The impact of financial development, tourism, and agricultural productivity on co2 emissions

ĐẠI HỌC KINH TÉ THÀNH PHỐ HÒ CHÍ MINHBÁO CÁO TỐNG KẾT ĐÈ TÀI NGHIÊN cứu KHOA HỌC THAM GIA XÉT GIẢI THƯỞNG ‘’ NHÀ NGHIÊN CỨU TRẺ UEH ” NĂM 2024 TÊN ĐỀ TÀI Through experimental evidence fr

INTRODUCTION

Research objective

This study aims to analyze the impact of climate change (specifically CO2 emissions) on financial development, tourism, and agricultural output, while also exploring strategies to enhance energy consumption By examining real data from 11 Southeast Asian nations—Brunei, Cambodia, East Timor, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam—over a 22-year period from 2000 to 2022, we seek to understand how these factors interrelate and how human well-being can be improved through regeneration.

This study aims to evaluate the relationship between CO2 emissions in Southeast Asia and key sectors such as financial development, tourism, and agriculture By analyzing the interplay between financial indicators, tourism activities, and agricultural productivity, the research seeks to understand how these industries contribute to climate change in the region.

This study will evaluate the impact of increasing renewable energy consumption on CO2 emissions by analyzing existing data on renewable energy sources The aim is to determine whether a rise in the use of renewables contributes positively or negatively to reducing carbon dioxide emissions.

The study will evaluate the effects of climate change, specifically CO2 emissions, on individual development and overall well-being By utilizing well-being metrics, the research will analyze how increased levels of CO2 influence these indicators.

The project will evaluate the impact of increased renewable energy use on people's well-being amidst rising CO2 levels It aims to explore various models and strategies that can effectively balance environmental preservation with economic development.

This study aims to understand the impact of climate change, particularly elevated CO2 levels, on financial development, tourism, and agricultural productivity, while also exploring strategies to enhance energy consumption By examining this relationship, the research highlights the potential for regeneration to improve human well-being.

In order to fulfill the aforementioned study goals, we attempted to respond to the following queries:

What effects do tourism, economic growth, and agricultural production have on Southeast Asia’s carbon dioxide emissions?

Will more carbon dioxide emissions have an impact on people’s well-being?

How much of the amount of carbon dioxide produced into the atmosphere affects Southeast Asian countries?

Research scope

This article explores the financial development, tourism, and agricultural output in Southeast Asia, emphasizing the relationship between rising renewable energy consumption (REC) and CO2 emissions It also investigates the effects of climate change on the region's growth and well-being perceptions The analysis encompasses 11 Southeast Asian nations, utilizing data from 2000 to 2022 to provide insights into these critical issues.

This study investigates the impact of various factors on the CO2 emissions produced by nations, employing quantitative research methods CO2 emissions significantly harm the environment and human health, serving as a major contributor to the greenhouse effect and climate change The researchers proposed a linear relationship between CO2 emissions and other influencing factors, utilizing a regression model to estimate the coefficients for each variable.

This article presents valuable strategies to reduce carbon dioxide emissions, protect the environment, and improve living standards in developing nations Key recommendations include the fair and effective implementation of an Environmental Protection Tax, the promotion and utilization of renewable energy sources, a reduction in the reliance on non-renewable energy, the efficient management of bank credit, and the pursuit of steady and sustainable economic growth.

Methodology

Throughout this research, our team employs the following methods for conducting research:

First, for annual data of variables obtained from 11 Southeast Asian countries between

Between 2000 and 2022, our team utilized descriptive statistics to analyze data We then employed correlation coefficients to assess the direction and strength of the linear relationships between variables To investigate the impact of various factors on ecological footprints, we applied pooled OLS, FEM, and REM regression models Finally, we conducted the Hausman Test, Breusch and Pagan Test, and F-Test to identify the most suitable model for our analysis, with the Hausman Test specifically comparing the efficiency of the models.

The article discusses the comparison of the Fixed Effects Model (FEM) and Random Effects Model (REM) through the Breusch and Pagan test, which evaluates the pooled Ordinary Least Squares (OLS) regression model against the REM Additionally, an F-Test is employed to compare the pooled OLS regression model with the FEM Following the selection of the appropriate model, the analysis addresses multicollinearity, heterogeneity, and autocorrelation issues Ultimately, the challenges identified are examined using the Feasible Generalized Least Squares (FGLS) and Generalized Method of Moments (GMM) models.

