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Assessing environmental quality through natural resources, energy resources,

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DOI: 10.1007/s11356-022-22005-z

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https://doi.org/10.1007/s11356-022-22005-z

RESEARCH ARTICLE

Assessing environmental quality through natural resources, energy

resources, and tax revenues
Yanyan Zhang1 · Irfan Khan2 · Muhammad Wasif Zafar3 

Received: 2 April 2022 / Accepted: 10 July 2022

© The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2022

Abstract
Developing countries have depleted their natural resources in economic interest to achieve high economic growth. Current
urbanization patterns and energy consumption and natural resource extraction are largely unsustainable. In this background,
this paper investigates the impact of natural resources rent, energy resources consumption, and tax revenue on carbon emis-
sions for developing countries. The study employed data for 48 developing countries from 1990 to 2020. We used second-
generation methods for empirical analysis that control heterogeneity and cross-sectional dependence in the data. The advanced
panel data estimates of CS-ARDL provide reliable outcomes by addressing these panel data econometric issues. The study
results revealed that natural resources or natural resources rent in their exploitation accelerates carbon emission. Similarly,
energy resources excessive consumption and economic growth are highly carbon-intensive for these countries and lead to
environmental degradation. In contrast, tax revenue and education stabilized the environmental quality of the study interest.
Besides this, to analyze the directional association among variables, the study applied DH causality test, which indicates
a bidirectional link between tax revenues and emissions, energy resources and emissions, and income and C ­ O2 emissions.
Based on the finding, the study suggests some policy implications to limit the extraction of natural resources and abate carbon
emissions by establishing appropriate strategies and imposing environmental charges.

Keywords  Environmental quality · Natural resources depletion · Tax revenues · Energy resources · Education

Introduction warm the climate, leading to many other changes worldwide

in the atmosphere (Godil et al. 2021). Carbon dioxide emis-
Greenhouse gases from human activities are the most sig- sions are the main drivers of climate change by strengthen-
nificant driver of observed climate change since the mid- ing the greenhouse effect (Zhang et al. 2021). Most carbon
twentieth century. As greenhouse gas emissions from human dioxide is from burning fossil fuels, coal, oil, and natural
activities increase, they build up in the atmosphere and gas. Emission caused by humans has increased atmospheric
carbon by 50% over the industrial level. According to Ali
et al. (2021), electricity generation and transport are major
Responsible Editor: Philippe Garrigues
emitters. However, deforestation and other land-use changes
* Muhammad Wasif Zafar also emit carbon dioxide. Among many causes of carbon
wasif.zafar6@yahoo.com dioxide emission, depletion of natural resources increases
Yanyan Zhang carbon dioxide emission. Many countries worldwide have
zyy123@wut.edu.cn taken a lot of policies and measures to reduce carbon emis-
Irfan Khan sions, including emission trading system reforms, emission
Khan.Irfan4032@yahoo.com; Irfan.Khan@bit.edu.cn standards, tax systems, carbon tax, and an energy tax. Levy-
ing carbon tax has been considered the most effective and
1
Business School, Wuchang University of Technology, direct way of reducing carbon dioxide emissions (Khastar
Wuhan 430223, China
et al. 2020).
2
School of Management and Economics, Beijing Institute It has also been argued that developing countries are
of Technology, Beijing 100081, China
experiencing inefficient usage of electricity and using poor
3
Riphah School of Business and Management, Riphah agricultural practices that are non-sustainable in terms of
International University, Lahore, Pakistan

