External finance for climate change mitigation: Assessing the impact of energy aid and total aid inflows on the ecological footprint

Abstract

This study examines the role of energy aid and total aid inflows in the ecological footprint of BRICS countries while controlling the economic growth, energy consumption, remittance inflows, and foreign direct investment inflows for the period spanning from 1992 to 2016. The empirical outcome of this work shows the long-run relationship for the selected variables. We find that overseas energy aid, total aid, and foreign direct investment inflows reduce ecological footprint while economic growth, remittance inflows, and energy consumption fuel it. These findings are robust across the alternative panel techniques used. However, the results imply that the energy aid, total aid, and investment capital coming from other countries and international agencies to BRICS countries are enhancing green energy plans rather than profiteering. This may be one of the reasons for the reduction of the ecological footprint in BRICS countries. Therefore, this study further suggests an effective climate mitigation policy for ensuring a life-sustaining green environment if the governments of BRICS countries can stimulate greater inflows of overseas energy aid, total aid, and foreign direct investment towards making the investment in green energy plans.