Interlinkages Between Environmental Quality, Economic Growth, and Human Capital in Indonesia: Implications for Sustainable Development Policies

This study investigates the complex interrelationships between environmental quality, economic growth, and human capital across 34 provinces in Indonesia from 2017 to 2023, employing a vector autoregression (VAR) approach.The analysis seeks to elucidate how these three critical dimensions influence one another and to provide insights for formulating sustainable development policies that balance economic progress with environmental preservation and human capital enhancement.The findings reveal a bidirectional causality between environmental quality and economic growth, indicating that improvements in one are likely to promote advances in the other.A similar bidirectional causality is observed between environmental quality and human capital, suggesting that better environmental conditions may enhance human capital development, which in turn can contribute to environmental sustainability.However, the relationship between economic growth and human capital is found to be unidirectional, with evidence showing that human capital positively influences economic growth, but not vice versa.This unidirectional causality highlights the importance of investing in human capital to sustain economic growth without compromising environmental integrity.The study underscores the necessity of integrated policy approaches that simultaneously address environmental quality, economic growth, and human capital development.Focusing narrowly on economic growth without considering its environmental and social dimensions may lead to adverse outcomes, undermining long-term sustainability objectives.Therefore, it is recommended that policymakers in Indonesia adopt a holistic perspective, integrating environmental, economic, and social policies to achieve sustainable development goals.The findings of this study provide a nuanced understanding of the interplay among these factors and offer valuable guidance for designing policies that ensure balanced and sustainable development in Indonesia.