Resources Policy 63 (2019) 101428

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Resources Policy
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The impact of natural resources, human capital, and foreign direct T

investment on the ecological footprint: The case of the United States
Muhammad Wasif Zafara, Syed Anees Haider Zaidia,b, Naveed R. Khanc, Faisal Mehmood Mirzad,
Fujun Houa,∗, Syed Ali Ashiq Kirmanie
a
School of Management and Economics, Department of Management Science & Engineering Beijing Institute of Technology, Beijing, 100081, China
b
COMSATS University Islamabad, Sahiwal Campus, Pakistan
c
Department of Management Sciences, Bahria University Karachi Campus, Pakistan
d
Department of Economics, Hafiz Hayat Campus, University of Gujrat, Gujrat, Pakistan
e
Department of Management Sciences, COMSATS University Islamabad, Sahiwal Campus, Pakistan

A R T I C LE I N FO A B S T R A C T

Keywords: This study explores the effect of the amounts of natural resources, human capital, and foreign direct investment
Natural resources abundance on the ecological footprint in the presence of energy consumption and economic growth using US data from
Foreign direct investment 1970 to 2015. We use the Zivot-Andrews unit root method to check the stationary properties of data series, along
Human capital with structural breaks and employ an Auto Regressive Distributive Lag (ARDL) model to estimate the short-run
Economic growth
and long-run elasticities among the variables. Our findings suggest that economic growth and energy con-
Ecological footprint
sumption have negative relationships with the ecological footprint. Natural resources and human capital are
helpful in curtailing ecological footprint, as is foreign direct investment (FDI). The results of Granger causality
show bidirectional causality between energy consumption and the ecological footprint and between economic
growth and the ecological footprint, while unidirectional causality runs from natural resources to the ecological
footprint and from human capital to natural resources. The US must attract more FDI and human capital from
other countries to ensure that established companies and new firms can innovate swiftly in support of the quality
of life and sustainable development.

1. Introduction environment and compares the regenerative capacity of the biosphere

The biggest challenge to global sustainable development is the en-
vironmental degradation that is due to increasing emissions of green-
house gases (GHGs). Among the GHG emissions, the literature has often
used carbon dioxide (CO2) emissions as a proxy in studies of environ-
mental hazards because it occupies the biggest share of GHGs and its
data is readily available. However, CO2 emissions are not always an
appropriate indicator of environmental degradation. For example,
Ulucak and Apergis (2018) argued that CO2 emissions may prove a
weak indicator in some cases, particularly for the stocks of resources
like oil, soil, mining, and forests. Therefore, to address environmental
degradation for sustainable development, we need an aggregate in-
dicator (Solarin and Bello, 2018). In this context, the ecological foot-
print is widely used to measure environmental degradation (Solarin and
Bello, 2018) and represents ecological sustainability (Chen et al., 2010).
The ecological footprint indicates the anthropogenic pressure on the
with human-based consumption (Rees, 1992). Therefore, we use the
ecological footprint as an indicator of environmental quality in this
study.
This study investigates the determinants of the ecological footprint
in the United States (the US) by examining the impact of the amounts of
natural resources, human capital, and foreign direct investment (FDI)
on the ecological footprint. Additionally, energy consumption and
economic growth have been added in ecological footprint function as
additional determinants of environmental degradation. To achieve the
said objectives, this study takes the US as a case study.
The US has enjoyed record economic growth in the previous two
decades. The US's gross domestic product (GDP) per capita is ranked
eighth among 189 countries, and GDP is ranked first, but the US
economy is facing two critical issues: CO2 emissions and overuse of
natural resources. In 2016, CO2 emissions in the US were 5.01 million
kilotons (kt), the second-largest in the world. Similarly, in 2016, the US

∗
Corresponding author. Main Building, School of Management & Economics, Beijing Institute of Technology, Zhongguancun campus, Beijing, China.
E-mail addresses: wasif.zafar6@yahoo.com (M.W. Zafar), aneeshaider5@hotmail.com (S.A.H. Zaidi), naveed.r.khan@gmail.com (N.R. Khan),
faisal.mirza@uog.edu.pk (F.M. Mirza), houfj@bit.edu.cn (F. Hou), alikirmani@ciitsahiwal.edu.pk (S.A.A. Kirmani).