13
Vol.:(0123456789)

future resource management (Loganathan et  al. 2014).
Developing countries are part of global areas full of high
carbon emissions with high natural resource depletion.
Today, resource depletion in developing countries is three
times higher than in the late 1990s (Mittal and Gupta 2015).
This is because the population in many developing coun-
tries has doubled, and many individuals are using natural
resources to promote their social and economic needs. How-
ever, this comes with environmental costs that should be
controlled (Hussain et al. 2020). Eighty percent of the bio-
diversity loss in developing countries is associated with the
energy and agricultural sector, especially issues associated
with deforestation, poor agricultural practices, and pollution
of the environment. With heavy tax revenue, natural resource
depletion has led to many global environmental challenges
(Hassan et al. 2021). The primary objective of this study is
to examine the impact of depletion of natural resources and
tax revenue on carbon emissions in developing countries
around the world based on the background information pro-
vided above.
This study addresses the first important question of how
many natural resources affect environmental quality. Deplet-
ing natural resources is a situation where natural resources
are consumed faster than they can be replenished. Natural
resource depletion can be caused by simple human needs,
the basic desire for survival, and overpopulation (Abbasi
et al. 2021). The most common sources are deforestation,
erosion, contamination and pollution of resources, indus-
trial and technological development, over-consumption and
waste, and soil degradation (Mittal and Gupta 2015). Defor-
estation contributes to up to 17% of global greenhouse gas
emissions annually and increases global warming. This is
because trees absorb greenhouse gases and carbon dioxide
in the atmosphere. Natural resource depletion contributes
to over 70% of carbon emissions (Mittal and Gupta 2015).
This is because natural resource usage and consumption rate
are faster than their replenishment level in many develop-
ing countries. According to Zhang et al. (2021), people are
clearing land in developing countries to meet their social
and economic needs and interests. This has led to the over-
depletion of natural resources. Many developing countries,
such as India, are also experiencing high population growth
and over-consumption of their resources (Loganathan et al.
2014). There is a high level of deforestation and destruction
of other natural resources in these countries, leading to bio-
diversity loss. Issues associated with soil erosion, pollution,
and natural resource contamination are common problems
in developing countries (Hassan et al. 2021).
Environmentally, natural resource depletion affects the
nature of the environment. According to Hussain et  al.
(2020), the depletion of natural resources is associated
with environmental issues such as increased soil erosion,
high rise of greenhouse gases, and loss of biodiversity. The
13
Environmental Science and Pollution Research
high rate of natural resource depletion also causes global
warming and the extinction of different living species. In
developing countries, consequences of poor management of
natural resources include high levels of drought and flood-
ing in society. This means that without effective manage-
ment of natural resources, a region's economy will decline,
increasing production's social, environmental, and economic
costs (Chopra et al. 2022). Importantly, Adjei et al. (2020)
noted that depletion of natural resources is associated with
direct and indirect impacts on the level of carbon emissions
in the atmosphere. Directly, depletion of natural resources
increases carbon dioxide in the air, resulting in oil, gas, and
water depletion. It also results in deforestation, pollution,
soil erosion, and over-consumption. Indirectly, depletion of
natural resources results in global warming and an increase
in the level of greenhouse gases in the air. It also causes
human health problems and the extinction of living organ-
isms around the globe (Mittal and Gupta 2015).
Another important issue this study addresses is how
tax revenues influence environmental quality. Doğan et al.
(2022) argued that tax revenue reduces carbon emissions
in the community by increasing the cost of burning vari-
ous fossil fuels. This means that taxing is important and
should be used as an effective way to reduce and control
carbon components’ emissions in the air. Frey (2017) also
confirmed that sufficient tax revenue discourages compa-
nies from using fossil fuels and promoting clean energy
sources. This has been initiated in developing countries such
as Canada and Ukraine. The government uses tax revenue
to promote investments in the renewable energy sector and
promote energy efficiency operations. Environmentally, tax
revenue is imperative in reducing greenhouse gas emissions
since it encourages people and investors to use fewer fossils
that may lead to carbon emissions in the atmosphere (Loga-
nathan et al. 2014). Thus, it can be argued that tax revenue is
associated with expensive fossil fuels and a decline in carbon
emissions around the globe. The carbon tax will increase
the related product’s price in the short term, weaken the
competitiveness of energy-intensive companies, and nega-
tively impact economic growth (Ren et al. 2021). There-
fore, levying taxes has a positive impact on strengthening the
governance of the environment. It will cut the net profit of
these enterprises, affecting their investments and production.
Reducing production and investment will reduce energy con-
sumption, and improving energy efficiency will be difficult.
Carbon emissions are affected since tax revenue increases
lead to lower individual disposable income (Khastar et al.
2020). Therefore, tax revenue reduces carbon emissions.
Empirically, implementing carbon and environmental taxes
is important for improving environmental quality (Ren et al.
2021). This is because effective environmental tax policies
have a significant impact on reducing carbon emissions.
Khastar et al. (2020) also confirm that governments can use
Environmental Science and Pollution Research
environmental and carbon taxes to increase clean energy
sources. With a carbon tax, industries can find alternative
energy sources since they have to pay fees for their usage
of carbon-induced fuels (Frey 2017). This is important for
controlling carbon emissions in developed and developed
countries worldwide. Typically, carbon and environmental
taxes increase companies’ costs of burning fuel, reducing
practices that pollute the environment and promoting envi-
ronmental governance and energy conservation (Loganathan
et al. 2014).
Other aspects of this study address how the level of edu-
cation and economic growth influence the environment in
48 developing countries. People are encouraged to conserve
energy and water and recycle household waste by being edu-
cated. Education can increase awareness and concern about
environmental issues; encourage people to use energy and
water more efficiently, especially in scarcity; and reduce
their impact on the environment. Filtering and boiling are
also more common water purification methods in educated
households. Due to the increasing reality that human activity
has significantly impacted environmental degradation and
climate change, especially through greenhouse gas releases,
the focus must now shift to education and how it can be
used more effectively (Global Education Monitoring Report
2015). Increasing output and consumption will likely impact
the environment as a result. Energy use is one of the most
critical factors determining economic growth (Godil et al.
2020; Anser et al. 2021). The emergence of economic stag-
nation, a wide energy supply, and demand gap, high mortal-
ity rates, and a rise in respiratory ailments are major chal-
lenges for developing nations (Khan et al. 2021b). Economic
growth has an adverse environmental impact by increasing
non-renewable resource consumption, pollution, and global
warming. The environment is not always adversely affected
by all forms of economic growth. It has been well estab-
lished that real incomes are rising, which translates into the
ability of individuals to devote more resources to protecting
the environment and mitigating pollution-related hazards.
As a result of advancing technology, we can generate higher
production with lower pollution levels due to economic
growth (Pettinger 2020).
Therefore, this study may contribute to the literature in
the following ways. First, this is the leading study evaluating
the environmental impact of tax revenues. In recent litera-
ture, the impact of tax revenues on the environment has not
been examined in depth. We contribute empirical evidence
to the debate about the relationship between environmental
quality and tax revenues. Second, we include natural and
energy resources in the pre-decided pollution equation, dis-
aggregating energy consumption. Due to these factors, natu-
ral resources and their potential environmental implications
have become a hot topic in recent years. By incorporating
energy resources into the model development, we would be
able to determine the current environmental quality sce-
narios in these economies. Balsalobre-Lorente et al. (2018)
report that a country with many natural resources is less
dependent on imports and has more control over environ-
mental degradation. Countries with limited natural resources
generally rely on fossil fuel imports, which degrade the envi-
ronment. Energy disaggregation and ecological contamina-
tion have been ignored despite the controversy surrounding
natural resources. Third, we considered the level of edu-
cation for our empirical analysis. The previous literature
neglects this aspect of environmental quality for developing
countries. There is a general misconception that education in
developing nations does not focus on environmental sustain-
ability and, therefore, it usually does not result in lessening
environmental degradation. In this study, natural resources,
energy resources, and tax revenues are utilized to analyze the
environmental quality of 48 developing countries between
1990 and 2020, with economic growth and level of edu-
cation serving as moderators. We utilized the well-known
cross-sectional autoregressive distributive lag (CS-ARDL)
estimator in the long-run analysis. This is done to deal with
the problems of endogeneity, cross-sectional dependence,
and heterogeneity that may arise from panel data. In addi-
tion, this study used the DH causality method to identify the
causality directions.
Section 2 discusses the literature relevant to the topic.
Section 3 provides a review of the literature relevant to the
topic. We then discuss the study outcomes and a discussion
of the results in Sect. 4, and we conclude the study by dis-
cussing robust policy designs in Sect. 5.
Literature review
Various empirical studies have been done to determine the
impact of natural resource depletion on carbon emission by
using time series and panel data. However, previous research
findings are different, and researchers could not research any
point. For example, Balsalobre-Lorente et al. (2018) used the
data of European Union 5 (EU-5) countries and checked the
link between natural resources abundance, economic growth,
energy use from renewable sources, and emissions level.
They concluded that energy use from renewable sources
and natural resources are the key factors that help decrease
the emissions level in these countries. Later, Zafar et al.
(2019) found similar results from the ARDL method for
the USA as well. However, Zafar et al. (2020) checked the
impact of education, renewable energy, natural resources,
and income on environmental quality. Their results show
a positive coefficient between natural resources and envi-
ronmental quality, while renewable energy and education
could be key factors in reducing carbon emissions. Hanif
et al. (2019) investigated the impact of both renewable and
13