The writers' commitment to precision and thoroughness is evident in their methodological framework, which underscores the importance of selecting a model that aligns with the nature of the examined variables This structured approach lays the foundation for obtaining meaningful and reliable insights into the relationship between financial development and renewable energy, as well as their impact on the ecological footprint in Southeast Asia.

Research contributions

The increasing adoption of renewable energy sources (REC) plays a crucial role in the transition towards sustainable practices, influencing various sectors This article explores the correlation between CO2 emissions and their repercussions on human health, economic growth, tourism, and agricultural output.

This study aims to explore the interconnections between financial development, tourism, agricultural output, and increasing CO2 emissions By analyzing data, it will determine the contributions of these three sectors to overall atmospheric CO2 levels Furthermore, the research will assess how these changes influence well-being factors such as health, living conditions, and quality of life.

This research will primarily focus on the impact of renewable energy usage on atmospheric CO2 levels, utilizing existing data and documents for analysis Additionally, it will explore how increased adoption of renewable energy certificates (RECs) can lead to enhanced well-being and improved living conditions, positively affecting public health.

This study provides new perspectives on the relationships between financial development, tourism, agricultural productivity, and atmospheric CO2 levels It thoroughly analyzes the impact of increasing CO2 on well-being and the growing adoption of renewable energy Consequently, the research offers valuable recommendations for effective strategies and policies aimed at mitigating CO2's negative effects while enhancing community well-being.

The research paper includes five chapters, including:

In the first chapter, we will outline our reasons for choosing this topic, define our objectives, and present the key questions we aim to answer through our research.

In this article, we will outline the research methodology and emphasize the significance and benefits of the topic Additionally, we will detail the setup of the research program.

LITERATURE REVIEW

Concept definition

Agriculture is crucial for economic progress in emerging economies, ensuring food security and supporting rural livelihoods It provides the majority of jobs in rural areas and significantly boosts export revenues in developing nations Following the 2008-2009 food crisis, agriculture gained renewed attention from international policymakers In South Asia, where many people live on less than USD 1.25 a day, the sector is vital, contributing approximately 20% to GDP in Bangladesh, Bhutan, India, and Pakistan, and 33.1% in Nepal It employs over 50% of the workforce in Bangladesh, India, and Pakistan, 31% in Sri Lanka, and 65.6% in Nepal, highlighting its role in absorbing the growing labor force.

Financial development is a key concept in economics, referring to the evolution of an economy's financial system, which includes markets, organizations, instruments, and regulatory frameworks that facilitate credit access for transactions The primary goal of financial development is to minimize the costs associated with the financial system, thus reducing expenses related to information acquisition, contract execution, and transaction processing This development is essential for economic advancement and plays a significant role in addressing inequality and poverty by providing small and medium-sized enterprises in emerging markets with the necessary funding to foster growth.

Over the past four decades, the global tourism industry has seen significant growth, contributing substantially to the economic development of both developed and developing nations This sector enhances infrastructure, creates job opportunities, facilitates foreign currency acquisition, and supports the growth of manufacturing, agriculture, and services In 2017, foreign visitor arrivals surged by a remarkable 7%, positioning tourism as the third highest contributor to global export earnings, following chemicals and automotive sectors Given its economic significance, assessing the tourism sector's impact on CO2 emissions is crucial for developing sustainable tourism policies, especially in light of the adverse effects of global warming and climate change.

Carbon dioxide (CO2) emissions arise from the combustion of carbon-containing fuels and the decomposition of organic materials like wood These emissions significantly influence our climate, contributing to the greenhouse effect and global warming Recent trends indicate an increase in human-caused CO2 emissions, alongside natural sources To ensure a sustainable future, it is crucial to reduce CO2 emissions and mitigate their impact on the environment.

Southeast Asian countries contribute minimally to global carbon dioxide (CO2) emissions, with their combined output in 2006 totaling only 1,045.95 million tons (MT), significantly lower than the emissions from China (6,103.49 MT) and the United States (5,975.10 MT) However, it is crucial to note that CO2 emissions in these nations have been increasing over time, as highlighted by data from the Asia-Pacific Energy Research Center.

If no action is taken or existing regulations are altered, CO2 emissions in Southeast Asia are projected to double by 2030, according to APERC This increase would lead to emission levels that become increasingly significant compared to those of China and the United States.

