INVESTIGATING THE IMPACT OF LONG AND SHORT-TERM NATURAL RESOURCE RENTS ON ECOLOGICAL FOOTPRINTS: EVIDENCE FROM INDONESIA
DOI:
https://doi.org/10.21837/pm.v23i36.1705Keywords:
Ecological footprint, Environmental Kuznets curve, Mineral rent, Forest rent, Human capitalAbstract
This study examines the relationship between economic growth and environmental sustainability in Indonesia, focusing on the validity of the Environmental Kuznets Curve (EKC) hypothesis and the impact of various factors on a country’s ecological footprint. Although extensive research has explored the connection between carbon emissions and economic growth, the specific roles of economic growth, mineral rent, forest rent, and human capital in determining the ecological footprint in Indonesia remain understudied. This study aimed to investigate two primary aspects. First, it examines the EKC hypothesis in Indonesia using a cubic representation of economic growth, which offers a more nuanced understanding of the relationship between environmental degradation and economic expansion than the traditional inverted U-shaped EKC curve. Second, it analyses the long-term and short-term effects of mineral rent, forest rent, and human capital on the ecological footprint using an Autoregressive Distributed Lag (ARDL) model. Data for the study variables were collected from Indonesia for the period 1991Q1-2021Q4. The ARDL findings revealed that human capital and forest rent contribute to improving Indonesia's ecological footprint. Conversely, mineral rents demonstrate the potential for reducing environmental impacts over time. The results indicate an N-shaped Environmental Kuznets Curve, illustrating the relationship between the ecological footprint and economic growth. This research has significant policy implications for Indonesian decision makers, emphasising the need for efficient transformation of non-renewable resources into a sustainable, eco-friendly environment. Additionally, this study highlights the importance of continuously enhancing environmental awareness and implementing educational reforms to achieve long-term sustainability benefits.
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