nonrenewable energy use as well as economic growth on
carbon emissions in Asian developing economies. Research-
ers studied 25 upper- and lower-middle-income economies
over the period 1990–2015 using the generalized method
of moments, a two-step technique. In developing countries,
resources are depleted, and populations grow, which results
in carbon emissions. They used carbon emissions for envi-
ronmental quality as a proxy. In their study of fifty-six Belt
& Road Initiative countries between 1990 and 2014, Hussain
et al. (2020) used the stochastic impact of regression on pop-
ulation, affluence, and technology (STIRPAT) model. Model
estimation was conducted using the Augmented Mean Group
(AMG) panel estimator and the Common Correlated Effects
Mean Group (CCEMG) estimator. Increasing natural deple-
tion results in an increase in carbon dioxide emissions and
energy use. If these countries deplete their natural resources
by 1%, their energy consumption will increase by 0.0117%
and carbon dioxide emissions will increase by 0.0286%,
respectively. In Pakistan, Zhang et al. (2021) evaluated the
impact of human capital, natural resources, and economic
growth on the degradation of the environment. A novel
dynamic simulated ARDL model was utilized in this study
using data between 1985 and 2018. Carbon emissions are
negatively correlated with natural resources in the short
run. Furthermore, the study recommended creating aware-
ness among Pakistan’s citizens and increasing regulatory
pressure on the government to solve the problems related to
the environment in order to ensure sustainability for future
generations.
Further, Hassan et al. (2021) conducted a study that
examined the relationship between carbon dioxide emis-
sions, real income, and natural resources between 1971
and 2017. Data were analyzed using auto-regressive dis-
tributive Lag (ARDL) and vector error correction (VECM)
models. According to the study, natural resource use in
Pakistan accelerates the carbon dioxide emission rate,
which ultimately worsens the environment. Environmental
degradation was studied by Ali et al. (2021) in relation to
renewable energy consumption and resource depletion. A
developing country, developed country, and complete sam-
ple analysis make up the three parts. In a developing coun-
try, the depletion of natural resources is closely related to
environmental degradation. Depleting natural resources
degrades the environment through factors like carbon
emissions. In the same vein, Afshan and Yaqoob (2022)
studied the impact of natural resource rent on the environ-
mental sustainability of China. The depletion of resources
is intimidating our ecological system. The excessive con-
sumption of natural resources disturbs the environmental
balance and leads to a high degree of environmental deg-
radation. An analysis of the long-term and short-term car-
bon dioxide emissions and energy consumption effects of
natural resource extraction was conducted by Adjei et al.
13
Environmental Science and Pollution Research
(2020) in Ghana. The Stochastic Impacts Regression on
Population, Affluence, and Technology (STIRPAT) model
was used to analyze the data. World Development Indica-
tors were used for secondary data between 1971 and 2013.
Autoregressive distributed lag was used for estimation.
Carbon dioxide emissions in Ghana are linked to natural
resource extraction.
An investigation was conducted by Loganathan et al.
(2014) to explore how carbon taxation and economic
growth impact the environment in Malaysia. Data from
1974 to 2010 were used to determine the long-term
cointegration and causal relationship between these
variables. There is cointegration between the variables.
Based on casualty analysis, carbon tax and CO2 emis-
sions are bidirectional. Frey (2017) used a CGE model
to assess the effects of the carbon tax on the environment
and economy in Ukraine. Having one of the highest car-
bon dioxide emission levels in the world, Ukraine has
enacted a law imposing a carbon tax to reduce emis-
sions from stationary sources. The current tax level is
0.26 Ukrainian Hryvnias (0.02 USD). In this context,
the author asks whether low tax rates could affect carbon
emissions. Taxes in Ukraine are reducing carbon emis-
sions, as the results showed. Tao et al. (2021) focused
on the carbon neutrality targets of E-7 economies and
found that carbon tax plays a vital role in environmental
sustainability. The study employed the CS-ARDL estima-
tors on the panel data between 1995 and 2018 and, based
on the findings, suggested that implementing these taxes
motivates the manufacturers to adopt the eco-friendly
production processes.
Ren et al. (2021) analyzed the effects of the tax burden
on carbon emission. The study used data from twenty-
one OECD countries between 1991 and 2014. A panel
quantile model with non-additive fixed effects was used
to estimate the tax burden using the ratio of tax reve-
nues to GDP. Based on the study results, the tax burden
impact on carbon emissions varies across countries. A
moderate tax would reduce carbon dioxide emissions,
but excessive taxation would increase emissions.  In
contrast, Wolde-Rufael and Mulat-Weldemeskel (2022)
explored the heterogeneous association between tax rev-
enue and carbon emission. In the high emission coun-
tries, the tax works as an effective instrument to abate
carbon emission, while in the low emission countries,
it has a nascent role and does not show any significant
progress toward carbon neutrality. Focusing on Asian-
based countries, Chopra et al. (2022) evaluated the role
of renewable energy systems and natural resources in
promoting strong and stable environmental controls and
productivity in the agricultural sector. The authors found
that poor carbon management systems and high levels of
deforestation in poor countries have led to a decline in
Environmental Science and Pollution Research

agricultural productivity. Many regions in Asia are poor
and experience different environmental challenges. With
overpopulation and a lack of environmental quality man-
agement controls, high carbon emissions are common
in developing countries in Asia. However, adoption of
renewable energy sources and effective control of natural
resources can help mitigate the carbon emission issues
in these countries. The authors also noted that it is the
role of the government to partner and work closely with
different stakeholders in the community in managing
carbon emissions. The government should adopt poli-
cies associated with plastic management, introduction
of carbon tax and increase dependence on sustainable
and renewable energy sources. This is imperative toward
the management of global warming and other dangerous
climate change issues in the current society (Table 1).

Table 1  Summary of literature review

Authors Study time/country Method Proxy/variables Key findings

Zafar et al. (2020) 1990–2015
OECD
Hussain et al. (2020) 1990–2014
Fifty-six Belt & Road Initia-
tive countries
Balsalobre-Lorente et al. 1990–2017 European Union
(2021) 5 (EU-5)
Zhang et al. (2021) 1985–2018
Pakistan
Ali et al. (2021) 1990–2014
Developed and developing
countries
Tufail et al. (2021) 1990–2018
OECD
Zakari et al. (2022) 1992–2018
40 SSA countries
Adebayo et al. (2022) 1990–2018
10 newly industrialized
countries (NICs)
Awosusi et al. (2022) 1970–2017
Colombia
Szetela et al. (2022) 2000–2015
Top natural resources
dependent countries
Ren et al. (2021) 1991–2014
twenty-one OECD countries
Doğan et al. (2022) 1994–2014
G-7 economies
Yunzhao (2022) 1995–2018
E-7 economies
Wolde-Rufael and Mulat- 1994–2018
Weldemeskel (2022) 18 Latin America and Carib-
bean (LAC) countries
Khan et al. (2022) 1990–2016
Top ten and near bottom ten
countries of SDGs index
2021
Cup-FM and CUP-BC Natural resources abundance ↑ NATR ↑ CO2
and environmental quality
AMG and CCEMG Natural resources depletion ↑ NATR ↑ CO2
carbon dioxide emissions
CS-ARDL Natural resources abundance NATR ∩ CO2
and carbon emission
ARDL Natural resources abundance ↑ NATR ↓ CO2
and carbon emission
PLS Natural resources depletion ↑ NATR no impact CO2
carbon dioxide emissions
CS-ARDL Natural resource rent and ↑ NATR ↓ CO2
ecological sustainability
PDSE and S-GMM Energy resources and envi- ↑ NATR ↑ CO2
ronmental degradation
MMQR Natural resource rent and ↑ NATR ↑ CO2
ecological sustainability
FMOL, DOLS and Natural resource rent and ↑ NATR ↑ CO2
ARDL estimators environmental quality
OLS, FGLS, and GMM Natural resource rent and ↑ NATR ↑ CO2
carbon emission
QRPD Tax burden and carbon ↑ Moderate TAXR ↓ CO2
dioxide emissions ↑excessive TAXR ↑ CO2
FMOLS Environmental taxes and ↑ TAXR ↓ CO2
carbon emission
Cup-FM and CUP-BC Environmental taxes and ↑ TAXR ↓ CO2
carbon emission reduction
MMQR Environmental taxes and ↑ TAXR ↓ CO2 in high
carbon emission emission countries
↑ TAXR no effect on
CO2 in low emission
countries
PGLS Energy resources and envi- ↑EGYR ↑ CO2
ronmental sustainability