A high quality of life is assessed through well-being, which can be viewed from both objective and subjective perspectives In this context, well-being refers to the objective measurement of various life indicators, encompassing social and material aspects such as health, education, income, and produced goods As well-being maintains its value over time within a sustainable development framework, it plays a vital role in the sustainability concept.

Health is a complex concept that extends beyond the mere absence of disease Emmet (1991) highlights that while diseases are clearly defined, health is often perceived as a lack of sickness The Organization for Economic Cooperation and Development broadens this definition, describing health as a state of physical, psychological, mental, and social tolerance Similarly, the World Health Organization defines health as a complete state of well-being, encompassing physical, mental, and social aspects, rather than just the absence of illness (World Health Organization, 1998) Ultimately, an individual's perception of their own health is paramount, as it reflects their unique experience and understanding of their well-being.

The organizational framework's middle section illustrates our perspective on health and well-being, emphasizing two key dimensions First, the physical health of employees, reflected in symptomatology and epidemiological rates of illnesses, represents their true state of health Second, health and well-being also encompass mental, psychological, and emotional aspects, influenced by emotional states and rates of mental disorders Additionally, societal factors, such as alcoholism and drug use rates, further contribute to the overall understanding of health and well-being (Danna & Griffin, 1999).

Theoretical basis

The Environmental Kuznets Curve (EKC)

Since the early 1990s, economists and econometricians have focused on estimating the empirical relationships between environmental quality metrics and GDP, primarily using cross-sectional data from individual nations in a single year Their research has identified an inverted U-shaped correlation for various environmental quality indicators.

An estimated empirical link between environmental quality measures and GDP is depicted in Figure I.

The environmental quality index tends to be positive in impoverished nations with minimal industrial activity, as they have a limited negative impact on the environment However, as these countries develop and per capita income rises, environmental degradation often increases The demand for a cleaner environment also escalates with higher income levels, leading to improvements in environmental conditions when effective laws are implemented This phenomenon is illustrated by the environmental Kuznets curve, which mirrors the relationship between income inequality and GDP per capita described by Kuznets in 1955 For more insights, refer to Environment and Development.

2(4), October 1997 for an introduction and examples of Kuznets curves for the environment.

The World Development Report (1992) marked a significant shift in environmental research, suggesting that the presence of certain curves could lead to win-win situations where economic growth and environmental regulation coexist However, this analysis is inherently complex and often muddled, highlighting the challenges in aligning growth with effective environmental policies.

Environmental Kuznets curves should not be viewed as optimal solutions for addressing environmental issues, as their existence is questionable Nations are better served by implementing institutional and regulatory reforms rather than relying solely on economic growth Accepting these curves as valid can be misleading and may foster unrealistic expectations of win-win scenarios in environmental management.

Figure 2 shows the sulfur emissions Kuznets curve in the environment Information from Stern et al (1996) and Panayolou (1993).

Empirical evidence

2.3.1 Yield of Agriculture and CO2 emissions

According to the study of Rida Waheed, Dongfeng Chang, Suleman Sarwar, Wei Chen

A study conducted in 2017 analyzes the effects of renewable energy, agriculture, and forestry on CO2 emissions in Pakistan, using annual data from 1990 to 2014 and the Autoregressive Distributed Lag model The results indicate that increasing renewable energy consumption and expanding forest areas can significantly reduce CO2 emissions in the long term Conversely, agricultural output contributes positively to CO2 emissions, highlighting its role as a major carbon source in the country In the medium term, the impacts of renewable energy and forestry are comparable, while the effects of agriculture are statistically insignificant Notably, forest planting is more effective than both renewable energy and agriculture in reducing CO2 emissions The robustness of these findings is confirmed across various model parameters.

A study by Mehdi Ben Jebli and Slim Ben Youssef (2016) analyzes the interplay between per capita renewable energy consumption, agricultural value added (AVA), CO2 emissions, and real GDP across five North African countries from 1980 to 2011, utilizing panel cointegration and Granger causality tests The findings reveal a bidirectional correlation between CO2 emissions and agriculture, while a unidirectional causality exists between agriculture, GDP, and renewable energy usage In the long term, agricultural value added reduces CO2 emissions, whereas increased GDP or renewable energy consumption contributes to higher emissions To enhance agricultural productivity and mitigate global warming, North African authorities are encouraged to promote the use of clean renewable energy sources, such as solar and wind.

