The dynamic nexus between biocapacity, renewable energy, green finance, and ecological footprint: evidence from South Asian economies

Striking a balance between economic development and environmental sustainability has evolved into an important primary goal for international organizations, governments and the globe. In the modern era, world economies, particularly developing ones such as South Asian economies, aim to achieve economic growth while simultaneously improving the reduction of ecological footprint (EFP). Against this backdrop, this study explores the impact of economic growth, biocapacity, renewable energy use, natural resource rent, agricultural value-added, green finance and information and communication technology on the ecological footprint. The scope of the relationship among the variables is examined within the environmental Kuznets Curve (EKC) framework with a dataset from 1990 to 2017. The cross-sectional-augmented autoregressive distributed lag (CS-ARDL) approach was applied to estimate the variable's short and long-term interaction. The results indicated the existence of the EKC hypothesis in this region. In addition, agriculture value-added, natural resources, and biocapacity increase EFP. Further, renewable energy use, green finance, and ICT mitigate EFP. The Dumitrescu and Hurlin (D-H) causality test reflected a unidirectional causality association flowing from economic growth, renewable energy use, green finance, and agricultural value-added to EFP. Lastly, there exists a bidirectional nexus between natural resource rent, biocapacity, ICT, and EFP. The present research adds to the existing literature on the factors contributing to environmental pollution by presenting new insights from South Asian economies. This study also provides a reference point for policymakers and government entities in these regions to invest in cleaner technologies, ICT, and green finance to mitigate environmental pollution.