ARDL, autoregressive distributed lag; CS-ARDL, cross-section autoregressive distributed lag; PDSE, Panel Driscoll-Kraay Standard Errors;
S-GMM, System-Generalized Method of Moment estimators; QRPD, quantile regression for panel data; DOLS, dynamic ordinary least square;
FMOLS, fully modified ordinary least square; AMG, Augmented Mean Group; CUP-FM, continuously updated fully modified; CUP-BC, Con-
tinuously Updated Bias-Corrected; CCEMG, common correlated effect mean group; MG, mean group; PLS, panel least square; PGLS, panel
generalized least square regressions; MMQR, method of moments quantile regression; OLS, ordinary least squares; FGLS, fixed effects general-
ized least square; NATR​, natural resources; CO2, carbon emission/environmental quality; EGYR​, energy resources; TAXR, tax revenues; OECD,
Organization for Economic Co-operation and Development; G-7; Group of Seven; E-7, Emerging Seven

13

Data and theoretical framework
Studying 48 developing countries from 1990 to 2020, this
study investigates the environmental quality through natural
resources, energy resources, and tax revenues, whereas eco-
nomic growth and education serve as moderator variables.
Algeria, Albania, Armenia, Azerbaijan, Bangladesh, Benin,
Bolivia, Botswana, Brazil, Bulgaria, Cambodia, Cameroon,
Chile, China, Colombia, Congo, Dem. Republic., Congo,
Republic., Costa Rica, Dominican Republic, Ecuador, Egypt,
Arab Rep., Ghana, Guatemala, India, Indonesia, Iran, Islamic
Republic., Jamaica, Jordan, Kenya, Malaysia, Mexico, Mol-
dova, Morocco, Nepal, Nigeria, Pakistan, Peru, Panama, Phil-
ippines, Romania, Russian Federation, South Africa, Sri Lanka,
Tajikistan, Tunisia, Turkey, Ukraine, and Vietnam are among
the 48 developing countries. We measure CO2 emissions in
metric tons per capita and estimate them to be a proxy for
checking the impacts on the environment. ­CO2 emissions are
the result of burning fossil fuels, liquid, and solid–gas flares,
which generate carbon dioxide. Worldwide, the primary cause
of ­CO2 emissions resulting from human activities is the burn-
ing of nonrenewable fossil fuels for transportation, heating, and
electricity (EPA 2014).
Natural resource rents as % of GDP. Oil, natural gas, hard
and soft coal, minerals, and forest rents make up total natural
resources rents. Rents from natural resources are used as a
percentage of GDP to calculate the total natural resources. All
natural resource rents, including oil, natural gas, coal, mineral,
and forest rents, are referred to as total natural resource rents.
Considering the amount of electricity produced as a result of
oil, gas, and coal sources, it is expressed as a percentage of the
total electricity produced and used as an indicator for energy
resources. Electricity sources are the inputs that go into the
creation of electricity. In simpler terms, crude oil and petro-
leum products are both considered crude oil. When we refer
to gas, we refer to natural gas, although natural gas liquids are
not included. All forms of coal are considered coal, includ-
ing both hard coal (hard coal) and lignite-brown coal (lignite-
brown coal). Also included are coke oven coke, coke oven
gas, gas coke, and blast furnace gas. It includes peat as well.
The tax revenues are expressed as a percentage of the econ-
omy’s GDP. Tax revenue entails compulsory transfers toward
the expenditure of public goods for the purpose of the cen-
tral government. There are a number of compulsory transfers
that are not covered by the Act, for example, fines, penalties,
and most of the social security contributions. A tax refund
or correction of incorrectly collected tax revenue is received
as a negative income. A measure of education is the number
of students enrolled in school, which is a percentage of total
enrollments. Gross or net enrollment ratios are based on the
number of people in a particular age group divided by the
total enrollment regardless of age, corresponding to the level
13
Environmental Science and Pollution Research
of education. As part of secondary education, student learn-
ing is subject- or skill-based with more specialized teachers,
which completes the preschool education process. The goal of
secondary education is to lay the foundation for lifelong learn-
ing, as well as human development, by focusing on maintain-
ing learning through life. Indicators such as C­ O2 emissions,
natural resources, energy resources, tax revenues, education,
and economic growth are taken from the World Development
Indicators (WDI). The data were transformed into a logarith-
mic form before the empirical estimates were made.
Model structure
In certain conditions, it may be possible to consider the envi-
ronment as a self-regenerating system that can withstand a
certain level of damage. There is an equation known as IPAT
that expresses the idea that environmental impact (I) is com-
posed of three factors: population, affluence, and technology.
This equation is sometimes written as I = PAT or I = P x A x T,
e.g., P x A x T. Previous to the early 1970s, “human impact on
the environment” was an equation developed by two environ-
mental scientists, Ehrlich and Holdren, in an effort to calculate
the environmental impact of humans (Ehrlich and Holdren
1971). There is much less complexity to this equation than
it might appear at first glance, but it is a good starting point
in our understanding of environmental issues resulting from
economic prosperity and technological progressions. Using
data from 48 developing countries from 1990 to 2020, this
study analyzes environmental quality using natural resources,
energy resources, and tax revenues, while economic growth
and education serve as moderators. Equation 1 in this study
borrows the IPAT identity for its environmental expressions.
CO2 it = 𝛽0 + 𝛽1 NATRit + 𝛽2 EGYRit + 𝛽3 TAXRit + 𝛽4 EDU it + 𝛽5 GDPit + 𝜀it (1)
The ­CO2 emissions is the dependent variable ­(CO2). The
natural resources (NATR), energy resources (EGYR), tax
revenues (TAXR), education (EDU), and economic growth
(GDP) the independent variables. 𝛽0 is the environmental
intercept term, and 𝛽1 , 𝛽2 , 𝛽3 , 𝛽4 , and𝛽5 are the coefficients
of natural resources, energy resources, tax revenues, educa-
tion, and economic growth. i shows cross-sections; t and
𝜀 is the error term. Equation 2 is expressed in logarithmic
form as follows:
lnCO2it = 𝛽0 + 𝛽1 lnNATRit + 𝛽 2 lnEGYRit
(2)
+ 𝛽3 lnTAXRit + 𝛽4 lnEDU it + 𝛽5 lnGDPit + 𝜀it
Based on these econometric functional expressions, this
study is developed and based on the following hypothesis:
Null hypothesis: Natural resource depletion does not
improve environmental quality in 48 developing countries
from 1990 to 2020.
Environmental Science and Pollution Research
Alternative hypothesis: Natural resource depletion
improves environmental quality in 48 developing coun-
tries from 1990 to 2020.
Null hypothesis: Energy resources do not improve envi-
ronmental quality in 48 developing countries from 1990
to 2020.
Alternative hypothesis: Energy resources improve envi-
ronmental quality in 48 developing countries from 1990
to 2020.
Null hypothesis: Tax revenues do not improve environ-
mental quality in 48 developing countries from 1990 to
2020.
Alternative hypothesis: Tax revenues improve environ-
mental quality in 48 developing countries from 1990 to
2020.
Null hypothesis: Economic growth does not improve
environmental quality in 48 developing countries from
1990 to 2020.
Alternative hypothesis: Economic growth improves
environmental quality in 48 developing countries from
1990 to 2020.
Null hypothesis: Level of education does not improve
environmental quality in 48 developing countries from
1990 to 2020.
Alternative hypothesis: Level of education improve
environmental quality in 48 developing countries from
1990 to 2020.
Cross‑section dependence
During the last few decades the body of research on panel
data models has been increasing and it has become apparent
there are likely to be substantial cross-sectional differences
in the error distributions that are likely to result from the
presence of common shocks and unobserved components
within the models (Zafar et al. 2019, 2020). Error terms,
spatial dependence, and idiosyncratic pairwise dependence
occur in disturbances where there is no particular pattern
of common components or spatial dependence. There is
no doubt that cross-sectional dependence has a significant
impact in estimation. However, cross-sectional correlations
and the nature of cross-sectional dependency can influence
the real impact of cross-sectional dependence (De Hoyos and
Sarafidis 2006). Pesaran (2004) recommended the pairwise
correlation coefficients as a measure of an unconventional
statistic cross-section dependence to deal with extensive
cross-section settings:
√ N−1 N
2 ∑∑
CDρ = T̂ ρ → N(0, 1), (3)
N(N − 1) i=1 j=i+1 ij ij
N → ∞ in any order a homogeneous asymptote for
Tij → ∞.
Panel unit root tests
There are two generations of panel unit root-testing tests that
are derived from the framework. There is a first generation
of tests that assume cross-section units have no dependence
on cross-sectional boundaries (Yang and Khan 2021; Zhang
et al. 2022). The second generation of panel unit root tests
allows for cross-sectional dependency, but the first gen-
eration does not (Menegaki 2018). In second-generation
panel unit root tests, augmented cross-sectional unit root
tests (CIPS) and augmented cross-sectional unit root tests
(CADF) are based on the assumption of heterogeneity and
typical autoregressive structure of all cross-sectional units.
The following form of augmented cross-section IPS was sug-
gested by Pesaran (2007) in order to find panel unit roots:
∑n
ΔX it = 𝛼it + 𝛽i Xit−1 + 𝜌i T + 𝜃 ΔX i,t−j + 𝜀it ,
j=1 ij (4)
where Δ is an equation of differentiation, Xit is indicators of
mean, and α is term intercept.
Westerlund error correction panel co‑integration
When time series are nonstationary, researchers perform coin-
tegration tests in order to determine whether there is a stable,
long-term relationship between the series (Taghizadeh-Hesary
et al. 2022; Zakari et al. 2022). It is becoming increasingly
popular in the literature of empirical research to use cointe-
gration techniques to test the presence of long run relation-
ships among related variables in correlational research. Using
structural rather than residual dynamics, Westerlund (2007)
developed four new panel cointegration tests that have the
advantage of imposing no common-factor restrictions because
they base their cointegration tests on structural rather than
residual dynamics. A conditional panel error-correction model
is applied in order to test whether the error-correction term in
the conditional panel error-correction model equals zero if the
null hypothesis of no cointegration holds (Westerlund 2007).
∏∕
Kit =
i
Mt + 𝜀it , (5)
Mjt = 𝜆j Mjt−1 + vjt , (6)
while
𝜀it = 𝜗i 𝜀it−1 + 𝜇it , (7)
where
N
1∑ ̂ ai
GT = (8)
N i=1 SE(̂
ai )
And
13
 Environmental Science and Pollution Research