According to Asif Raihan, Said Ibrahim, and Dewan Ahmed Muhtasim's study from

In 2023, CO2 emissions significantly contribute to global climate change, threatening development, human life, and the environment A study analyzing the connection between Egypt's CO2 emissions and factors such as tourism, agricultural productivity, economic growth, and energy sources utilized the Dynamic Ordinary Least Squares (DOLS) method on data from 1990 to 2019 Findings revealed that Egypt's economic growth, fossil fuel consumption, and tourism activities increase CO2 emissions, while advancements in renewable energy and agriculture help reduce emissions and improve environmental quality Consistent results were confirmed through alternative estimators like FMOLS and CCR, and a causal relationship among the variables was identified using the paired Granger causality test This research enhances understanding of pollution sources in Egypt and proposes low-carbon economic strategies, including climate-smart agriculture, green tourism, and renewable energy, to promote environmental sustainability and reduce emissions.

A 2022 study by Asif Raihana and Almagul Tuspekova highlights the detrimental impact of greenhouse gas emissions, particularly carbon dioxide, on global climate change and sustainability The research analyzed the interplay between Nepal's CO2 emissions, agricultural output, fossil fuel energy use, renewable energy, and economic growth using time series data from 1990 to 2019 Employing the Dynamic Ordinary Least Squares (DOLS) method following the autoregressive distributed lag (ARDL) bounds testing, the study found a significant cointegration among the variables The findings revealed that a 1% increase in economic growth and fossil fuel energy use would result in a rise in CO2 emissions by 0.61% and 0.67%, respectively Conversely, a 1% increase in agricultural output and renewable energy usage could decrease CO2 emissions by 3.65% and 0.41% in the long term The robustness of these results was confirmed through additional estimators, including canonical cointegrating regression and fully modified least squares Furthermore, the paired Granger causality test established causal relationships between the variables To mitigate environmental degradation, the article proposes regulatory policies aimed at promoting sustainable development.

Asif Raihan's study from 2023 claims that greenhouse gas (GHG) emissions, particularly carbon dioxide (CO2), are the primary cause of global climate change.

Emissions pose a significant threat to human life, the environment, and sustainable development, making their reduction a global priority to combat climate change Despite this urgency, limited research has utilized econometric methods to evaluate emission reduction potential, particularly in the Philippines This study investigates the dynamic impacts of economic growth, renewable energy consumption, urbanization, industrialization, tourism, agricultural productivity, and forest area on CO2 emissions in the Philippines Utilizing annual time series data from 1990 to 2020, the Dynamic Ordinary Least Squares (DOLS) and Autoregressive Distributed Lag (ARDL) methods were employed Findings reveal that a 1% increase in urbanization, industrialization, tourism, and economic growth correlates with CO2 emissions rising by 0.16%, 1.25%, 0.06%, and 0.02%, respectively Conversely, a 1% increase in renewable energy use, agricultural productivity, and forest area could lead to reductions in CO2 emissions by 1.50%, 0.20%, and 3.46%, respectively.

The Granger causality test was conducted to analyze the causal relationships between key variables This article discusses several low-carbon economy policy implications, including the adoption of renewable energy, sustainable urbanization, green industrialization, eco-friendly tourism, climate-smart agriculture, and sustainable forest management Implementing these practices can significantly reduce emissions and enhance environmental sustainability.

2.3.2 Financial Development and CO2 emissions

A study by Zhike Lv and ShaSha Li (2021) analyzes the relationship between financial development and CO2 emissions using a spatial econometric model with panel data from 97 countries between 2000 and 2014 The research reveals a geographical link in CO2 emissions among countries during this period, highlighting that a nation's emissions are influenced by the financial progress of its neighbors Overall, financial development has a net negative effect on CO2 emissions, as the adverse spillover effects surpass the positive direct impacts The findings emphasize that financial development is crucial for reducing CO2 emissions, and proximity to financially advanced countries can enhance a nation's environmental performance These insights are vital for policymakers, underscoring the importance of considering both national and regional effects of financial development on environmental outcomes.

This research by Duy Tung Bui (2020) analyzes the relationship between financial development and CO2 emissions in 100 countries from 1990 to 2012, utilizing 2SLS and 3SLS estimators to explore various transmission mechanisms The findings indicate that while financial development initially has a direct negative impact on environmental quality due to increased energy demand and emissions, it also has the potential to enhance income distribution and reduce economic disparity over time However, higher living standards resulting from financial growth may exert pressure on environmental sustainability Additionally, the study highlights the nonlinear effects of financial development on carbon emission rates, suggesting that early benefits of financial progress are limited to a small segment of the population, with broader advantages emerging as development continues.

