An Assessment of the Relationship between Energy Subsidies and Ecological Footprint in the Form of the Environmental Kuznets Curve in Selected Countries

Sayadi, Mohamad; Ebrahimi, Mohsen; Hasanzadeh, Zeinab

doi:10.22059/jte.2025.390874.1008988

An Assessment of the Relationship between Energy Subsidies and Ecological Footprint in the Form of the Environmental Kuznets Curve in Selected Countries

Document Type : Research Paper

Authors

¹ Department of Economics of Energy and Resources, Faculty of Economics, University of Kharazmi, Tehran, Iran.

² Department of Economics of Public Affairs, Faculty of Economics, University of Kharazmi, Tehran, Iran.

10.22059/jte.2025.390874.1008988

Abstract

One of the most important issues that has received special attention in recent decades is the issue of ecological footprint and how to reduce it in order to maintain the quality of the environment in human societies. In this regard, the subsidies paid by countries for fossil fuels can affect the ecological footprint. The main goal of this study is to examine the relationship between energy subsidies and ecological footprint among a selection of countries with the highest share of energy subsidies in GDP from 2010 to 2021 in the form of the environmental Kuznets curve. The method used in this study is the generalized method of moments (GMM) and other independent explanatory variables including GDP, urbanization rate, renewable energy consumption, foreign direct investment, government effectiveness and research and development expenditure. The variables of population density, value added of the industrial sector, and political stability have been used as instrumental variables. The research findings confirm the existence of a third-order Kuznets curve between per capita energy subsidy and ecological footprint. Which is in accordance with the hypothesis that the relationship between these two variables is N-shaped. The effect of gross domestic product (GDP) on the ecological footprint is positive and statistically significant at all levels. Foreign direct investment (FDI) and urbanization rate (UR) have a positive effect on the ecological footprint, and the effect of research and development (RD) expenditure on the ecological footprint is negative but statistically insignificant. The effect of government effectiveness (GOV) on the ecological footprint is positive and statistically significant at all levels, and the effect of renewable energy (RE) consumption on the ecological footprint is negative and statistically significant.

Keywords

Main Subjects

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