Is economic fitness helpful in achieving environmental sustainability in BRICS economies? A risk exposure perspective

Abstract

A country’s ability to create complex goods and diversify its lines of products is essential for addressing all types of vulnerabilities. Quantifying a country’s vulnerability to extreme climatic events, such as droughts, superstorms, and other natural disasters, and its capacity for successful adaption, is an essential global need that has been ignored. This study examines the role of economic fitness (EF) in addressing climate change risk exposure in BRICS countries in the context of the environmental Kuznets curve using panel data from 1995 to 2015. Panel threshold methodology is employed to ascertain the nonlinear relationship between EF and climate change risk exposure (i.e., Notre Dame Global Adaptation Initiative Country Index (ND-GAIN)). In addition, empirical associations were estimated using panel-corrected standard errors, Driscoll-Kraay standard errors, and feasible generalized least squares estimation techniques. These findings demonstrated an inverted N-shaped link between EF and ND-GAIN. Moreover, even after controlling for significant ND-GAIN influencing variables such as gross domestic product per capita, financial development, and urbanization, our robustness checks revealed significant and consistent findings.