https://doi.org/10.1016/j.resourpol.2019.101428
Received 22 March 2019; Received in revised form 15 May 2019; Accepted 12 June 2019
0301-4207/ © 2019 Elsevier Ltd. All rights reserved.
M.W. Zafar, et al.
imported twenty of ninety mineral commodities from other countries.
In spite of these imports, the US is the seventh-largest holder of natural
resources1 in the world (World Atlas, 2018). Since the US is not de-
pendent on a single country for its resources, it is largely autonomous in
its economic development, and US policy regarding sustainable devel-
opment is independent of multilateral efforts, including the United
Nations' Sustainable Development Goals. Therefore, how natural re-
sources impact the US's ecological footprint can offer unique insights
into ecological sustainability.
The first question this study addresses concerns how natural re-
sources impact the ecological footprint. Per the Global Footprint
Network (GFN, 2018), natural resources like forests, croplands, fishing
grounds, grazing lands, and developed lands offset human-caused CO2
emissions and provide capital for energy production. On the other
hand, some natural resources, such as petroleum and coal, degrade the
environment (Ahmadov and van der Borg, 2019). Natural resources are
closely connected with an economy's income level. In the early stages of
economic development, humans use more energy (i.e., more natural
resources) and neglect its environmental effects, but in later stages of
economic development, when the quality of life improves, they start
demanding a cleaner environment, energy-efficient products, and pro-
tection of natural resources. Thus, environmental quality starts im-
proving, which indicates the presence of the Environmental Kuznets
Curve (EKC) in the relationship between energy use and the ecological
footprint.
The ecological footprint is useful for determining and managing the
natural resources for various sectors of a society (GFN, 2018). Since the
pioneer studies of Auty (2000), Karl (1997), and Sachs and Warner
(1997), considerable attention has been paid to natural resources and
economic growth worldwide. According to Hailu and Kipgen (2017),
the amount of natural resources is consequential for a country's eco-
nomic development, depending on the extraction procedure and use of
such resources. Balsalobre-Lorente et al. (2018) found that human ac-
tivities negatively impact the environment, reduce production capacity,
and deteriorate water quality. In such scenarios, natural resources play
a positive role in increasing economic growth and help to improve
environmental quality (Charfeddine, 2017; Hassan et al., 2018).
The extant empirical work confirms that resource-rich economies
may attain lower economic growth than resource-scarce economies, a
phenomenon popularly known as the resource curse. To explain this
finding, a plethora of research work has presented a variety of en-
vironmental, political, economic, and institutional factors, but this
work has contained heterogeneous findings (Robinson et al., 2006).
One group of scholars has considered that natural resources' effect on
the economy is based on institutional quality (Mehlum et al., 2006;
Sala-i-Martin and A.S., 2008), while another group found that countries
with high levels of human capital benefit most from their natural re-
sources (Gylfason, 2001; Lederman and Maloney, 2007). A third group
of scholars has established that both human capital and institutions
have key roles to play in the resources curse for an economy (Arezki
and Ploeg, 2007; Sachs and Warner, 1997). Therefore, little agreement
has been reached on the impact of rich natural resources on economic
development. Because of this debate, we include human capital in the
function of the ecological footprint. Considerable changes have been
observed in the US's human capital. Investment in human capital fell in
the US in 2016, dropping from sixth to twenty-seventh among the
1
The US has been known as the leading producers of coal for decades and
currently owns more than 31 percent of the global coal reserves. It also controls
ample quantity of timber. Per the World Atlas (2018), the US possess total
natural resources worth $45 trillion, of which coal and timber represents more
than 89 percent. The US's total reserves of coal and metals were valued in
2015 at $109.6 billion. Beside these reserves, the US owns a significant deposit
of natural gas, gold, oil, and copper. The mining industry directly employs more
than 158,000 people.
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Resources Policy 63 (2019) 101428
world's countries (Lim et al., 2018). However, it has attracted a sig-
nificant amount of FDI since the start of this decade, leading to the
question concerning the country's ecological footprint is being affected
by the quality of its human capital, its potential FDI, and the amount of
its natural resources.
Human capital affects energy security and environmental issues and
the ability of humans to manage their workspaces resourcefully (Bano
et al., 2018). Per Kwon (2009), human capital plays an important role
in reducing emissions by increasing energy efficiency. Human capital
also enhances individuals' productivity by improving production pro-
cesses and increases economies’ readiness to adopt energy-efficient and
pollution-free technologies in the industrial, household, and transport
sectors. Exploring the impacts of human capital on CO2 emissions can
help economies achieve their sustainable economic development goals
(Lan et al., 2012). Per Zallé (2018), the effective use of natural re-
sources and energy consumption is heavily dependent on human ca-
pital. The literature has suggested that human capital helps in im-
proving environmental quality and reducing the consumption of fossil
fuel energy, so this study also analyzes the role of human capital in the
ecological footprint.
Another emerging concept that is related to the ecological footprint
and economic growth is FDI, which sharpens a country's economic
growth by increasing productivity, accumulations of capital, and the
diffusion of technology. Therefore, most developing countries are eager
to attract FDI (Balasubramanyam et al., 1998; Seker et al., 2015). FDI
inflows to developing countries in 2016 increased 21 percent to a re-
cord of $500 billion. The debate about the relevance of FDI to the en-
vironment, which began in the 1990s (UNCTAD, 2008), has addressed
two explanations for the nexus of FDI and the environment. The first
explanation applies the Pollution Haven Hypothesis, which suggests
that a country's environmental regulations can influence the location of
the firms or industries (Zarsky, 1999). This hypothesis, confirmed by
You and Lv (2018) states that developed economies shift their pro-
duction to developing countries because of their weak environmental
regulations. The second explanation supports the Pollution Halo Hy-
pothesis, which focuses on the environmental quality of international
firms and industries, rather than their locations. Environmentally
friendly foreign firms bring advanced, energy-efficient, and en-
vironmentally cleaner technologies with strong environmental man-
agement systems to the host countries (Wang et al., 2013; Zarsky,
1999). Although FDI has great potential to increase economic growth, it
can also harm environmental quality (Chandran and Tang, 2013) if
industries in developed countries with strong environmental standards
move to developing countries with lower standard. Therefore, FDI is
considered an additional determinant of environmental degradation,
although the nature of the nexus among FDI, economic growth, and
environmental pollution remains unclear and needs further investiga-
tion (Al-mulali and Foon, 2013).
To measure the impact of natural resources and human capital on
the ecological footprint, we include energy consumption and economic
growth in the ecological footprint model, as they are important de-
terminants of environmental degradation. The nexus of energy growth
with emissions has been extensively explored under the framework of
the Environment Kuznets Curve (EKC) (e.g., Ahmad et al., 2016; Ajmi
et al., 2015; Sencer Atasoy, 2017; Shahbaz and Sinha, 2009; Sinha and
Shahbaz, 2018; Zafar et al., 2019). Therefore, this study also comments
on the presence of the EKC for the case of the US.
The case of the US should be studied thoroughly because it is the
world's second-largest emitter of CO2 (BP Statistics, 2017), the largest
source of FDI (World Bank, 2017), and the seventh-largest holder of
natural resources in the world (World Atlas, 2018). In addition, the US
is one of the richest countries in the world, with a share of 24.6 percent
of the world's GDP (World Bank, 2017). Per the World Economic Forum
(2017), the US fourth in the global ranking of human capital. The lit-
erature has largely ignored the roles of natural resources and human
capital in the US's ecological footprint in the period from 1970 to. To
M.W. Zafar, et al.
the best of our knowledge, the inter-relationships among the ecological
footprint, natural resources, FDI, and human capital have not been
studied together.
This study contributes to the literature by presenting the case of a
developed economy and identifying the link between the ecological
footprint and the amount of natural resources, human capital, and FDI.
Many developing countries follow the US's policies, so the challenges
faced by developed economies like the US deserve investigation.
Keeping in view the heavy recessions and financial crises in the US
economy in the current decade, we apply advanced stationarity tests to
check for structural changes in the data series. The bound testing ap-
proach is used to estimate the long-run relationships among the vari-
ables. The paper paper's findings also have useful policy implications.
The remainder of this study proceeds as follows. Section II presents
a literature review, while section III provides the data and describes
theoretical framework, section IV explains the data and econometric
strategy, section V discusses the results, and section VI concludes the
paper and describes its policy implications.
2. Literature review
Studies in the literature on energy, the environment, and growth
literature have used various proxies to measure environmental quality.
For instance, Cole et al. (1997) used Nitrous Oxide (NO2), while Danish
and Baloch (2018) used Sulfur Dioxide (SO2), and Ahmad et al. (2016),
Mrabet et al. (2017), and Zaidi et al. (2018) used CO2 emissions, but
few studies have used the ecological footprint as a proxy for environ-
mental degradation. Al-mulali et al. (2015) tested the EKC hypothesis
through the ecological footprint using data from ninety-three countries
over the period from 1980 to 2008. Their fixed effects and Generalized
method of moments (GMM) test results indicated the presence of the
EKC hypothesis.
For fifteen Middle East North African (MENA) countries,
Charfeddine and Mrabet (2017) investigated the effects of GDP and
social-political factors on the ecological footprint by applying the Fully
Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least
Squares (DOLS) approaches and found that energy consumption and
political institutions degrade environmental quality by increasing the
ecological footprint. Uddin et al. (2017) checked the links among the
ecological footprint, economic growth, trade openness, and financial
development for the twenty-seven countries with the highest emissions
using cointegration methods over the period from 1991 to 2012. Their
results showed that economic growth increases the ecological footprint,
while financial development and trade openness reduce it. Using the
ARDL approach, Mrabet et al. (2017) investigated the links among GDP,
trade openness, oil prices, and environmental quality for Qatar over the
period from 1980 to 2011 using an ecological footprint to measure
environmental quality. Their long-run estimation results revealed that
economic growth degrades environmental quality by increasing the
ecological footprint. Imamoglu (2018) divided economic growth into
formal and informal economic activities and found that both types of
GDP and energy uses increase the ecological footprint in Turkey. Destek
et al. (2018) used the EKC and the ecological footprint as determinants
of environmental degradation in the European Union (EU) and in-
vestigated their links with nonrenewable energy, renewable energy,
economic growth, and trade openness. Their results confirmed the
presence of the EKC hypothesis and indicated that the ecological foot-
print increases with an increase in nonrenewable energy consumption.
Using the STRIPAT model, Bello et al. (2018) observed the link between
the ecological footprint and energy consumption from hydro sources by
controlling for the effect of economic growth and urbanization in Ma-
laysia and found that energy consumption and urbanization sig-
nificantly reduce the ecological footprint. Akif and Asumadu (2019)
looked into the impact of energy consumption and financial develop-
ment on the ecological footprint in eleven newly industrialized coun-
tries using data from 1977 to 2013. They used the Augmented Mean
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Resources Policy 63 (2019) 101428
Group (AMG) approach for their long-run estimations, which also
controls for the issue of heterogeneity among the cross-sections in the
panel data. Their results showed a significant positive link between
energy consumption and the ecological footprint.
By controlling for heterogeneity and the cross-sectional issue in the
panel data, Ulucak and Bilgili (2018a) examined the impact of human
capital on the ecological footprint within the framework of the EKC
hypothesis by dividing countries into low-, middle-, and high-income
countries for the period from 1961 to 2013. Their results showed that
the human capital index decreases the ecological footprint for all
countries. Hassan et al. (2018) used the ARDL approach to investigate
the link among natural resources, human capital index, economic
growth, and the ecological footprint over the 1971–2014 period for
Pakistan and found that GDP and natural resources increase the eco-
logical footprint.
Solarin and Al-Mulali (2018) used various proxies to measure en-
vironmental degradation (the ecological footprint, CO2 emissions, the
carbon footprint) and checked its link with economic growth and FDI
for twenty developed and developing countries. The results of their
AMG methodology showed that FDI has no significant relationship with
the ecological footprint for the full sample of countries but a negative
and statistically significant relationship for developed countries and a
positive relationship for developing countries. They also showed that
energy consumption and economic growth increase the ecological
footprint.
We found no time series study that investigated the determinants of
ecological footprint by discussing the role of the amount of natural
resources, human capital, and FDI in the US's ecological footprint. Few
studies that have used panel data have included US data in the panel.
For example, Ulucak and Bilgili (2018b) categorized data into low-
middle-high-income countries, and Uddin et al. (2017) used the twenty
countries with the highest emissions. Solarin and Al-Mulali (2018) used
the AMG approach to analyze the relationships among the variables for
twenty countries, including data from the US. However, numerous
studies have used CO2 emissions as a proxy for environmental quality in
investigating the relationship using various variables for the US. For
example, Aslan et al. (2018) used the bootstrap rolling window tech-
nique, Dogan and Turkekul (2015) employed the ARDL method, and
Bildirici (2017) used ARDL approach.
In short, we observed that GDP and energy consumption are the key
drivers of the ecological footprint, so the lack of empirical evidence on
the relationship between these variables encourages us to fill this gap.
We use the ARDL approach to investigate the impact of the amount of
natural resources, human capital, and FDI on the ecological footprint by
incorporating energy consumption and economic growth into the
function of the ecological footprint.
3. Theoretical framework and model specification
The concept of the ecological footprint was first established in the
1990s by William Rees and Mathis Wackernagel. Since then, it has been
used in their various publications (e.g., Rees, 1992; Rees and
Wackernagel, 1996; Wackernagel and Rees, 1995). The ecological
footprint measures environmental degradation as human-based con-
sumption of resources, where the total earth use is an appropriate in-
dicator of humans’ impact on natural resources (Hoekstra, 2008). Since
then, various researchers have used this measure for various purposes.
The present study also uses the concept of the ecological footprint to
represent environmental degradation, along with such determinants as
natural resources, FDI, human capital, energy consumption, and eco-
nomic growth.
Currently, the consumption of global resources has risen to the point
at which the consumption has exceeded the earth's production (Haberl
et al., 2007). The global economic challenges that have emerged during
the last four decades include the consumption of the forest in the tro-
pical zones, which is occurring faster than its growth (UNEP, 2007);
M.W. Zafar, et al.
increased extraction of natural resources like fossil fuels, biomass, mi-
nerals, and metals, which cannot be replaced in many lifetimes
(Krausmann et al., 2009); sharply increased food consumption per ca-
pita (Turner, 2008); increasing GHG emissions that effect changes in
the climate, which has an adverse impact on the ecosystem (UNEP,
2007); and increased human-induced pressures on nature (Hertwich
and Peters, 2009; Krausmann et al., 2009). All of these resource chal-
lenges increase the importance of studying the US's ecological footprint
with regard to its use of natural resources.
The literature provides three main benefits of FDI with regard to the
host country's economic growth. First, the host country receives useful
capital in the form of the latest technology and new inputs (Borensztein
et al., 1998; Glass and Saggi, 2002; Osano and Koine, 2016). Second,
FDI improves the knowledge and skills of workers in the host country
with the help of new training opportunities (Hansen and Rand, 2006;
Lee, 2013). Third, FDI enhances competition by removing entry barriers
in the host country and weakening the market power or monopoly of
existing companies (Antoci et al., 2015; Bitzer and Görg, 2009; Resmini,
2000). Thus, FDI increases the host country's productivity and boosts its
economic growth. Most of the existing studies have linked FDI with
economic growth, but the impact that FDI can have on the local en-
vironmental quality still needs investigation.
Human capital is considered the most important input value used in
the production process (Bano et al., 2018; Dias and McDermott, 2006).
Human capital includes the health, education, knowledge, work ex-
perience, skills, and training of the people in a particular economy.
Human capital can be divided into general human capital, which con-
sists of education and experience and is also called human capital stock;
firm-specific human capital, which includes the knowledge, education,
and skills acquired at the firm level; and task-specific human capital,
which includes the knowledge, experience, training, and skills that
pertain to a specific task (Kwon, 2009).
Numerous studies have investigated the relationship between en-
vironmental quality and economic growth, specifically examining the
EKC hypothesis. The EKC hypothesis proposes that environmental
quality declines in the early stages of economic growth, but it starts
improving after it reaches a certain threshold. EKC has been checked by
many researchers (e.g., Apergis, 2016; Baek, 2015; Ben Jebli and Ben
Youssef, 2015; Damania et al., 2018; Dogan and Seker, 2016; Ozturk
and Acaravci, 2013; Shahbaz et al., 2015), but it was Aydin et al. (2019)
who pointed out that the EKC phenomenon is a complex concept with
which to check the relationship between the ecological footprint and
economic growth.
To analyze the impact of natural resources, FDI, human capital,
energy consumption, and economic growth on ecological footprint, this
study uses the following equation:
EF = f (GDP , ENG, NR, FDI , HC ) ,
where EF is the ecological footprint, GDP is gross domestic product,
ENG is energy consumption, NR is natural resources, FDI is foreign
direct investment, and HC is human capital. All of these variables are
transformed into their natural logarithms to reduce dispersion in the
data and to minimize issues related to multicollinearity and hetero-
scedasticity. The log-linear-transformed data also produces more effi-
cient and consistent results than the simple linear form does (Adebola
Solarin et al., 2017; Sinha and Shahbaz, 2018). The log-linear multi-
variable model is written as:
lnEFt = β0 + β1 lnGDPt + β2 ln ENGt + β3 lnNRt + β4 ln FDIt + β5 ln HCt
+ εt ,
where t is the time series operator, εit is the error term, and β1, β2, β3, β4,
and β5 are the coefficients of economic growth, energy consumption per
capita, natural resources, FDI, and human capital, respectively.
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Resources Policy 63 (2019) 101428
4. Data and econometric strategy
4.1. Data
This study uses time series data for the US from 1970 to2015 for
estimation purposes. The ecological footprint is used to measure en-
vironmental quality, natural resources are measured as a percentage of
GDP FDI is measured as FDI inflows as a percentage of GDP, economic
growth is measured as GDP per capita in US dollars at constant prices,
and energy consumption is been measured in kilograms (KG) per capita.
The data for the ecological footprint comes from the Global Footprint
Network (GFN, 2018), whereas the data for FDI, economic growth,
natural resources, and energy consumption are collected from the
World Development Indicators (World Bank, 2017). The data on human
capital is taken from the Penn World Tables (PWT) 9.0 (Feenstra and
Robert Inklaar Timmer, 2015) database.
4.2. Econometric strategy
We used the ARDL approach to find long-run and short-run dynamic
relationships among the variables. This approach, the pioneer work of
Pesaran et al. (2001), was designed to test the co-integration among
variables. Many scholars have used a variety of co-integration techni-
ques in their studies. Some of these techniques (e.g., Engle and Granger,
1987; Johansen and Juselius, 1990; Phillips and Hansen, 1990) contain
such drawbacks as not incorporating structural breaks and ignoring the
sequence of integration among the variables (Shahbaz et al., 2013b),
which is the primary reason for our preference for the ARDL bound
testing approach to cointegration. This approach contains numerous
advantages over the existing econometric techniques: (i) It is useful
even when the variables are stationary at the I(0) level, 1st difference I
(1) or the mixed integration level; (ii) the estimates based on the ARDL
approach remain robust regardless of the sample size and the en-
dogeneity (Harris and Sollis, 2003); (iii) the ARDL approach can help
researchers derive a dynamic unrestricted error correction model
(UECM) with a simple linear transformation; (iv) the ARDL bounding
test is the best technique for time series data when lag orders can be
changed to derive more robust results; (v) the UECM joins the long-run
and short-run dynamics and keeps the long-run data intact; and (vi) the
ARDL is a modeling approach that addresses the issues of endogeneity
and serial correlation when we use time series data (Pesaran et al.,
2001). The ARDL equation for our specific case is presented as:
p q q
ΔlnEF = c0 + ∑i = 1 β1ΔEFt − r + ∑i = 0 β2 ΔlnNR t − r + ∑i = 0 β3 ΔlnHCt − r +
q q q
∑i = 0 β4 ΔlnFDIt − r + ∑i = 0 β5 ΔlnGDPt − r + ∑i = 0 β6
ΔlnENGt − r + λ1 lnEFt − 1 + λ2 lnNR t − 1 + λ3 lnHCt − 1 + λ 4
lnFDIt − 1 + λ5 ln GDPt − 1 + λ 6 lnENGt − 1 + εt
(2)
where the 1st difference operator is denoted by Δ, the lag length is
denoted by P, and coefficients are shown through β. We also frame two
types of hypotheses from equation (2), representing long-run relation-
ships, the first of which is the null hypothesis of no co-integration (H0:
λ1 = λ2 = λ3 = λ 4 = λ5 = 0 ) and the of which is the alternative hy-
pothesis (H1: λ1 ≠ λ2 ≠ λ3 ≠ λ 4 ≠ λ5 ≠ 0 ).
A pre-condition of ARDL is to check the data integration levels to
ensure that the series is integrated at the maximum first difference level
and that none of the variables are stationary at the second difference
level. If series are stationary at the second difference level, ARDL's F
values will be unreliable (Ouattara, 2004). Various unit root tests can
be used to examine the stationary properties of the series (e.g., Dickey
and Fuller, 1979; Phillips and Perron, 1988; KPSS from Kwiatkowski
et al., 1992), but these tests do not consider the structural breaks in the
data and may produce unreliable results. Therefore, the unit root tests
are required to indicate structural breaks (Shahbaz et al., 2019).
M.W. Zafar, et al. Resources Policy 63 (2019) 101428

