Forest Products Trade-Environment Nexus through the Lens of Carbon Neutrality Targets: The Role of Rural Bioenergy

Abstract

Environmental sustainability is the primary objective of policymakers all around the globe. The most viable option to deal with this situation is to increase the use of renewable energy sources, particularly bioenergy, a carbon-neutral energy source. Trading activities in clean and green products can also enhance environmental performance. The literature on the impact of bioenergy and trade in environmental goods on ecological sustainability is growing. However, the empirical literature has not shed light on the impact of forest products trade (FPT) and rural bioenergy on environmental sustainability, leaving a significant gap in the literature. To address this gap, this analysis examines the impact of FPT and rural bioenergy on environmental sustainability using 23 economies from 2000 to 2022. Empirical estimates of the model are obtained by applying several estimation techniques, such as fixed effects (FE), random effects (RE), two-stage least squares (2SLS), generalized method of moments (GMM), and cross-sectional autoregressive distributed lag (CS-ARDL). The findings confirm that FPT and rural bioenergy reduce CO2 emissions and contribute to environmental sustainability. The estimates of control variables of economic growth, industrialization, technological development, urbanization, and financial development are positively significant, confirming that these factors increase carbon footprints and thus hurt environmental sustainability. In contrast, political stability negatively impacts carbon emissions and thus promotes environmental sustainability. In light of these findings, policymakers should encourage forest products trade and rural bioenergy to achieve environmental sustainability.