Environmental cost of natural resource rents based on production and consumption inventories of carbon emissions: Assessing the role of institutional quality

The association between resource rents, energy intensity, trade and disaggregated CO2 emissions is examined for 93 nations spanning 23 years (1995-2017), while accounting for the quality of government (QoG). The results show that natural resource rents have positive and statistically significant impact on both consumption-based and production-based carbon emissions in the Low QoG countries. For the Upper-High QoG countries, the estimates show statistically insignificant impact on consumption-based carbon emissions and significantly negative (decreasing) impact on production-based emissions. The results also provide evidence that economic growth and import trade have stronger degrading impact on the environment in the Low QoG countries. Based on these results, we conclude that quality of governance plays important role in how natural resources rents are used and consequently their impacts.