning countries with the objectives of sustainable development and environmental stewardship.