Evaluating the environmental performance index and economic, financial, and political risks impacts in top oil-exporting and importing countries

Numerous economic activities have been found to have adverse effects on the environment. So, making it crucial to focus on the factors that contribute to environmental changes. This study assessed the environmental performance index of top oil-exporting and importing countries by utilizing the environmental performance index (EPI). The study also evaluated impacts of key factors on this index, economic, financial, and political risks, GDP per capita, population density, economic complexity index (ECI), and non-renewable energy, using the panel autoregressive distributed lag model (Panel ARDL). The findings of the EPI calculation revealed that India consistently exhibited the lowest EPI during the study period, while Germany and the United States consistently demonstrated the highest EPI. Moreover, the model estimation results for oil-importing and exporting countries separately indicated that a reduction in political and economic risks in both groups led to an improvement in the EPI. Conversely, a decrease in financial risk resulted in a decline in environmental performance. In addition, the EPI was adversely influenced by GDP per capita, non-renewable energy consumption per capita, and population density. On the other hand, the ECI in oil-importing countries was associated with an enhancement in the EPI, while it had a negative effect on EPI in oil-exporting countries. Therefore, findings underscores the necessity for sustainable policies and investments in green sectors to improve environmental performance globally. • India had the lowest EPI during 2001–2019, while Germany and the United States had the highest. • Reductions in political and economic risks were associated with improved EPI, whereas decreased financial risk was negatively impacted. • In oil-importing countries, greater economic complexity correlates with EPI. Policymakers should prioritize technological advancement and knowledge-based production. • Financial risks negative impact on EPI, countries should develop policies fostering green technologies rather than relying solely on foreign investment. • Implementing sustainable economic and political policies, focusing on green investments, sustainable industries, organizational reforms, and robust regulatory frameworks suggested.