Investigating the Environmental Kuznets Curve Hypothesis Amidst Geopolitical Risk

Abstract

Environmental concerns have become one of the top inevitable issues the world has been facing nowadays. Human-induced carbon emissions are the main reasons behind these environmental issues and to reduce them and mitigate their consequences, policymakers globally explore their drivers and determinants continuously. Although several socio-economic factors have been explored that affect the level of emissions, relatively less attention has been paid to geopolitical risk (GPR). Over the past few decades, the world has witnessed a significant rise in GPR with economic and environmental impacts. However, the existing body of literature on the GPR-environment nexus documents the contrasting conclusion, which might cause inconvenience while proposing environmental protection policies. Therefore, the present study reinvestigates the impact of GPR on carbon emissions at the global level. The findings document that, in the short run, a 1% rise in GPR impedes emissions by 3.50% globally. On the contrary, a 13.24% rise in emissions is fostered by a 1% increase in GPR in the long run. Also as was expected, we report that energy consumption leads to higher global emissions in both the short and long run. Next, this study also validates the existence of the environmental Kuznets curve (EKC) hypothesis at the global level. Based on these aforementioned outcomes, we propose several policy recommendations to curb global carbon emissions via GPR accomplish, thus, a few sustainable development goals.