A study by Muhammad Qayyum et al (2021) highlights the critical role of environmental sustainability in achieving long-term development goals, particularly in underdeveloped countries The research examines the interplay between financial development, renewable energy consumption, technological advancements, and CO2 emissions in India from 1980 to 2019, factoring in economic growth and urbanization Utilizing the Autoregressive Distributed Lag (ARDL) model for long-run dynamics and the Vector Error Correction Model (VECM) for causal analysis, the findings reveal that financial development positively impacts carbon emissions, while advancements in technology and renewable energy usage significantly reduce CO2 emissions Conversely, urbanization and economic growth negatively affect environmental quality due to increased CO2 emissions Robustness tests, including Canonical Cointegration Regression (CCR), Dynamic Ordinary Least Squares (DOLS), and Fully Modified Ordinary Least Squares (FMOLS), confirm the results, which indicate a long-term causal relationship among the studied variables This research provides valuable insights for policymakers, emphasizing the financial system's influence on environmental issues.

Environmental sustainability is a critical issue for contemporary society, businesses, and governments, as highlighted by Ahmed Imran Hunjra and colleagues (2020) There is a significant gap in understanding how governments can effectively eradicate poverty while protecting the environment This study explores the moderating role of institutional quality in the relationship between financial development and environmental quality in South Asia The research utilizes panel data from five countries—India, Bangladesh, Nepal, Sri Lanka, and Pakistan—covering the period from 1984 to the present.

In 2018, we found that financial growth in South Asia correlates with increased CO2 emissions, indicating that these countries prioritize financial development over advancements in manufacturing technologies However, enhancing institutional quality can alleviate the negative impacts of financial growth on environmental sustainability Our research highlights that improving institutional quality may play a crucial role in fostering sustainable development in the region.

Through the incorporation of energy consumption within the framework of the Environmental Kuznets Curve (EKC) hypothesis, Zafar, M w., Saud, s., & Hou, F

A 2019 study investigates the impact of globalization and financial development on environmental quality among OECD countries from 1990 to 2014, utilizing the Lagrange Multiplier approach and second-generation panel unit root tests to assess cross-sectional dependence and long-run relationships The Westerlund panel cointegration test confirms long-term cointegration, while the Continuously Updated Fully Modified Ordinary Least Square (CUP-FM) and Continuously Updated Bias-Corrected (CUP-BC) methods reveal that energy use significantly increases carbon dioxide (CO2) emissions The study supports the Environmental Kuznets Curve (EKC) hypothesis, indicating that globalization and financial development can enhance environmental conditions by reducing CO2 emissions A bidirectional causal relationship is identified between energy use and CO2 emissions, alongside feedback effects between globalization and economic growth The research recommends policies promoting green technology exchange, foreign direct investment in renewable energy, financing for green infrastructure, and electricity generation from renewable sources to further improve environmental quality in OECD countries.

Tantatape Brahmasrene and Jung Wan Lee's 2013 study investigates the impact of tourism on CO2 emissions and economic growth Utilizing panel data from European Union countries, the research explores the long-term equilibrium relationship between tourism, CO2 emissions, economic development, and foreign direct investment (FDI).

From 1988 to 2009, fixed-effects models and panel cointegration reveal a long-term equilibrium relationship among the variables studied Notably, foreign direct investment (FDI), tourism, and CO2 emissions all contribute positively to economic growth Additionally, while economic growth increases CO2 emissions, both FDI and tourism exert a negative influence on them.

The tourism sector plays a vital role in economic growth and job creation globally, as highlighted by the United Nations World Tourism Organization (UNWTO) Despite extensive research on the interplay between emissions, tourism, and economic growth, there is a lack of studies addressing the effects of foreign direct investment (FDI) on pollution dynamics and the significance of local lending to the private sector in an Environmental Kuznets Curve (EKC) context This study utilized augmented mean group (AMG) and moment quantile regression (MM-ỌR) methodologies to analyze the relationships among CO2 emissions, domestic loans to the private sector, tourism, FDI, and per capita income The findings reveal a significant negative correlation between CO2 emissions and tourism, while emissions and income are positively associated, indicating an inverted U-shaped EKC Additionally, domestic credit is positively correlated with CO2 emissions, and FDI aligns with increased pollution, supporting the pollution haven hypothesis (PHH) The Dumitrescu and Hurlin panel causality test shows a bidirectional relationship among tourism, per capita income, domestic credit, and CO2 emissions, suggesting that tourism growth does not detrimentally affect environmental quality in the Mediterranean region Nonetheless, caution is advised regarding FDI and harmful economic practices that could adversely impact environmental conditions.

