Protector or Polluter? Environmental Impacts of Remittances

As remittances are largely viewed as potential factor of financial development and economic growth, their role in polluting the environment cannot be denied. In this paper, we investigate the environmental effect of migrant remittance in the global south. By using panel data of 37 countries in the southern hemisphere from 1980 to 2014, results show that remittances worsen the environment. We, therefore, support the remittances-led emission hypothesis. Interestingly, we found that the inflows of remittances do not affect CO2 emissions directly, but indirectly through household consumption, private investment, urbanization and importations. Our results deeply suggest that policymakers in the South should (1) consider remittances as a policy instrument to design strategies related to sustainable and responsible investing, and (2) channel remittances into green consumptions and investments.