Impact of natural resources rents and human capital on ecological footprint in Indonesia: Technological innovation as moderation

Abstract Ensuring a balance between economic and environmental sustainability is challenging for sustainable development. In global economies, particularly in low-middle income countries, there is a strong focus on achieving sustainable growth that balances economic expansion with efforts to limit ecological footprints. In this context, this study investigates the impact of natural resource rents (mineral rent and forest rent), human capital, economic growth, and technological innovation on the ecological footprint in Indonesia using the ARDL model from 1991Q1 – 2021Q4. The results indicated that all variables significantly increased ecological footprint in the short run. On the other hand, technological innovation has been proven to have a moderating effect in lessening the negative environmental consequences of natural resource rents (0.004%) and human capital (0.003%). The findings of this study have several policy implications for Indonesia. First, technological innovation frequently demands large amounts of energy. When this energy is sourced from non-renewable resources, it can lead to environmental degradation. Therefore, the Indonesian government should develop sustainable solutions with environmental protection policies and use environmentally friendly technologies. Secondly, the interaction of technology innovation on mineral rents and human capital only has a negative impact on ecological footprint in the short term. Hence, the government can develop transition plans towards more sustainable practices, covering the entire product lifecycle from raw materials to disposal. Then, the government can educate public about the trade-off of new technologies. An escalating ecological footprint is strongly associated with a corresponding rise in disaster risk. Understanding these correlations helps us reduce ecological footprint and disaster risk.