Hypothesis

2.4.1 The impact o f agricultural productivity on CO2

As the global population increases and agricultural processes become more energy-efficient, carbon dioxide emissions are emerging as a significant concern (Chandio et al., 2021) The energy demands of agriculture, crucial for achieving the Sustainable Development Goal of eradicating world hunger, are likely to elevate CO2 emissions Modern energy is essential for all agricultural activities, including cultivation, transportation, processing, storage, and distribution, as the focus shifts toward sustainable and secure food production Practices reliant on fossil fuels have contributed to rising atmospheric CO2 levels (Ghosh, 2018; Chandio et al., 2020) Economic growth is often linked to higher CO2 emissions, which adversely affect the environment and ecosystems Recent climate changes have led to alarming environmental risks, such as floods and droughts, threatening economic stability Furthermore, the spread of infectious diseases, melting glaciers, reduced agricultural output, and increased mortality rates pose additional challenges to sustainable development Thus, it is vital to assess the impact of economic growth in developing nations on carbon dioxide emissions while considering biodiversity, natural ecosystems, food security, human health, and water resources (Aye and Edoja, 2017; Luan et al., 2019; Wang et al., 2022).

Future food production will face significant challenges due to restrictions on natural resources and the global climate Key contributors to climate change include emissions from agricultural land, fuel usage, and fertilizer manufacturing Globalization and free trade have led to food traveling longer distances to reach the U.S., raising concerns about transportation-related greenhouse gas emissions Additionally, the processes of food production, packaging, and wastewater management further harm the environment Agriculture not only significantly contributes to carbon dioxide emissions but is also highly vulnerable to natural disasters Although global agricultural CO2 emissions are lower than those from the thermal power industry, they have risen sharply due to increased resource consumption, exacerbating environmental issues such as rising sea levels and global warming CO2, a byproduct of human activity, remains a leading cause of these environmental challenges.

Hl : Agricultural productivity affects CO2 emissions in the same direction, causing the amount of this gas to increase Besides, this process will also increase when using renewable energy

2.4.2 The impact of financial development on CO2

Over the past two decades, the accumulation of greenhouse gases (GHG) has led to significant environmental challenges, including air pollution, deforestation, declining water tables, and global warming, prompting global attention from organizations and policymakers While the impact of financial development on carbon emissions remains debated, evidence suggests it plays a crucial role in increasing emissions An efficient financial system allows firms to access cheaper loans, expand financial channels, and reduce information asymmetry, leading to heightened production and significant carbon emissions Additionally, the growth of the financial sector enhances consumer credit services, encouraging increased consumption of goods like automobiles and appliances A robust stock market, indicative of economic prosperity, further boosts consumer and business confidence, driving production and energy consumption, which collectively elevate carbon emissions This phenomenon illustrates the "positive impact" of financial development on carbon emissions.

Research by Bckun et al (2019) highlights a positive relationship between carbon emissions and financial development, both of which can drive economic growth However, their findings also reveal a negative correlation between carbon emissions and renewable energy utilization, indicating that enhancing renewable energy use can lead to reduced emissions and progress toward the goals of the Paris Agreement (Ọudrat-Ullah & Nevo, 2022).

Financial development positively influences CO2 emissions, whereas the utilization of renewable energy negatively affects carbon dioxide levels This indicates that the use of renewable energy sources (REC) can effectively curb the growth of CO2 emissions by interacting with financial development.

2.4.3 The impact of tourism on CO2

The Northeast and Southeast Asia regions are rapidly expanding in terms of real GDP, energy consumption, foreign travel, and CO2 emissions, yet the relationship between these factors remains unclear Tourism plays a crucial role in the global economy, contributing to 10% of employment and 10.2% of global GDP in 2016, with 3.1% of GDP growth attributed to this sector However, tourism also significantly impacts CO2 emissions, accounting for approximately 5% of global emissions, alongside transportation (75%), lodging (20%), and other industries (5%) As national wealth increases, both regions are projected to experience some of the highest growth rates in emissions, energy consumption, and tourism The environmental consequences of tourism have sparked ongoing debate, highlighting the need for a deeper understanding of its effects on sustainability.

