Understanding the economy of natural resources: Fundamental role of natural resources in sustainable development

Abstract

Understanding the economy of natural resources is crucial for ensuring sustainable Development. Recently, industrialized economies have concentrated on reducing CO2 emissions to achieve the COP26 goal. This study explores how the COP26 goal and sustainable economic growth relate in high-income countries between 1990 and 2021. The importance of natural resources to the COP26 goal is also looked at in this study. This study uses an advanced cointegration test to reveal that the variables have a long-term relationship. This study employed panel quantile regression to perform an empirical analysis, and the findings indicate that economic growth has a detrimental effect on regional environmental quality. Along with the pace of income growth, natural resources are one of the region's primary drivers of environmental degradation. The results, however, also indicate that attaining the goal of COP26 would largely depend on energy efficiency and the production of electricity from renewable sources. The latter element considerably reduces emissions across quantiles. This study also employs many parametric methods, including bootstrap quantile regression, to support the empirical findings. Based on the empirical results, this research suggested that to achieve the COP26 objective, economic growth should be raised as a better instrument for investment in R&D, sustainable resource extraction and consumption, improved renewable energy generation, and improved energy efficiency.