Because the US faced severe financial crises in 2008 and the following
recession, structural breaks in the data of the US are obvious. This study
uses the Phillips and Perron test, the Augmented Dickey-Fuller test, the
Dickey-Fuller Generalized Least Squares (DF-GLS) test, and the KPSS
test to check the unit root. We also apply the Zivot-Andrews unit root
tests for structural breaks to ensure reliable and accurate results.
After examining the order of integration of all the series, we apply
the ARDL bound testing approach. The appropriate lag order of data
series is selected in the first step, and the long-run relationship among
the variables is tested (with the help of F-statistics) in the second step.
This study used the Schwarz Bayesian Information (SIC) criteria for
optimal lag selection. The ARDL bound testing approach confirms the
presence of a long-run cointegrating relationship among the variables.
We apply the Johansen cointegration technique to verify and test the
robustness of these results. The ARDL results provide information about
the long-run and short-run dynamics but do not provide the direction of
the relationships, which is essential to develop policy implications.
Therefore, we use the Vector Error Correction Model (VECM)-based
Granger Causality analysis to check the direction of causal relationships
among the variables. The VECM Granger causality approach conveys
the short-run as well as the long-run causality among the variables. First
we calculate the short-run causality with the help of the Wald test; then
we work out the long-run causality through ECM. Long-run causality is
confirmed if the error correction term has a negative sign and is sta-
tistically significant. The VECM Granger causality is formulated
through the following equation:
5. Results and discussions
The correlation matrix and descriptive statistics are shown in
Table 1. The mean and median figures corresponding to all variables
are largely uniform. The results of standard deviation reveal that the
instability in economic growth, the amount of natural resources, and
FDI is greater than that of the ecological footprint, energy consumption,
and human capital. The Jarque-Bera value shows a normal distribution
of all the variables, and the time series data contain no outliers. The
correlation results indicate that the ecological footprint is positively
correlated with GDP and energy consumption, and natural resources,
human capital, and FDI are correlated with the ecological footprint.
The results of the unit root tests, shown in Table 2, reflect that the
variables are integrated at the first difference level, and none of them is
integrated at the second difference level. Our application of the Zivot
and Andrews (1992) test identifies structural breaks in the data series
(Table 3). The findings reveal that the data is stationary at the first
difference level and that structural breaks exist in the years 1983, 1984,
1987, 1992 and 2008, indicating that economic structure and policy
changes occurred in those years. The results allow us to apply ARDL, as
all of the series are integrated at I(0) or I(1).
Table 4 contains the results of VAR lag order selection criteria. We
selected lag 1 using the SIC.
The results of the ARDL bound cointegration test shown in Table 5
confirm that long-run cointegration exists in the ecological footprint
model. The value of the bound test F-statistic is 3.76, which is sig-
nificant at the 1 percent level when compared against the upper and

