How do transportation-based environmental taxation and globalization contribute to ecological sustainability?

Abstract

Environmental taxation strategies are recognized as powerful instruments for enhancing environmental quality through emissions reduction globally; however, the ecological effects of green taxes in the transportation sector (ETT) have been largely overlooked. To fill this literature void, we undertake a novel attempt to evaluate the effectiveness of ETT and globalization in attaining ecological sustainability in the presence of energy intensity and real GDP per capita. We employ second-generation Westerlund cointegration, pooled mean group autore-gressive distributed lag and fully modified ordinary least squares econometric strategies on data from the Group of Seven (G7) countries from 1994 through 2016. We found long-term stability among the under-analysis var-iables. Notably, we revealed that while ETT shows a neutral effect in the short run, it promotes ecological sustainability in the long run. Likewise, increased globalization is also uncovered to foster ecological sustain -ability from the long-term perspective, though its neutral impact existed in the short term. In addition, energy intensity is found to increase ecological footprint consumption (EFCO); nevertheless, the phenomenon of the Environmental Kuznets Curve is valid for the G7 countries, suggesting a long-term ecological recovery in response to higher economic growth. Concerning causality directions, all variables established a bidirectional relationship with EFCO except for globalization, displaying a unidirectional link stemming from globalization to EFCO. From the normative policy perspective, ETT fiscal policy toolbox can prove a breakthrough instrument in mitigating environmental emissions, contributing to ecological quality. Also, in the face of enhanced global-ization, exchanging green investment endeavors and trade in green and environmentally friendly products can achieve the ecological sustainability agenda of sustainable development.