Toward sustainable environment in Italy: The role of trade globalization, human capital, and renewable energy consumption

Abstract

The current study evaluates the effect of financial development (FD), economic growth (GDP), trade globalization (TGLO), renewable energy consumption (REC), and human capital (HC) on ecological footprint (ECF) in Italy using data between 1985 and 2018. We further assess the combined impact of trade globalisation and human capital on ecological footprint as well as the combined effect of trade globalisation and human capital on ecological footprint. In order to explore these associations, the present research utilizes autoregressive distributed lag (ARDL) to catch both long and short-run associations between ecological footprint and its drivers. Furthermore, we use dynamic OLS (DOLS) and fully modified OLS (FMOLS) long-run estimators as robustness checks. Lastly, causality at different frequencies is captured using the frequency domain causality test. The outcomes of the ARDL estimator disclose that (a) a surge in ecological footprint is attributed to an increase in economic growth; (b) a decrease in ecological footprint is attributed to an increase in renewable energy, trade globalisation, and human capital; (c) the combined impact of human capital and trade globalisation lessen ecological footprint, and (d) combined effect of trade globalisation and human capital mitigate ecological footprint in Italy. Furthermore, the outcomes of the causality test revealed that all the exogenous variables can significantly predict ecological footprint in the long run with the exemption of financial development. Based on the study's findings, an SDG-focused policy framework is advocated.