⎡ Δ lnEFt ⎤ ⎡ δ1 ⎤ ⎡ θ11p θ12p θ13p θ14p θ16p θ17p ⎤ lower critical bounds. The results of the ARDL bound test are verified
⎢ Δ lnGDPt ⎥ ⎢ δ2 ⎥ ⎢ θ21p θ22p θ23p θ24p θ25p θ26p ⎥ through the Johansen Cointegration test. The trace statistics and Ei-
⎢ Δ lnENG ⎥ ⎢ δ ⎥ q ⎢ ⎥ genvalues mentioned in Table 6 confirm that ecological footprint is
t⎥ 3 ⎢ θ31p θ32p θ33p θ34p θ35p θ36p ⎥
⎢ =⎢ ⎥+ ∑ ⎢θ cointegrated with natural resources, human capital, economic growth,
⎢ Δ lnNR t ⎥ ⎢ δ4 ⎥ θ42p θ43p θ44p θ45p θ46p ⎥
⎢ Δ lnFDIt ⎥ ⎢ δ5 ⎥
p−1 ⎢ 41p ⎥ and energy consumption in the long run.
⎢ ⎥ ⎢ ⎥ ⎢ θ51p θ52p θ53p θ54p θ55p θ56p ⎥
⎢ ⎥
⎣ Δ lnHCt ⎦ ⎣ δ6 ⎦ ⎣ θ61p θ62p θ63p θ64p θ65p θ66p ⎦
5.1. Long-run and short-run dynamics
⎡ Δ lnEFt − p ⎤ μ
⎢ Δ lnGDPt − p ⎥ ⎡ α1 ⎤ ⎡ 1t ⎤
After confirming cointegration among the variables, we estimated
⎢ ⎥ ⎢ α2 ⎥ ⎢ μ 2t ⎥
⎢ Δ lnENGt − p ⎥ ⎢ α3 ⎥ ⎢ μ3t ⎥ the long-run and short-run dynamics for the ecological footprint model.
×⎢ + ECTit − 1 + ⎢μ ⎥ ,
Δ lnNR t − p ⎥ ⎢ α4 ⎥ ⎢ 4t ⎥
The results are shown in Table 7.
⎢ ⎥ ⎢ α5 ⎥
⎢ Δ lnFDIt − p ⎥ ⎢ α ⎥ ⎢ μ5t ⎥ We found positive and statistically significant link between eco-
⎢ ⎥ ⎣ 6⎦ ⎢ μ6t ⎦
⎣ ⎥ nomic growth and ecological footprint in the long run: a 1 percent in-
⎣ Δ lnHCt − p ⎦ (3) crease in economic growth increases the ecological footprint by 0.329
percent. This result indicates massive developments in various sectors
where the first difference operator is represented by Δ, p is the lag
of the US, rising economic activities that have accelerated energy
length, and μ is the error term.
consumption and the level of environmental degradation. This finding
justifies the inclusion of GDP as a control variable in the ecological

