Political Economy of Environmental Poverty: The Role of Political Risk and Income Level
Political Economy of Environmental Poverty: The Role of Political Risk and Income Level

Summary/Abstract: This study evaluates the role of political risk index and income level on environmental poverty in OECD economies (2004–2022), also examining the role of renewable energy consumption. A multidimensional index for assessing weighted average environmental poverty and a novel index to gauge political risk within OECD economies were developed. Panel econometric procedures (including cross-sectional dependence and slope heterogeneity, CIPS unit root circle, Westerlund cointegration, and CS-ARDL) were employed. Results show that political risk index reduces environmental poverty (a one-percent increase in political risk index lowers environmental poverty by -0.022% and -0.034%), while income increases it (a one-percent increase in income increases environmental poverty by 1.21% and 1.34%). Renewable energy consumption significantly reduces environmental poverty. Robustness analysis using an augmented mean group (AMG) estimator yielded similar results. The Dumitrescu–Hurlin panel causality test showed a bidirectional causal linkage between renewable energy consumption and environmental poverty, and a unidirectional connection between GDP and PRI and environmental poverty.

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