N ∑pn ̂
1 ∑ T̂ ai 𝜉
Ga = (9) 𝛽̂CD−ARDL,i =
I=0 Ii
𝜃I,t (12)
N i=1 ̂
ai (1) 1 = ΣI=0

where SE(̂
ai ) is standard conventional error of ̂
ai
̂ 1 ∑N ̂
𝛽 MG = 𝛽
i=1 i
(13)
Cross‑sectional ARDL N
The short-run parameter estimates are demonstrated as
In order to estimate cross-country heterogeneity and error under
cross-country dependence in the data, we use the cross- ∑pm−I
sectional autoregressive distributed lag (CS-ARDL) models. ΔlnCO2it =𝜗i [lnCO2it−1 − 𝛼i Xit−1 ] −
I=1
𝜃 ΔI lnCO2it−I
it
The ARDL model is an OLS-based model that can be used +
∑pn
𝜉 ΔX (14)
I=0 Ii I it−j
for mixed-order and non-stationary time series (Hassan et al. ∑pw
𝜑 IW t−j +𝜀it
2022; Khan et al. 2022). A significant part of the congenital
+
I=0 i

ARDL analysis is the addition of cross-sectional linear com- where

binations between all the independent variables, most notably
the dependent variable, that will enable us to determine the
cross-sectional correlations between the random errors within
the model. The Cross-Section ARDL being an advanced panel
data estimator, suggests the common policy framework by
providing long-run and short-run reliable estimates. This
method reports the sampling probabilities and produces more
reliable estimates than the other traditional methods or first-
generation such as FMOLS, DOLS, and ARDL. Equation (2)
is modified to construct the CS-ARDL model as under:
∑pm ∑pn
lnCO2it = 𝜃 lnCO2it−1 + 𝜉 X
i=0 it it−1
+ 𝜀it (10)
i=0 it
ΔI = t − (t − 1)
Moreover, for the robustness analysis, we also applied
the popular continuously updated bias-corrected and fully
modified (Cup-BC & Cup-FM) approach proposed by Bai
et al. (2009). These tests employ an advanced iteration struc-
ture by using the responsiveness of calculated parameters for
investigating long-run equations. Bai et al. (2009) clarified
that CUP estimates handle the cross-section dependency
issue, which makes their properties interesting in their own
right. Bai and Kao (2006) defined the continuously updated
estimator for (B, F) as:

where
̂Cup = argmin 1
( ) )� (
𝛽̂Cup , F
∑( )
lnCO2 is a dependent variable refer as environmental T 2
yi − xi 𝛽 MF yi − xi 𝛽 .
n i=1
quality, whereas the “X” is used as the combined term for
(15)
explanatory variables such as natural resources (NATR),
energy resources (EGYR), tax revenues (TAXR), education where MF̂ = IT − T F F since, F F∕T = Ir , and VnT is a
−2 ̂ ̂ � ̂ � ̂ 2