Table 1
Correlation matrix and descriptive statistics.
lnEF lnGDP lnENG lnNR lnFDI lnHC

lnEF 1.000
lnGDP 0.5254 1.000
lnENG 0.9170 −0.3865 1.000
lnNR −0.1809 0.4974 0.2521 1.000
lnFDI −0.4486 0.8923 −0.2867 0.3372 1.000
lnHC −0.6143 0.9776 −0.4511 −0.3802 0.8903 1.000

Descriptive Statistics

Mean 2.28941 10.50306 8.944944 0.315854 −0.375442 1.240275

Median 2.296567 10.50688 8.956458 0.097442 −0.209579 1.244038
Maximum 2.407846 10.83531 9.040548 1.75031 1.224872 1.314484
Minimum 2.107786 10.05662 8.83483 −0.60233 −2.596943 1.117318
Std. Dev. 0.074765 0.249496 0.048662 0.597023 0.991461 0.053486
Skewness −0.857947 −0.215504 −0.566437 0.803633 −0.534301 −0.510763
Kurtosis 3.225099 1.683464 2.987431 2.544572 2.278574 2.4317
Jarque-Bera 3.572295 3.793383 1.484951 3.11694 2.562152 2.213182
Probability 0.167605 0.150064 0.475934 0.210458 0.277738 0.330684

