Land productivity and environmental sustainability for G7 economies: Does an inverted U-shaped curve exhibit green finance?

Abstract

Land productivity including both water and agriculture are equally important for sustainable environment. The study investigate the role of water productivity and agriculture land along with the non-linear effect of green finance on environment. Specifically, this research aims to investigate the effect of agriculture land, water productivity, green finance, environmental taxes and technologies on environmental sustainability in the Group of Seven (G7) countries, covering the timeframe of 1990–2020. The study also scrutinized the effect of green innovation and environmental regulations on the environment. This study uses novel panel data methods that are robust to nonparametric data. The empirical data are confirmed to be nonnormally distributed; therefore, the quantile regression approach is used. The empirical results confirmed an inverted U-shaped curve for green finance, as its linear term is positive, and its nonlinear term negatively impacts carbon emissions. This supports the idea that green finance is effective for a group of seven economies; however, its magnitude should increase. Moreover, agricultural land, water productivity, environmental regulations, and green innovation negatively impact carbon emissions. By contrast, increasing economic activities, such as gross domestic product, increase carbon emissions. This study recommends increasing the focus on green finance, agricultural land, water productivity, and environmental regulations for the G7 countries to achieve the target of COP 27 and address climate change.