article · Palgrave Communications
Economic growth linked to oil dependency frequently overlooks the rise of greenhouse gas emissions. An analysis of data from Saudi Arabia spanning 1970 to 2014 evaluated how urbanisation, non-oil income per capita, gasoline prices, and the oil sector income share affect carbon dioxide emissions per capita. The findings reveal a long-term relationship between these factors. Both urbanisation and non-oil income contribute positively to emissions, whereas higher gasoline prices reduce them. Crucially, the oil sector income share demonstrates an asymmetrical effect: expansions in the oil income share drive up emissions far more aggressively than contractions decrease them. Furthermore, the impact of growth in oil income share surpasses the individual effects of urbanisation, non-oil income, and gasoline prices. Addressing these environmental pressures requires stricter environmental regulations alongside economic and urban development, coupled with a concerted effort to curb reliance on oil.
Understanding how resource dependency shapes environmental degradation helps nations craft balanced growth strategies. Because oil sector growth increases emissions more rapidly than downturns reduce them, relying on market contractions alone will not clean the environment. Policymakers must actively enforce stringent environmental regulations and decouple economic development and urban expansion from fossil-fuel dependence.
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Abstract Saudi Arabia is an oil-abundant country, and gather a significant portion of its income from the oil sector. Owing to the country’s over-dependency on the oil sector, increasing greenhouse gas emissions due to economic growth have often been neglected. The present research aims to estimate the effects of non-oil income per capita, the oil sector income share, urbanisation, and gasoline price on the CO 2 emissions per capita in Saudi Arabia throughout 1970–2014. We use the latest nonlinear cointegration technique to estimate the asymmetrical effects of the oil sector on CO 2 emissions. We found a long-run relationship in our hypothesised model. We also found a positive impact of non-oil income and urbanisation on CO 2 emissions per capita and a negative effect of gasoline price. Moreover, a positive asymmetrical impact of oil income share on CO 2 emissions is observed. The increasing oil income share has a more significant positive impact on CO 2 emissions than that of decreasing oil income share. Moreover, the effect of increasing oil income share is found greater than non-oil income, urbanisation, and gasoline price. It is suggested to use tight environmental policies while formulating economic growth and urbanisation policies. Further, the economy should cut down its dependency on the oil sector to ensure a cleaner environment.
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DOI: 10.1057/s41599-020-0470-z
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