5
M.W. Zafar, et al. Resources Policy 63 (2019) 101428

Table 2
Unit root results.
Augmented Dickey–Fuller Phillips–Perron DF-GLS KPSS

Level First difference Level First difference Level First difference Level First difference

lnEF −2.003611 −6.626518*** −2.107036 −6.651105*** −2.102 −6.624*** 0.932*** 0.113

lnGDP −1.963590 −4.970229*** −1.378713 −4.881794*** −1.580 −5.066*** 1.580*** 0.235
lnENG −2.736004 −4.968710*** −2.200637 −4.777013*** −2.632 −5.083*** 1.1861*** 0.057
lnNR −2.836119 −5.746490*** −2.720252 −7.168997*** −1.186 −4.745*** 1.1861*** 0.035
lnFDI −2.833259 −6.946414*** −2.827518 −9.663748*** −1.186 −5.437*** 1.026*** 0.099
lnHC −2.168152 −6.650246*** −2.151975 −4.921357*** −1.766 −4.644*** 1.195*** 0.133

Note, *, **, and *** indicate the significance level at10%, 5% and 1% respectively.

Table 3 Table 5
Structural break unit root test results. Results of ARDL bounding test approach.
Zivot Andrews Unit root test Model ln EF = f (ln GDP , ln ENG, ln NR, ln FDI , ln HC )
Bound test-F-statistics 4.342418***
Level Break Year First difference Break Year Significance 1%
Lower 1(0) Bound 3.06
lnEF −3.057 2007 −7.7625*** 1984 Upper 1(1) Bound 4.15
lnGDP −4.989 2004 −5.6025*** 1983
lnENG −3.853 2000 −6.4659*** 1984 Note, *, **, and *** indicate the significance level at10%, 5% and 1% respec-
lnNR −3.761 1982 −7.6611*** 1987
tively.
lnFDI −3.813 1990 −6.8739*** 1992
lnHC −4.226 2007 −5.9617*** 2008
Table 6
Note, *, **, and *** indicate the significance level at10%, 5% and 1% respec- Results of johansen cointegration.
tively.
Hypothesis Trace Statistics Maximum Eigen Value

footprint function and confirms the long-run effect of economic growth
on the ecological footprint. The major source of energy consumption in
the US is oil, which increases the ecological footprint, along with the
GDP. Uddin et al. (2017) found similar results for the twenty-seven
highest-emitting countries, and Mrabet et al. (2017) did so for Qatar.
The second control variable in our model is energy consumption.
The results show a positive and statistically significant effect of energy
consumption on the ecological footprint such that a 1 percent increase
in energy consumption increases the ecological footprint by 1.194
percent. The estimated coefficient of energy consumption is sig-
nificantly larger than the coefficient of economic growth, suggesting
that energy consumption is one of the primary reasons for environ-
mental degradation, perhaps because the US depends on traditional
energy sources like gas, oil, and coal. The country's massive increase in
the use of fossil fuels has generated negative effects on the ecological
footprint, both direct and indirect. In the US, largest use of fossils fuels
is attributed to electricity consumption, which has a negative effect on
environmental quality, including air quality, water quality, and land
quality. Our results are in the line with Al-mulali et al. (2015) for
upper-, middle-, and low-income countries, with Charfeddine and
Mrabet (2017) for fifteen MENA countries, with Akif and Asumadu
(2019) for eleven newly industrialized economies, and with Zaidi et al.
(2019) for APEC countries.
The estimated coefficient of natural resources with respect to the
ecological footprint is negative and statically significant, suggesting
that a 1 percent increase in natural resources decreases the ecological
footprint by 0.029481 percent, so an increase in natural resources re-
duces environmental degradation. Thus, improvement in environ-
mental quality can be ensured through the regenerative capacity of
R = O 111.4742*** 46.31125***
R ≤ 1 65.16299** 33.11695**
R ≤ 2 32.04604 19.82924
R ≤ 3 12.2168 8.007341
Note, *, **, and *** indicate the significance level at10%, 5% and 1% respec-
tively.
natural resources, suggesting that natural resources can offset the dis-
advantage of fossil fuel energy to a certain point, as natural resources
reduce the country's dependence on imported and polluted traditional
fossil fuels. This result shows that natural resources are significantly
associated with the ecological footprint in the long run. Our results do
not match those of Hassan et al. (2018) for Pakistan, which indicated
that there is no significant relationship between natural resources and
the ecological footprint. However, Balsalobre-Lorente et al. (2018)
found that natural resources increase environment quality.
Our analysis also reveals a statistically significant but negative re-
lationship between FDI and the ecological footprint such that a 1 per-
cent increase in FDI causes a 0.025 percent reduction in the ecological
footprint. This relationship suggests that FDI brings with it advanced
technology and innovative products, reduces energy intensity, and re-
places energy-intensive goods with energy-efficient goods, decreasing
environmental pollution. Our results are consistent with those of
Solarin and Al-Mulali (2018) for twenty countries but not with Baloch
and Zhang (2019) for fifty-nine Belt and Road countries. FDI affects
economic growth, energy consumption, natural resources, and parti-
cularly the ecological footprint, justifying the inclusion of FDI in our
study.
The coefficient on human capital is negative and statistically

Table 4
VAR Lag Order Selection Criteria results.
lag LogL LR FPE AIC SC HQ

0 284.3388 NA 7.06E-14 −13.2542 −13.006 −13.1632

1 563.1808 464.7367 6.84E-19 −24.8181 −23.08047* −24.18121*
2 609.119 63.43836* 4.74e-19* −25.2914 −22.0643 −24.1085
3 651.036 45.90919 4.82E-19 −25.57315* −20.8566 −23.8444

6
M.W. Zafar, et al. Resources Policy 63 (2019) 101428

Table 7
Long and short run estimations.
Long-run estimations Lag order (1, 0, 1, 1, 0, 0)

Coefficient Std. Error t-Statistic Prob.

