Introduction: In recent decades, human activities have significantly damaged the environment, and currently, the emission of greenhouse gases and global warming are among the most important environmental issues. The use of fossil energy has made a major contribution to the emission of greenhouse gases and as a result the destruction of the environment by humans. Due to the role of renewable energies in reducing the emission of pollutants and as a result reducing the destruction of the environment, more use of these energies has attracted the attention of countries. Therefore, in this study, the relationship between renewable energy consumption and environmental degradation (ecological footprint index) in 38 countries with lower average income during the period of 1997 to 2020 has been investigated.
Materials and Methods: For this purpose, the system of simultaneous equations and the three-stage least squares method (3SLS) were used. In order to estimate the system of simultaneous equations, first, the stationary of the variables was checked, and to avoid spurious regression, the co-integration of the equations was checked using the Kao test. Then, using the Hausman test, a choice was made between the two methods of estimating the panel data. After that, the simultaneity bias test was performed to check the existence of simultaneity between the endogenous variables and finally, in order to analyze the data, the system of equations was estimated using the 3SLS method. The necessary statistics and information were collected from the Global Footprint Network website and the World Bank database for the period of 1997-2020.
Results: The empirical results showed that there is a negative relationship between environmental degradation and renewable energy consumption, and with a one-unit increase in renewable energy consumption, the ecological footprint decreases by 0.0071. With a one-unit increase in the variables of foreign direct investment, urbanization, technological innovation, and economic growth, the amount of renewable energy consumption decreases by 0.78, 0.32, 0.06, and 33.9 units, respectively. The amount of renewable energy consumption increases by 0.34 units with a one-unit increase in the variable of natural resource rent. A one-unit increase in the variables of crop production, livestock production index, and financial development index will increase the ecological footprint by 0.0022, 0.0042, and 0.0107 units. With a one-unit increase in foreign direct investment, the ecological footprint decreases by 0.023 units.
Discussion: The results showed that increasing the use of renewable energy can improve the quality of the environment. The financial sector has allocated resources to enterprises that have led to an increase in industrial waste, pollution emissions, and consequently environmental degradation. The agricultural sector has caused pollution and environmental degradation through livestock farming, ammonia in fertilizers on agricultural fields, livestock wastewater wetlands, slaughtering meat animals, corn and soy protein production, sugar refining, wool processing, and other things. Foreign capital can reduce environmental degradation by facilitating the development of modern environmentally friendly technologies. Increasing the efficiency of natural resources motivates people to use them effectively and efficiently and increases the consumption of renewable energies. Therefore, directing foreign direct investments and technological innovations towards greater use of renewable energies, increasing the natural resource rent, directing national resources towards environmentally friendly activities and technologies, increasing the productivity of crop and livestock production, and using environmentally friendly technologies in the agricultural sector can help reduce environmental degradation.