A c (2019)) revealed the positive effects of economic growth and tourism on co 2 emissions using the ARDL method using data over the period 1970-2014 for Turkey (Raihan, A., & Tuspekova, A (2022))

The World Travel & Tourism Council (2011) supports the idea that renewable energy sources, such as wind farms, generally have a minimal environmental impact compared to non-renewable sources like nuclear power plants, which can pose significant risks, especially in disaster-prone areas For instance, incidents like Chernobyl highlight the potential dangers of nuclear waste, leading to a decline in tourism due to safety concerns Conversely, wind farms can enhance ecotourism by becoming attractions themselves and providing access to remote areas, thus generating revenue for local communities Surveys indicate that a significant majority of tourists (70-91%) are not deterred by the presence of wind farms, suggesting that the growth of such facilities would not negatively impact visitor numbers (Prinsloo, F c., 2013).

H3: Tourism industry development has a positive impact on CO2 emissions, this relationship will increase with the impact of renewable energy use.

2.4.4 The impact of CO2 on Well-being (how does increasing co2 impact Well being)

The importance of healthy air quality in schools has been a focal point for years, supported by numerous global studies that outline practical solutions for improvement Key issues include inadequate ventilation in classrooms, high carbon dioxide levels, and increased particulate matter in urban outdoor air, all contributing to poor indoor air quality Despite the growing body of research, many institutions still face challenges due to factors such as neglect of the problem, conflicting regulations, and insufficient funding from local authorities to implement necessary changes.

Recent literature highlights significant changes in outdoor air pollution levels over recent decades, while also emphasizing that an individual's health effects are closely tied to their total exposure to pollutants, both indoors and outdoors As people frequently transition between various indoor and outdoor environments, their exposure to air pollutants fluctuates, underscoring the importance of indoor air quality (IAQ) in exposure assessments (Buonanno et al., 2015) Therefore, prioritizing exposure assessments over mere estimates of outdoor air pollutant concentrations is essential for effectively protecting public health from the risks associated with air pollution (Morawska et al., 2013).

Air pollution significantly impacts adult health, with ambient PM2.5 exposure ranked as the eighth global risk factor Urban and educational environments are experiencing critical changes, including increased air pollution levels and altered indoor air quality due to modern materials and outdoor pollutant infiltration Understanding and optimizing building architecture for thermal comfort, adequate ventilation, and access to high-quality outdoor air is essential for safeguarding future generations' health Additionally, energy consumption must be carefully managed to prevent further combustion emissions from exacerbating environmental harm.

H4: Carbon dioxide has a negative impact on Well-being Increasing CO2 emissions causes Well-being to decrease day by day

MODEL, DATA AND METHODOLOGY

Data source

This study explores the interplay between carbon dioxide (CO2) emissions and key factors such as renewable energy (RNE), tourism (TR), financial development (FD), and agricultural yield (AVA), highlighting the impact of CO2 on well-being (WB) Utilizing comprehensive annual panel data from 2000 to 2022 across eleven Southeast Asian nations—Indonesia, Burma, Thailand, Vietnam, Malaysia, Philippines, Laos, Cambodia, East Timor, Brunei, and Singapore—this research offers an in-depth analysis of the economic, environmental, and energy-related dynamics in the region.

Well-being (WB) is assessed through energy consumption, measured in thousands of kilograms of oil equivalent per capita, alongside average life expectancy in years This evaluation also considers all resources consumed and waste produced, including carbon dioxide (CO2) emissions By incorporating these economically significant factors, it provides a comprehensive understanding of environmental impacts and overall well-being.

Financial development is assessed through the annual percentage of GDP growth and banking domestic credit to the private sector This concept reflects the growth of a nation's GDP over time Various natural resources, including solar energy, wind, water, biomass, geothermal sources, and sunlight, can be converted into clean energy, which is quantified as a percentage of total energy consumption Tourism is evaluated by the number of visitors, while agricultural productivity is measured by the value added to the sector All relevant data is sourced from the World Bank.

Research model

CO2ÍÍ = ait + ^IFDit + ^2AVAỂt + pĩTRit + /MRECỉt + ^5WBit + fit (1)

In this context, CO2 indicates per capita carbon dioxide emissions, while GDP denotes the Gross Domestic Product at purchaser's prices, reflecting the total value added by resident producers, including product taxes and excluding unaccounted subsidies AVA measures agricultural productivity as the value added in agriculture relative to GDP, and TR represents international tourism through the number of tourist arrivals Additionally, "REC" refers to the percentage of total end-use energy sourced from renewables, and WB signifies the energy level necessary for happiness.