lnGDP 0.329202** 0.13371 2.462053 0.0189

lnENG 1.194418*** 0.116907 10.21685 0.0000
lnNR −0.029481* 0.014076 −2.094484 0.0549
lnFDI −0.02518* 0.014615 −1.72278 0.0938
lnHC −1.74162*** 0.61301 −2.84109 0.0074
C −9.67809*** 1.185553 −8.16335 0.0000
Short-run estimations
D(lnGDP) 0.254544** 0.099411 2.560524 0.0149
D(lnENG) 0.92354*** 0.130042 7.101851 0.0000
D(lnNR) −0.0336 0.02024 −1.660055 0.1191
D(lnFDI) 0.004344 0.008813 0.492857 0.6252
D(lnHC) −5.33446** 2.603202 −2.04919 0.0480
CointEq(-1) −0.77321*** 0.103377 −7.47952 0.0000

Sensitivity analysis F-statistics p-value

RESET Test 1.831698 0.1891 Fig. 1. Cusum
LM 0.276777 0.760
Breusch-Pagan-Godfrey 1.025035 0.436
R-square 0.930588
Adj- R-Square 0.914723
F-statistics 58.65466
DW 2.204753

Note, *, **, and *** indicate the significance level at10%, 5% and 1% respec-
tively.

significant such that a 1 percent increase in human capital reduces the

ecological footprint by 1.74162 percent. This result suggests that, when
a country has a good stock of human capital, demand for environmental
quality increases so people find ways to improve their environmental
quality by planning their consumption of energy, conserving natural
resources, and developing new technologies to improve environmental
quality. The pool of human capital includes domestic and international
workers living in the US. The results of this study match those of Ulucak
and Bilgili (2018a) for high-, middle-, and low-income countries and
those of Hassan et al. (2018) for Pakistan, although Danish et al. (2019)
found no relationship between the ecological footprint and human ca-
pital for Pakistan. Human capital can significantly influence the use of
natural resources, along with FDI, energy consumption, economic
growth, and the ecological footprint in the US. Human capital's sig-
nificant relationship with the ecological footprint validates its presence
in ecological modeling.
The results of the short-run dynamics report a significant and po-
sitive relationship of economic growth and energy consumption with
environmental degradation. The estimated coefficients of GDP and
energy consumption are significantly smaller than the long-run esti-
mated coefficients, suggesting that economic growth and energy con-
sumption decreases environmental quality at a higher rate in the long
run. The impact of FDI and natural resources is insignificant in the
short-run dynamics, as neither variable impacts environmental quality
in the short run, although they do so significantly in the long run. The
results also indicate that human capital has a negative and significant
relationship with the ecological footprint; the estimated coefficient of
human capital is significantly smaller than the long-run coefficient, so
human capital also plays an important role in the short-run by reducing
the ecological footprint, thus increasing environmental quality.
Table 7 also shows the results of sensitivity analysis. The results of
LM test, Ramsey RESET test, and Breusch-Pagan-Godfrey test reveal the
model reliability. To check the robustness of model, we also use CUSUM
and CUSUM of squares graphs which are shown in Figs.1 and 2 re-
spectively. The figures indicate that the study model is a good fit be-
cause blue line remains in between upper and lower red lines of the
CUSUM and CUSUM of squares.
Fig. 2. CUSUM of squares.
5.2. Granger Causality results
This section discusses the results of the VECM Granger causality
test, which are presented in Table 8. In the short run, a bidirectional
causality relationship is found between energy consumption and the
ecological footprint. Energy consumption Granger causes the ecological
footprint and, in response, the ecological footprint also Granger causes
energy consumption. These results match with the results of
Charfeddine and Mrabet (2017) for MENA countries and those of
Charfeddine (2017) for Qatar. However, Destek and Sarkodie (2019)
found unidirectional causality from energy consumption to the ecolo-
gical footprint. The ecological footprint Granger causes natural resource
in the short run. Zeb et al. (2014) had similar results for Nepal, but our
results are not consistent with those of Hassan et al. (2018), who found
no causal relationship between the ecological footprint and natural
resources. However, FDI Granger causes the ecological footprint. The
results also indicate that energy consumption Granger causes economic
growth, so the growth hypothesis is supported for the US. Ali et al.
(2017) had similar results for Malaysia, but Shahbaz et al. (2013a)
found one-way causality from economic growth to energy consumption
in China. We also observe that economic growth Granger causes FDI,
which is consistent with Seker et al. (2015) for Turkey. However,
Salahuddin et al. (2018) found no causal relationship between these
two variables for Kuwait. The short-run causal results indicate feedback
causality between natural resources and energy consumption, which is
similar to Mudakkar et al. (2013) results for Pakistan but not with Khan
et al. (2016), who found no causal relationship between energy con-
sumption and natural resources. However, a one-way causal

