Moderating role of biocapacity in the fiscal decentralization–environment nexus

Abstract

Global warming is a multifaceted challenge triggered by greenhouse gas emissions attributable to carbon-intensive industrial expansion for economic growth incentives. Therefore, the departure from carbon-intensive to carbon-efficient production process has become compulsory to maintain ecological preservation. In this context, the present study examines how ecological efficiency of affluence, biocapacity, fiscal decentralization, renewable energy expansion, population, financialization, and economic globalization influence carbon intensity in seven emerging and developing countries (EGDVCs) between 2000 and 2019. The outcomes of the Method of Moments Quantile Regression postulated that fiscal decentralization, population, financialization, and economic globalization give rise to carbon intensity. At the same time, ecological efficiency of affluence, renewable energy expansion, and biocapacity support the carbon-neutral objectives of EGDVCs and contribute to ecological preservation. The negative coefficient of the moderator portrays that fiscal decentralization encourages environmental preservation through the biocapacity channel. In other words, fiscally decentralized authorities of countries with substantially high capacity to regenerate materials from nature and absorb waste may bring about energy transition initiatives to tackle carbon intensity and instigate environmental preservation. Keeping in mind these outcomes, EGDVCs are advised to build fiscal decentralization on a more responsive sub-national administrative setup to ensure policy harmony between advancing carbon efficiency and preserving the regenerative capacity of Earth's ecosystem to maintain the Sustainable Development Goals (SDGs) on clean energy (SDG-7) and climate action (SDG-13).