(EDU), and economic growth (GDP). According to Chudik
and Pesaran (2015), the average of cross-country or section
should be taken to neutralize the effects of cross-country
dependency. Equation (10) applies the average of the cross-
section to address the cross-country dependency as under
∑pm ∑pn ∑pw
lnCO2it = 𝜃 lnCO2it−1 + 𝜉 X + 𝜑 W t−1 𝜀it
i=0 it it−1
i=0 it i=0
where
W t−1 = (lnCO2it−1 , X it−1 )
lnCO2it−1 presents as the average value of the dependent
variable, whereas the average of explanatory variables is
X it−1 and to elevate the cross-country dependency effect, the
average of dependent and explanatory variables is written as
W t−1 . The lag values are illustrated as Pm, Pn, and Pw in the
Eq. (11). In the CS-ARDL method, the long-run parameter
estimates are computed from the parameter estimates of the
short-run. Therefore, the equation for long-run parameter
estimates and Mean group estimates are as follows:
diagonal matrix that consists of r most significant eigenval-
ues (Fig. 1).
Results and discussions
There are 48 developing countries whose results of a cor-
i
(11)
relation matrix are provided in Table 2 for C ­ O2 emissions,
natural resources, energy resources, tax revenues, educa-
tional achievements, and economic growth. According to the
results, natural resources and energy resources are positively
correlated with C ­ O2 emissions. There is also a positive cor-
relation between tax revenues, the level of education, and the
level of economic growth as well. A cross-section depend-
ence test for CDs, based on the result in Eq. (3) as displayed
in Table 3, shows that cross-section dependence is possible.
The results of the study indicate that ­CO2 emissions, natu-
ral resources, energy resources, tax revenues, educational
achievement, and economic growth are significantly associ-
ated at 1% level of significance (Appendix). The result of

13
Environmental Science and Pollution Research
Fig. 1  Steps of methodology
this analysis suggests that our panel data exhibit substantial
cross-sectional dependence across the cross-sections, which
indicates that economic shocks in one of the sample countries
have consequences for other nations because the economies
of the two countries are highly interconnected.
For ­CO2 emissions, natural resources, energy resources, tax
revenues, education level, and economic growth, from Eq. (4),
the second-generation panel unit root tests of CADF and CIPS
are computed in Table 4. The CIPS and CADF variables all
do not form a stationary distribution at all levels in CIPS and
13
 Environmental Science and Pollution Research

Table 2  Correlations LCO2 LNR LTAX LEP LY LE

LCO2 1
LNR 0.4996 1
LTAX 0.6793 0.4898 1
LEP 0.4914 0.0103 0.1266 1
LY 0.7852 0.5690 0.9155 0.2063 1
LE 0.6931 0.2534 0.6210 0.3602 0.6779 1

CADF respectively. However, at 1% level of significance, these
variables do form a stationary distribution at first difference.
Based on the results retrieved from Eqs. (5), (6), (7), (8), and
(9) of the Westerlund error correction test with robust probabil-
ity values, the following is presented in Table 5. In addition, the
results of Westerlund co-integration are also given in Table 6.
At 10% and 5% levels of significance, Gt is statistically signifi-
cant at Table 4. Similarly, Ga is statistically significant at robust
probability level. For Pt and Pa, the significance level is 1%.
Sz-t, Sz-rho, Pz-t, and Pz-rho in Table 5 are significant at 1%
levels of significance. ­CO2 emissions, natural resources, energy
resources, tax revenues, educational attainment, and economic
growth are all found to be interconnected as well as exhibiting
a long-term relationship.
The main CS-ARDL results of the long-run and short-run
are in Table (7), which is based on Eq. (14), derived from
Eq. (1). These results indicate that natural resources have a sig-
nificant effect (5% significance level). The tax revenues, energy
resources, the economic growth, and the levels of education
are significant at 1% levels of significance. Natural resources,
energy resources, and economic growth are all positively related
to that emissions. On the other hand, tax revenues and a higher
level of education are negatively related to C ­ O2 emissions. In
general, natural resources, energy resources, and economic
growth adversely affect the environment. At the same time, tax
revenues, and the level of education improve the environment.
Natural resource extraction, processing, and use can lead to
air, land, and water pollution; disrupted or destroyed ecosys-
tems; and decreased biodiversity (Office of Solid Waste and
Reduction & Recycling 2008). The positive coefficient values
of natural resources explain the increase in C ­ O2 emissions by
Table 3  Cross-sectional dependence test results
Variable CD-test p-value
0.0524% resulting from a 1% increase in the depletion of natu-
ral resources. Thus, the null hypothesis is accepted at 5% level
of significance which is desirable that natural resource deple-
tion does not improve environmental quality in 48 develop-
ing countries from 1990 to 2020. Globally, the level of natural
resource degradation is also increasing as a result of the increas-
ing population. It is important to understand that when talking
about the natural resource depletion, it is a term that is used in
the context of issues involving water use, agriculture, fishing,
mining, and fossil fuel consumption. Furthermore, depletion of
natural resources is defined in terms of the value of a resource
in terms of the availability of it in nature. The study shows
that developing countries are using a greater proportion of the
natural resources available to them to industrialize and sup-
port their ever-expanding populations. The finding that natural
resource depletion degrades the environment is consistent with
the literature (Tsani 2013; Zaidi et al. 2019; Khan et al. 2021a).
The negative coefficient value of tax revenues provides an
explanation for the increase of 0.2484% in C ­ O2 emissions as a
result of a 1% increase in tax revenues. Thus, the null hypoth-
esis is rejected at 1% level of significance and the alternative
hypothesis is accepted which is desirable that tax revenues
improve environmental quality in 48 developing countries
from 1990 to 2020. Green growth policy is based on the prin-
ciple that pricing instruments should encourage a broad-based
reduction in environmental damage at the lowest possible cost.
By providing incentive, they will help reduce inefficiencies,
spur green investment and innovation, as well as shifting con-
sumption patterns. By shifting tax burden away from more
distorting taxes, e.g., on corporate or personal income, and
Table 4  Unit root test results
Variable CIPS CADF
corr Level 1st difference Level 1st difference

CO2 45.01*** 0.000 0.345 CO2  − 2.287  − 4.970***  − 2.161  − 5.258***

NR 62.50*** 0.000 0.476 NR  − 2.524  − 3.211***  − 1.795  − 3.705***
TAX 94.12*** 0.000 0.718 TAX  − 2.418  − 4.772***  − 2.470  − 3.665***
EP 5.14*** 0.000 0.039 EP  − 2.331  − 5.262***  − 2.238  − 4.020***
Y 101.92*** 0.000 0.779 Y  − 1.887  − 3.882***  − 2.147  − 4.028***
E 68.87*** 0.000 0.525 E  − 2.100  − 3.703***  − 1.839  − 3.892***
* *
 , **, and *** indicate the significance level at 1, 5, and 10%  , **, and *** indicate the significance level at 1, 5, and 10%

