Financing Education for Sustainable Development: How Relevant Is the Role of Institutions?

This study examines the effect of government expenditure on education on environmental degradation, proxied by carbon dioxide emissions, across a panel of 17 Sub-Saharan African (SSA) countries from 2005 to 2024. It also examines whether the institutional environment in SSA influences this relationship. Applying the Lewbel two-stage least squares method to address endogeneity and omitted variable challenges, the study finds that government expenditure on education reduces environmental degradation in SSA, whereas the poor institutional environment increases it. The results further show that the poor institutional environment in SSA reverses the beneficial effect of government expenditure on education on the environment. These findings suggest that policymakers in SSA can rely on government educational finance to promote environmental sustainability; however, efforts should be geared towards strengthening the institutional environment to realise the positive environmental gains of government educational finance.