7
M.W. Zafar, et al.
Table 8
VECM granger causality results.
ΔlnEF ΔlnGDP ΔlnENG
ΔlnEF – 3.527** (0.039) 2.873* (0.068)
ΔlnGDP 1.256 (0.296) – 3.073* (0.057)
ΔlnENG 3.031* (0.060) 1.959 (0.154) – 4.365** (0.019)
ΔlnNR 2.682* (0.081) 3.145* (0.054) 4.255** (0.021)
ΔlnFDI 0.112 (0.893) 4.971** (0.012) 0.167 (0.846)
ΔlnHC 1.351 (0.271) 0.970 (0.387) 0.919 (0.407)
Note, Δ indicate the first difference, *, **, and *** indicate the significant level at 10%, 5%, and 1% respectively, t-values are mentioned in brackets, and p-values are
mentioned in parenthesis.
relationship exists from FDI to energy consumption. Our results are
similar to Al-mulali (2012) results but are not consistent with Seker
et al.'s (2015) results for Turkey. Our results also reveal unidirectional
causality from GDP to the ecological footprint in the short run, so that
economic growth Granger causes the ecological footprint. Uddin et al.
(2017) had the same results for the twenty-seven highest-emitting
countries, but our results depart from Akif and Asumadu (2019) results
for eleven newly industrialized countries. FDI Granger causes natural
resource, and in response natural resources also Granger cause FDI. A
feedback relationship also exists between human capital and natural
resources. Shahbaz et al. (2018) reported similar results for the US, but
Hassan et al. (2018) found no causal link between human capital and
natural resources.
We found bidirectional causality in the long run among the ecolo-
gical footprint, economic growth, and energy consumption. Natural
resource abundance Granger causes the ecological footprint and the
ecological footprint Granger causess natural resources in return. A bi-
directional causal relationship also exists between FDI and the ecolo-
gical footprint and between human capital and the ecological footprint.
Our results also indicate a feedback effect with economic growth, en-
ergy consumption, FDI, natural resources, and human capital.
6. Conclusion and policy recommendations
Donald Trump's announcing the US's withdrawal from the Kyoto
Protocol accord indicates an anti-environmental policy that will affect
future generations in the US and the rest of the world. Per the World
Atlas (2018), the US is one of the largest holders and exporters of coal
and mining reserves, which emit CO2, so if the US follows suit with the
Paris accord, it will suffer in terms of exports and job losses. If the US
does not follow the Paris accord, it will generate more CO2 emissions,
which will ultimately affect the quality of its future FDI and human
capital (Zhang et al., 2017).
Our study addresses the relationships among natural resources, FDI,
human capital, and environmental quality and the role of energy con-
sumption and economic growth as additional determinants of the eco-
logical footprint. The integration levels of the data series are examined
through various unit root methods. To find long-run cointegration, we
use the Johansen cointegration and ARDL bounding tests, and we use
the ARDL approach to check the long- and short-run elasticities be-
tween the variables.
The results of cointegration tests indicate the long-run equilibrium
relationships among the variables. The ARDL results confirm that eco-
nomic growth and energy consumption reduce environmental quality
by increasing the ecological footprint. This relationship suggests that
energy consumption and economic growth cause environmental de-
gradation. Short-run dynamics reveal a significant negative relationship
between natural resources and the ecological footprint and between
human capital and the ecological footprint. The ecological footprint is
also positively associated with energy consumption and economic
growth in the short run. The sensitivity analyses show that the results of
ARDL are robust, while reliability tests (including CUSUM and
CUSUM2) also indicate that the model is steady. The Granger causality
Resources Policy 63 (2019) 101428
ΔlnNR ΔlnFDI ΔlnHC ECT-1
2.331 (0.110) 2.792* (0.073) 1.456 (0.245) −0.7258*** [-4.4809]
5.303 (0.009) 1.653 (0.204) 8.468*** (0.000) −0.2387*** [-3.3804]
3.590** (0.037) 2.156 (0.129) −0.4147*** [-3.0456]
– 4.818** (0.013) 4.684** (0.015) −0.3669** [-2.5775]
3.133* (0.055) – 0.739 (0.484) −0.4467*** [3.4522]
3.481** (0.040) 4.008** (0.026) – −0.7578*** [-2.9185]
results indicate bidirectional relationships of the ecological footprint
with economic growth, energy consumption, natural resources abun-
dance, FDI, and human capital in the long run.
The variables' effects on the US's ecological footprint lead to several
policy recommendations.
6.1. Natural resources and the ecological footprint
The relationship between natural resources and the ecological
footprint is significantly negative, so an increase in natural resources
improves environmental quality by reducing the ecological footprint.
Therefore, the US government should control the excessive use of nat-
ural resources by educating its citizen to change their consumption
patterns through a reduction in deforestation and fishing, careful use of
water and energy resources, and the use of high-quality, energy-effi-
cient products in their daily lives. Industry should be closely monitored
to control the use of rare resources; the mining industry in particular
should be directed to ensure the use of advanced and energy efficient
technologies in their works.
6.2. Human capital and the ecological footprint
Our results indicate that human capital has a negative and sig-
nificant relationship with the ecological footprint in the long run.
Human capital is not only helpful in the efficient use of natural re-
sources but is also important in the effort to improve environmental
quality. According to Narula (1994), the nature of the location is central
to attracting FDI to a host country. The US's location advantages, which
include the best human capital and quality natural resources, have re-
sulted in huge FDI inflows in the US. Using the power of human capital,
the US government is in a strong position to spread the notion of sus-
tainable consumption and to encourage FDI by designing a sustainable
infrastructure that provides environmentally friendly and energy-effi-
cient goods and services. Being a developed country, the US's percen-
tage of educated people is high, which increases its human capital. This
is the right time to educate both individuals and the corporate sector
about recycling, conservation, and the best use of energy sources, along
with responsible citizenship and management. Tutorials and public
messages should be delivered to build an image of a responsible human
being.
6.3. FDI and the ecological footprint
Our results confirm that FDI significantly decreases the ecological
footprint in the US, suggesting that the US has been successful in at-
tracting high-tech FDI that is not primarily CO2 emitters. The best
human capital can reduce environmental degradation. The US is the
top-ranked single recipient of FDI in the world, but global economies
are developing rapidly, so attracting and retaining new FDI inflows will
be a continuing challenge. The US must attract more FDI and the best
human capital from other countries to ensure that new and existing
firms can innovate swiftly to improve the quality of life and ensure
sustainable development.
8
M.W. Zafar, et al.
6.4. Energy consumption, economic growth and the ecological footprint
Economic growth is positively related to the ecological footprint. An
increase in economic growth stimulates the use of fossil fuels in the US,
thus increasing the country's ecological footprint. The US is a rich
country with enormous potential for FDI, but it needs to attract more
investments in renewable energy sources like hydro, biomass, wind,
and solar power. Reducing the share of fossil fuels in energy production
should be a central goal of high-emitter countries like the US. New
technologies can revolutionize the country's energy sector to reduce
emissions. The firms should be encouraged to invest in renewable in-
frastructure and modern technology, and the government should sub-
sidize such investments. The biggest issue the energy sector faces is the
storage of renewable energy, but hydrogen fuel cell technology can
resolve this issue by storing energy for use when needed. However,
switching the US's energy use to renewable sources is hampered by
heavy sunk costs. We endorse the argument of Ahmadov and van der
Borg (2019) that proceeds from nonrenewable natural resources like
petroleum should be used to offset the heavy costs of developing a re-
newable infrastructure. Policies should be developed that improve the
bio-productivity of nature in ways that are sustainable and harmless,
such as increasing bio-productive areas through reforestation and soil
management, and land. Productivity can be increased through man-
agement techniques like permaculture, improved irrigation, organic
farming, edible gardens, and solar panels.
This study is limited by its not considering institutional quality in
the CO2 emissions function, as institutional quality can play a sig-
nificant role in a country's FDI, economic development, and manage-
ment of human capital. Future studies may include institutional quality
and energy dependence as explanatory variables. In addition, the US
announced its withdrawal from the Kyoto Protocol because the coun-
try's president thought it to be the reason for job losses. Future study
should include a time factor to investigate the effects of this member-
ship withdrawal. Finally, future studies can use other econometric
techniques, such as quantile regression, to check the variables' re-
lationships with structural changes that have occurred in the US.
Declarations of interest
None.
Acknowledgments
We are grateful to the National Natural Science Foundation of China
[No. 71571019] for sponsoring this study.
Appendix A. Supplementary data
Supplementary data to this article can be found online at https://
doi.org/10.1016/j.resourpol.2019.101428.
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