13
Environmental Science and Pollution Research

Table 5  Westerlund error correction test results
Statistics Value Z-value P-value Robust p-value
Gt  − 2.472  − 1.566 0.059 0.008
Ga  − 10.926 0.606 0.728 0.000
Pt  − 60.933  − 40.883 0.000 0.000
Pa  − 66.994  − 43.233 0.000 0.000
*
 , **, and *** indicate the significance level at 1, 5, and 10%
by utilizing environmentally related taxes more effectively,
more growth-oriented reforms can be achieved that are con-
ducive to fiscal consolidation. In light of these findings, it can
be concluded that Eco taxes are imposed on activities that are
considered harmful to the environment and were designed to
provide financial incentives to encourage environmentally
friendly behavior. In addition, these findings suggest that tax
revenues and related policies can contribute to, or even reduce
the need for regulation in some situations.
Using positive coefficients of energy resources, we can
explain that increase of 0.1126% in C ­ O2 emissions as a result
of a 1% increase in energy resources. Thus, the null hypoth-
esis is rejected at 1% level of significance and the alterna-
tive hypothesis is accepted which is desirable that energy
resources improve environmental quality in 48 developing
countries from 1990 to 2020. These findings suggest and agree
with the assertion that the environmental impact of every type
of energy source varies. Moreover, fossil fuels can have a sub-
stantial adverse effect on the environment. Water pollution,
air pollution, damage to public health, wildlife extinction and
habitat destruction, global warming emissions, and contami-
nation of the soil and water are all included in this cause and
effect scenario. The findings of this study are consistent with
previous studies (UnionofConcernedSciences 2013; Naeem
Nawaz and Alvi 2018; Režný and Bureš 2019; Li et al. 2020)
that demonstrate that energy production and consumption
directly contribute to environmental problems. These issues
include air pollution, global warming, water pollution, thermal
pollution, and the disposal of solid waste. Among the major
sources of urban air pollution, the major cause is the emissions
of air pollutants from the combustion of fossil fuels.
As a result of 1% growth in economic development, the posi-
tive coefficient value of economic growth is responsible for the
increase of 0.7899% in C ­ O2 emissions. Thus, the null hypothesis
is accepted at 1% level of significance which is not desirable
that economic growth does not improve environmental qual-
ity in 48 developing countries from 1990 to 2020. In a similar
way, the negative coefficient of level of education explains that
a 1% increase in the level of education can result in a decrease
in ­CO2 emissions by 0.3770%. Thus, the null hypothesis is
rejected at 1% level of significance and the alternative hypothesis
is accepted which is desirable that level of education improves
environmental quality in 48 developing countries from 1990 to
2020. Economic growth has numerous negative environmental
effects on the environment, including the replacement of non-
renewable resources, pollution, increased global warming, the
destruction of habitats as a result of global warming. These find-
ings indicate that the level of income tends to affect the level of
environmental degradation in areas where environmental quality
directly impacts human welfare. There are however cases where
economic growth tends to result in stabilizing deterioration of
the environment’s quality where the cost of environmental
damage can be externalized. Moreover, based on the findings,
we argued that sustainable development preserves the natural
environment and improves social, cultural, and economic con-
ditions. Development cannot be characterized by destructive
economic growth or lack of sustainability. Individuals can learn
about environmental issues, engage in problem solving, and
improve the environment through green education. Additionally,
individuals are more educated about environmental issues and
gain the skills they need in order to be able to make informed
and responsible decisions. This is consistent with the studies
conducted by (Aydin 2019; Adedoyin et al. 2020; Ivanovski
et al. 2020; Raheem et al. 2020) which found that economic
growth degrades the environment. The negative relationship
between education and emissions level was found by Zafar et al.
(2020) for OECD countries and Bano et al. (2018) for Pakistan.
The results of the pairwise DH Granger causality test are
presented in Table 7 (see also Tables 8 and 9). There is a uni-
directional causality relationship between natural resources
and ­CO2 emissions, as well as a causal relationship between
­CO2 emissions and level of education. On the other hand,
there is a bidirectional causality relationship between C ­ O2
emissions and tax revenues, energy resources and ­CO2 emis-
sions, as well as economic growth and ­CO2 emissions.

Conclusion and policies
Table 6  Westerlund Statistics Value
cointegration test results The environment has steadily deteriorated since the begin-
Sz-t 10.132*** ning of this decade (Dong et al. 2020). Human activities
Sz-rho 15.556*** primarily cause climate change. Human activities cause
Pz-t 14.096*** greenhouse gas emissions that build up in the atmosphere
Pz-rho 13.716*** and warm the climate. Carbon dioxide emissions amplify the
*
 , **, and *** indicate the sig- greenhouse effect. The environment directly affects health
nificance level at 1, 5, and 10% status and plays a major role in the quality of life, health

