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<p>The research article assesses the interrelationship among energy consumption, environmental degradation, and institutional standards in Australia by applying the dynamic autoregressive distributed lag simulation model covering the duration of 1985–2021. Variables such as environmental policy stringency, inflation, FDI inflow, FDI outflow, and environmental related taxes were incorporated to explore the impact of the selected series on environmental deterioration. According to the dynamic ARDL simulation and correlation matrix estimations, electricity production, FDI inflow, and inflation have a pragmatic impact on environmental deterioration. Further, FDI outflow, environmental-related taxes, institutional standards, and renewable energy consumption were identified to have an inverse impact on environmental degradation; implying that, these factors help to mitigate environmental deterioration and improve its standards and sustainability in Australia. Moreover, the econometric estimation shows that the model’s variables spell out 87% of the variation in environmental sustainability. Renewable energy consumption&#xa0;leads to a decrease in emissions, with a short-term reduction of 2.5% and a long-term reduction of 1.6% for each unit increase. Environmental taxes play a significant role in decreasing emissions in the short-run (2.1%) and the long-run (5.8%). The quality of institutions&#xa0;contributes&#xa0;in reducing emissions by 0.8% and 0.7% in the short and long-term, respectively, emphasizing&#xa0;the importance of&#xa0;strong&#xa0;governance.&#xa0;However, a 1% increase in electricity production results in a rise in emissions by 1% in the short term and 1.5% in the long term, emphasizing the critical need for a transition to cleaner energy sources. Fundamental policy implications are outlined based on our findings.</p>

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Interrelationship among institutional quality, energy consumption and environmental degradation in Australia: a dynamic autoregressive distributed lag approach

  • 期刊论文

  • 发表日期：

    2025年1月7日

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  • A. Gibba,
  • M. K. Khan,
  • M. A. Jallow,
  • T. Sanneh,
  • B. Bojang,
  • M. Touray

摘要

The research article assesses the interrelationship among energy consumption, environmental degradation, and institutional standards in Australia by applying the dynamic autoregressive distributed lag simulation model covering the duration of 1985–2021. Variables such as environmental policy stringency, inflation, FDI inflow, FDI outflow, and environmental related taxes were incorporated to explore the impact of the selected series on environmental deterioration. According to the dynamic ARDL simulation and correlation matrix estimations, electricity production, FDI inflow, and inflation have a pragmatic impact on environmental deterioration. Further, FDI outflow, environmental-related taxes, institutional standards, and renewable energy consumption were identified to have an inverse impact on environmental degradation; implying that, these factors help to mitigate environmental deterioration and improve its standards and sustainability in Australia. Moreover, the econometric estimation shows that the model’s variables spell out 87% of the variation in environmental sustainability. Renewable energy consumption leads to a decrease in emissions, with a short-term reduction of 2.5% and a long-term reduction of 1.6% for each unit increase. Environmental taxes play a significant role in decreasing emissions in the short-run (2.1%) and the long-run (5.8%). The quality of institutions contributes in reducing emissions by 0.8% and 0.7% in the short and long-term, respectively, emphasizing the importance of strong governance. However, a 1% increase in electricity production results in a rise in emissions by 1% in the short term and 1.5% in the long term, emphasizing the critical need for a transition to cleaner energy sources. Fundamental policy implications are outlined based on our findings.