Factors Responsible for Environmental Sustainability in G-20 Nations: A Panel Data Analysis

Deleterious external consequences of various productive activities have impacted the quality of the environment in all countries worldwide. These productive activities damage the environment by emitting greenhouse gases, particularly carbon dioxide, excessively using natural resources and producing solid pollutants or waste. Since these significantly contribute to environmental deterioration, policymakers should take appropriate action to reduce the external effects of these three outcomes of productive activities. In light of this challenging situation, the present study considers environmental impact (EI)—a combined external effect of three factors—as a representative of ecological degradation and examines the impact of four driving forces on the environmental effect across all G-20 nations from 1990 to 2019 based on the STIRPAT model. This study employs several econometric methodologies, including ARDL-PMG and FMOLS, to investigate the causal relationship between the four forces and EI. The primary conclusion of the analysis is based on the ARDL-PMG results, which reveal that while urbanisation and gross capital formation (GCF) have positive effects, GDP per capita and population levels have a long-term negative impact on EI. The results also demonstrate that population growth and productive activities pose the most significant obstacles to long-term improvements in environmental sustainability.