13

disparities, and years of healthy life. Poor air quality is
linked to disease, premature death, and lung and cardiovas-
cular damage over the long term. Carbon dioxide emissions
from the production of electricity and transport are major
contributors, but deforestation and land-use changes are also
significant contributors. In addition to many other factors,
the depletion of natural resources is also an important factor
contributing to the emission of carbon dioxide. Many coun-
tries have taken actions and policies to reduce carbon emis-
sions, including emissions standards, emission trading, and
a carbon tax. Carbon taxes have been considered the most
direct and effective method of reducing emissions. Manag-
ing resources and the environment are intertwined due to
the scarcity question. Using resources results in pollution,
and abating pollution requires using additional resources.
It will be difficult to achieve sustainable development on a
timescale encompassing many human generations, even with
technological innovation helping alleviate some of these
problems. There are local and regional resource and envi-
ronmental issues, but they are part of a global eco-system.
In this study, natural resources, energy resources, and tax
revenues are utilized to analyze the environmental quality
of 48 developing countries between 1990 and 2020, with
economic growth and level of education serving as modera-
tors. The main CS-ARDL results of the long-run and short-
run indicate that natural resources, energy resources, and
economic growth are positively related to that emissions.
Conversely, higher education and tax revenues are associ-
ated with higher ­CO2 emissions. Environments are adversely
affected by natural resources, energy resources, and eco-
nomic growth. Meanwhile, tax revenues and education
levels improve the environment. The pairwise DH Granger
causality test results indicate a unidirectional causality rela-
tionship between natural resources and ­CO2 emissions and
a causal relationship between C ­ O2 emissions and level of
education. On the other hand, there is a bidirectional causal-
ity relationship between C ­ O2 emissions and tax revenues,
energy resources and ­CO2 emissions, and economic growth
and ­CO2 emissions.
Table 7  CS-ARDL test results
Long-run Short-run
Coefficient t-statistics Coefficient
NR 0.0524** 2.1257 0.0498
TAX  − 0.2484***  − 4.0018  − 0.1464
EP 0.1126*** 5.9352 0.0233
Y 0.7899*** 6.7004 0.5002
E  − 0.3770***  − 6.3261  − 0.0774
COINTEQ  − 0.3418***
*
 , **, *** indicate the significance level at 1, 5, and 10%
13
Environmental Science and Pollution Research
Table 8  Cup-FM and Cup-BC test result
Cup-FM Cup-BC
Coefficient t-statistics Coefficient t-statistics
NR 0.0015*** 26.1603 0.0081*** 25.083
Tax  − 0.0412***  − 7.8603  − 0.0436***  − 7.7143
EP 0.0542*** 22.395 0.0541*** 22.385
Y 0.8301*** 14.4545 0.8250*** 14.4318
E  − 0.0900***  − 8.04157  − 0.0913***  − 8.0415
*
 , **, *** indicate the significance level at 1, 5, and 10%
Natural resources can be used sustainably to optimize
social and environmental benefits and preserve long-term
availability for future generations. The long-run estimates
substantiate the fact that resource depletion degrades the
quality of the environment. Development and wealth crea-
tion are often seen as being driven by natural resources.
As industrialization progressed, resource use increased.
Some exploitation exceeded the natural regeneration rate
of some resources. As a result of such overexploitation, the
livelihoods and well-being of people who depend on these
resources are compromised as eco-system health. Natural
resource management is crucial to better preserving natural
resources and eco-systems in light of the risk of resource
depletion, especially in the form of fishery collapses. These
empirical conclusions suggest that countries in the develop-
ing group must decrease the use of natural resources and
enhance cleaner energy sources to lessen the dependence on
pollutant natural resources. Mining activities in these nations
present a threat to environmental quality. Thus, technology
needs to be modernized, and green mining practices should
be implemented. Also, the combustion of natural resources,
mainly fossil fuels, should be subject to stringent environ-
mental taxes. Moreover, property rights should determine
natural resources regarding who can and should access, ben-
efit from, and participate in decision-making. Tenure secu-
rity should recognize and enforce the rights of individuals
over specific lands and natural resources and promote social
security and ensure long-term resource sustainability. These
rights could be key to avoiding conflict.
Energy use has detrimental effects on the environment. The
government should support the development of green energy
that is both affordable and accessible to reduce energy-related
t-statistics CO2 emissions. There should be a reduction in taxes on green
energy technologies, such as solar energy systems to increase
1.7352
green energy. Similarly, more energy-saving appliances should
 − 1.6827
also be introduced in the household sector. It is anticipated
2.0257
that these policies will significantly reduce CO2 emissions in
5.6103
the long run and increase the environmental sustainability of
 − 1.7231
developing nations. In order to meet public and environmental
 − 7.4691
safety objectives and efficient production to meet demands,
both energy and environmental systems need to be guided
Environmental Science and Pollution Research

Table 9  DH causality test CO2 NR TAX EP Y E

results
CO2  =  =  =  2.807*** 5.057*** 2.254** 9.013*** 4.546***
(0.005) (0.000) (0.024) (0.000) (0.000)
NR 0.860  =  =  =  =  1.693* 2.266** 4.444*** 2.973***
(0.389) (0.090) (0.023) (0.000) (0.002)
TAX 5.083*** 2.346**  =  =  =  3.048*** 8.010*** 2.395**
(0.000) (0.019) (0.002) (0.000) (0.016)
EP 4.168*** 2.724*** 3.055***  =  =  =  6.790*** 4.959***
(0.000) (0.006) (0.002) (0.000) (0.000)
Y 3.552*** 1.475 1.605 0.807  =  =  =  3.669***
(0.000) (0.140) (0.108) (0.419) (0.000)
E 1.024 1.161 1.440 0.467 7.548***  =  =  = 
(0.305) (0.245) (0.149) (0.640) (0.000)
*
 , **, and *** indicate the significance level at 1, 5, and 10%

together. Consequently, an official and a specialist from the
agency are encouraged to determine how, where, and when
energy systems research will be applied. Energy policy should
be derived from resources that can maintain current operations
without jeopardizing future generations' energy needs or global
climate to achieve sustainability. It is recommended that poli-
cymakers encourage popular renewable energy sources such
as wind, solar, and hydropower to achieve sustainability goals
over the long term.
The long-run estimates confirm that tax revenues contribute
to improving environmental quality. Since tax revenue helps
reduce ­CO2 emissions, raising the tax on C ­ O2 emissions gen-
eration will be a useful policy instrument in helping to control
the menace of emissions caused by the burning of fossil fuels.
Furthermore, the government should devise strategies to chan-
nel these tax revenues toward non-polluting technologies on the
other hand. In addition to the imposition of carbon taxes, it will
be useful to make green energy as affordable as possible. The
practical method to achieve this goal will increase green energy
research and budgetary development investments. Taxes on
pollution have the advantage of providing similar incentives to
reduce pollution on each unit of pollution. By encouraging abate-
ment at the lowest-cost source, homogeneous taxes policies may
promote environmental goals at the lowest social cost. Moreover,
growth-oriented reforms are encouraged for fiscal consolidation
by shifting the tax burden away from more distorting taxes, such
as corporate or personal income. Policymakers are encouraged
to reassure eco-taxes and provide incentives to promote environ-
mentally friendly behavior by taxing activities deemed harmful
to the environment. At the same time, they may also contribute
to reducing the need for environmental regulations in some cases.
The empirical results of this study suggest that education
contributes to environmental quality. Education and environ-
mental sustainability are the topics of many research papers and
books in many developing nations. Education and sustainability
are important barriers to sustainability. Education contributes
to ­CO2 emissions due to its lack of environmental awareness.
Increased income generated from education promotes the con-
sumption of resources and luxury lifestyles in these countries
that have already adopted unsustainable production and con-
sumption practices. Some awareness campaigns should run
using all available resources and electronic and print media to
resolve this issue. As a result of the policies discussed in this
context, stakeholder preferences and demands for environmental
sustainability can increase, resulting in increased pressure on
leaders to improve environmental quality and reduce unsustain-
able practices. Aside from this, efforts to raise ecological aware-
ness in books and initiate resource-saving training programs will
also be helpful. The National Curriculum should include envi-
ronmental themes. As well as natural environment and physical
factors, social factors, values, and attitudes, the environment
theme may also include sustainability, diversity, and values.
Furthermore, the relationship between economic
growth and environmental quality is positive. This find-
ing suggests that greener growth policies require stringent
environmental policies that are flexible and minimize bar-
riers to entry and competition. Moreover, the study recom-
mends adopting a model of green development and cor-
responding efficient policies for the future. Developing
countries would benefit from addressing market failure,
pricing pollution properly, reforming inefficient subsi-
dies, enforcing property rights, and decoupling the links
between environmental destruction and economic growth.
We recommend that governments of developing countries
promote green growth policies and strategies by managing
governance and markets according to the country’s unique
circumstances, such as its social, economic, physical, and
environmental endowments.
The causality outcome elucidates that changing natural
resource consumption will directly influence C ­ O 2 emis-
sions. On the other hand, the feedback effect between tax
revenue reveals that it will be impossible to reduce ­CO2
emissions without designing appropriate tax strategies,
as ­C O 2 emissions and tax revenue are complimentary.

13
 Environmental Science and Pollution Research

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