The impact of economic growth, inequality, and resource depletion on CO2 emissions in Indonesia: Evidence from the ARDL model

Annisa Annisa; Anna Yulianita; Abdul Bashir

doi:10.22437/ppd.v13i3.40844

Authors

Annisa Annisa Department of Development Economics, Faculty of Economics, Universitas Sriwijaya, Indonesia
Anna Yulianita Department of Development Economics, Faculty of Economics, Universitas Sriwijaya, Indonesia
Abdul Bashir Department of Development Economics, Faculty of Economics, Universitas Sriwijaya, Indonesia

DOI:

https://doi.org/10.22437/ppd.v13i3.40844

Keywords:

Economic growth, Resource depletion, CO2 Emissions, Inequality, EKC

Abstract

This study examines the impact of natural resource depletion, economic growth, and income inequality on CO₂ emissions in Indonesia from 1990 to 2021. Utilizing time series data from the World Bank, the analysis employs the Auto-Regressive Distributed Lag (ARDL) model to simultaneously assess both short- and long-run relationships among the variables, while also testing the validity of the Environmental Kuznets Curve (EKC) hypothesis. The results reveal that natural resource depletion, economic growth, and income inequality all have a positive and statistically significant effect on CO₂ emissions in both the short and long term. Furthermore, the findings provide strong empirical support for the existence of an inverted U-shaped EKC in Indonesia, indicating that emissions initially rise with income but eventually decline beyond a certain income threshold. These results underscore the crucial need for comprehensive policy frameworks that effectively integrate economic development, environmental sustainability, and social equity. In particular, the significant role of resource depletion necessitates prioritizing sustainable resource management strategies—such as forest conservation, responsible mining practices, and improved resource efficiency—to mitigate environmental degradation.

Downloads

Download data is not yet available.

References

Abbasi, K. R., Hussain, K., Redulescu, M., & Ozturk, I. (2021). Does Natural Resources Depletion and Economic Growth Achieve the Carbon Neutrality Target of the UK? A Way Forward Towards Sustainable Development. Resources Policy, 74(102341). https://doi.org/10.1016/j.resourpol.2021.102341

Adedoyin, F. F., & Zakari, A. (2020). Energy Consumption, Economic Expansion, and CO2 Emission in the UK: The Role of Economic Policy Uncertainty. Science of the Total Environment, 738(140014). https://doi.org/10.1016/j.scitotenv.2020.140014

Agyeman, J., Bullard, R. D., & Evans, B. (2003). Just sustainabilities: Development in an unequal world. MIT Press.

Alfisyahri, N., Karimi, S., & Ridwan, E. (2020). Hubungan Kausalitas Konsumsi Energi Hydropower, Emisi Karbon Dioksida dan Pertumbuhan Ekonomi pada Negara-Negara G20. Jurnal Ilmiah MEA (Manajemen, Ekonomi, Dan Akuntansi), 4(1), 114–127. https://doi.org/10.31955/mea.v4i1.273

Amri, K. (2017). Analisis Pertumbuhan Ekonomi dan Ketimpangan Pendapatan : Panel Data 8 Provinsi di Sumatera. Jurnal Ekonomi Dan Manajemen Teknologi, 1(1), 1–11. https://doi.org/https://doi.org/10.35870/emt.v1i1.22

Bahmani-Oskooee, M., & Brooks, T. J. (2003). A New Criteria for Selecting The Optimum Lags in Johansen’s Cointegration Technique. Applied Economics, 35(8), 875–880.

Baloch, M. A., Danish, Khan, S. U. D., Ulucak, R., & Ahmad, A. (2020). Modeling the dynamic linkage between financial development, energy innovation, and CO₂ emissions in the presence of globalization: Is the “EKC” hypothesis still relevant in BRICS countries? Journal of Environmental Management, 271, 110944. https://doi.org/10.1016/j.jenvman.2020.110944

Bashir, A., Susetyo, D., Suhel, S., & Azwardi, A. (2021). Relationships between Urbanization, Economic Growth, Energy Consumption, and CO2 Emissions: Empirical Evidence from Indonesia. Journal of Asian Finance, Economics and Business, 8(3), 79–90. https://doi.org/10.13106/jafeb.2021.vol8.no3.0079

Boyce, J. K. (1994). Inequality as a cause of environmental degradation. Ecological Economics, 11(3), 169–178. https://doi.org/10.1016/0921-8009(94)90198-8

Chancel, L., & Piketty, T. (2015). Carbon and inequality: From Kyoto to Paris—Trends in the global inequality of carbon emissions (1998–2013) and prospects for an equitable adaptation fund. Paris School of Economics. https://wid.world/document/chancel-piketty-2015-carbon-inequality/

Dickey, D. A., & Fuller, W. A. (1979). Distribution of the Estimators for Autoregressive Time Series with a Unit Root. Journal of the American Statistical Association, 74(366a), 427–431.

