Economic expansion can no longer be pursued in isolation from environmental responsibility: Study

New Delhi, Nov 12 (PTI) Economic expansion can no longer be pursued in isolation from environmental responsibility. While carbon emission is usually associated with growth in the short-term, it is a detrimental growth factor in the long-term, a new research has found.

Conducted by the Goa Institute of Management, in collaboration with Xavier Institute of Management (XIM) University, Bhubaneswar and BITS Pilani, Goa, the research has examined the short-term and long-term linkages between the economic drivers and the environment with the aim of illustrating the two-way relationship of growth and climate action.

Published in the prestigious Bulletin of Monetary Economics and Banking journal, the study addresses how inflation, trade, energy use and carbon emissions jointly shape regional output.

By applying Advanced Econometric Modelling (ARDL), the researchers have showcased that economic expansion can no longer be pursued in isolation from environmental responsibility.

"The approach to growth in the Asia-Pacific can no longer be at variance with the environment; it must be aligned. There is no doubt about it-- sustainability is not an obstacle to growth and development, it is an enabler. The region, with the combination of clean energy, strategic policy, and ethically responsible investment, will be able to deliver growth, not only this decade but for many decades to come," said Chinmaya Behera, Associate Professor, GIM.

The research found that trade openness and Gross Domestic Product (GDP) are still the major long-term determinants of economic output.

"Economic expansion can no longer be pursued in isolation from environmental responsibility, and while carbon emission is usually associated with growth in the short-term," he said.

"Context-specific policy design becomes clear when appreciating how Renewable Energy (RE) will affect different economies. Policymakers recognise there is no trade-off between economic growth and protection of the environment," he added.

Behera explained that the findings of this research will enable the design of fiscal policy instruments that encourage environmentally sustainable economic activities within an enabling framework to be inclusive of the planned economic growth.

"With Asia contributing to nearly half of global GDP growth and accounting for a major share of carbon emissions, it stands at a crossroads between economic ambition and environmental urgency. Against this backdrop, the research bridges economic, policy and sustainability and contributes to evidence-based policymaking that drive inclusive growth," he said. PTI GJS HIG