Endriana, L., Hartono, D., & Irawan, T. (2016). Green Economy Priority Sectors in Indonesia: a SAM Approach. Environmental Economics and Policy Studies, 18(1), 115–135. https://doi.org/10.1007/s10018-015-0114-5

Febriyani, A., & Anis, A. (2022). Pengaruh Pertumbuhan Ekonomi, Investasi dan Indeks Pembangunan Manusia Terhadap Ketimpangan Distribusi Pendapatan di Indonesia. Jurnal Kajian Ekonomi Dan Pembangunan, 3(4), 9–16. http://ejournal.unp.ac.id/students/index.php/epb/index

Government of Indonesia. (2017). Presidential Regulation No. 22/2017 on the National Energy Plan (RUEN). Jakarta. https://peraturan.bpk.go.id

Grossman, G. M., & Krueger, A. B. (1995). Economic Growth and the Environment. The Quarterly Journal of Economics, 110(2), 353–377. https://doi.org/10.2307/2118443

He, Q., Han, J., Guan, D., Mi, Z., Zhao, H., & Zhang, Q. (2018). The Comprehensive Environmental Efficiency of Socioeconomic Sectors in China: An Analysis Based on a Non-Separable Bad Output SBM. Journal of Cleaner Production, 176, 1091–1110. https://doi.org/10.1016/j.jclepro.2017.11.220

Hulu, P. K., & Wahyuni, K. T. (2021). Kontribusi Pembangunan Infrastruktur terhadap Pertumbuhan Ekonomi dan Ketimpangan Pendapatan di Indonesia Tahun 2010-2019. Seminar Nasional Official Statistics, 603–612. https://doi.org/https://doi.org/10.34123/semnasoffstat.v2021i1.979

Jordan, S., & Philips, A. Q. (2018). Cointegration Testing and Dynamic Simulations of Autoregressive Distributed Lag Models. In The Stata Journal (Vol. 18, Issue 4).

Jorgenson, A. K., Schor, J. B., & Huang, X. (2017). Income inequality and carbon emissions in the United States: A state-level analysis. Ecological Economics, 134, 40–48. https://doi.org/10.1016/j.ecolecon.2016.12.016

Kementrian Keuangan Republik Indonesia. (2022). Implementasi Pajak Karbon di Indonesia. https://www.kemenkeu.go.id

Litasari, Y. W. (2018). Pengaruh Dimensi Ekonomi, Sosial dan Lingkungan terhadap Perencanaan Pembangunan Kawasan Pesisir yang Berkelanjutan di Kabupaten Malang. Jurnal Ilmiah Administrasi Publik, 4(4), 349–354. https://doi.org/10.21776/ub.jiap.2018.004.04.9

Mardani, A., Streimikiene, D., Nilashi, M., Arias Aranda, D., Loganathan, N., & Jusoh, A. (2018). Energy consumption, economic growth, and CO2 emissions in G20 countries: application of adaptive neuro-fuzzy inference system. Energies, 11(10), 2771. https://doi.org/10.3390/en11102771

Mehmood, K., Saifullah, Qiu, X., & Abrar, M. M. (2023). Unearthing Research Trends in Emissions and Sustainable Development: Potential Implications for Future Directions. Gondwana Research, 119, 227–245. https://doi.org/10.1016/j.gr.2023.02.009.

Noor, M. A., & Saputra, P. M. A. (2020). Emisi Karbon dan Produk Domestik Bruto: Investigasi Hipotesis Environmental Kuznets Curve (EKC) pada Negara Berpendapatan Menengah di Kawasan ASEAN. Jurnal Wilayah Dan Lingkungan, 8(3), 230–246. https://doi.org/10.14710/jwl.8.3.230-246

Ocampo, J. A. (2012). The Transition to a Green Economy: Benefits, Challenges and Risks from a Sustainable Development Perspective.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds Testing Approaches to The Analysis of Level Relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616

Ravallion, M., Heil, M., & Jalan, J. (2000). Carbon Emissions and Income Inequality. Oxford Economic Papers, 52(4), 651–669. https://doi.org/10.1093/oep/52.4.651

Ren, X., Cheng, C., Wang, Z., & Yan, C. (2020). Spillover and Dynamic Effects of Energy Transition and Economic Growth on Carbon Dioxide Emissions for The European Union: A Dynamic Spatial Panel Model. Sustainable Development, 1–15. https://doi.org/10.1002/sd.2144

Evans, S. (2020, March). UK’s CO2 emissions have fallen 29% over the past decade. In World Economic Forum Carbon Brief. https://www.carbonbrief.org/analysis-uks-co2-emissions-have-fallen-29-per-cent-over-the-past-decade.

Stern, D. I. (2004). The Rise and Fall of The Environmental Kuznets Curve. World Development, 32(8), 1419–1439. https://doi.org/10.1016/j.worlddev.2004.03.004

UNEP. (2011). Towards a Green Economy : Pathways to Sustainable Development and Poverty Eradication A Synthesis for Policy Makers. www.unep.org/greeneconomy

United Nations. (2015). World Urbanization Prospects: The 2014 Revision.

Wang, M. L., Wang, W., Du, S. Y., Li, C. F., & He, Z. (2019). Causal Relationships Between Carbon Dioxide Emissions and Economic Factors: Evidence from China. Sustainable Development,28(1), 73-82. https://doi.org/10.1002/sd.1966

Warr, P., & Yusuf, A. A. (2011). Reducing Indonesia’s Deforestation-Based Greenhouse Gas Emissions. The Australian Journal of Agricultural and Resource Economics, 55(3), 297–321. https://doi.org/10.1111/j.1467-8489.2011.00540.x

Zafar, M. W., Saeed, A., Zaidi, S. A. H., & Waheed, A. (2021). The Linkages Among Natural Resources, Renewable Energy Consumption, and Environmental Quality: A Path Toward Sustainable Development. Sustainable Development, 3(2), 353-362. https://doi.org/10.1002/sd.2151