The rise of renewable energy has prompted the introduction of three new equations that incorporate interaction terms, illustrating the changing impacts of financial development, agricultural output, and tourism on CO2 emissions.

CO2it= ait + /?lFDít + ^2RECit + /?3FD.RECit + fit (2)

CO2it= ait + pWNMt + ^2RECit + ^3AVA.RECit + fit (3)

The equation CO2it = ait + /?lTRít + ^2RECit + ^3TR.RECit + fit (4) illustrates the intricate relationship between financial development, agricultural productivity, and tourism in relation to CO2 emissions In this context, three interaction variables—FD.REC, AVA.REC, and TR.REC—are utilized to explore the impact of renewable energy on these dynamics, highlighting its significant role in shaping environmental outcomes.

In order to explore the relationship between CO2 emissions and well-being, we conducted research on the following equation:

WBit= ait + p\CO2it + fit (5) in which, WB is the energy intensity of well-being.The impact of these pollutants on well-being is studied using CO2.

Variable description

Agricultural productivity aims to enhance output and efficiency through continuous advancements in farming practices Notably, agriculture and related activities are responsible for about 20% of global CO2 emissions, making it the second-largest contributor to climate change (IPCC, 2014) To address this, modern farming techniques are employed to optimize resource use while minimizing environmental impact Additionally, increased agricultural value is tied to economic growth, fostering demand for cleaner environments and enabling governments to implement environmental regulations (Borlaug, 2007) Ultimately, boosting agricultural productivity not only alleviates poverty and creates jobs but also improves living standards, thereby enhancing social security.

The percentage of GDP used to compute the agricultural productivity variable (WDI)

Financial development refers to the enhancement and expansion of financial resources within a nation, region, or organization, focusing on improved management and utilization, as well as the efficiency and diversification of financial systems While it can sometimes lead to increased energy consumption and unexpected ecological impacts, the relationship between financial development and environmental degradation remains inconsistent Some studies suggest that a robust financial sector can actually improve environmental quality, with research indicating that financial development may reduce environmental harm (Tamazian et al., 2009) and lower carbon dioxide emissions (Tamazian and Rao, 2010) In Southeast Asia, companies are increasingly adopting green technologies and optimizing their transportation and production processes to decrease CO2 emissions, reflecting a broader regional trend towards clean energy and heightened awareness of climate change.

According to WDI, banks' domestic lending to the private sector is a percentage of the nation's GDP (FDB)

Travel involves moving from one's permanent residence to explore new locations, often for relaxation or exploration This growing sector significantly contributes to the economy, with the United Nations' World Tourism Organization (UNWTO) projecting that by 2030, international tourist numbers will reach 2 billion, resulting in an annual global income of USD.

Tourism accounts for over 5% of global emissions, with transportation responsible for 75% and housing contributing 20% (Raihan et al., 2022c; IPCC, 2014) Modes of transport, such as cars, trains, and airplanes, are significant sources of CO2 emissions, particularly airplanes that predominantly rely on fossil fuels The use of personal vehicles during travel further exacerbates CO2 emissions This highlights the link between tourism growth and increased emissions However, despite its environmental impact, tourism plays a crucial role in driving economic growth, especially in Southeast Asian countries, as evidenced by the rising number of tourists.

Human-induced climate change is primarily driven by CO2 emissions, a key greenhouse gas that traps heat in the atmosphere and raises global temperatures Major sources of these emissions stem from industrial production, transportation, energy consumption, and forest management, with fossil fuels playing a significant role The continuous increase in CO2 emissions poses serious threats to the global climate system, potentially leading to catastrophic impacts on all facets of society To promote sustainable development and mitigate the effects of climate change, there is a growing international focus on reducing CO2 emissions and enhancing environmental quality Strategies such as transitioning to renewable energy, improving energy efficiency, promoting public transportation, and implementing effective emissions treatment technologies are essential Additionally, strengthening forest management, preserving ecosystems, and fostering a shift towards a green economy are critical for reducing CO2 emissions, which are measured in tons per capita.

Well-being is a multifaceted concept encompassing happiness, comfort, and service levels among individuals or groups It is influenced not only by material factors like income and amenities but also by mental health, self-esteem, and social relationships While development is often viewed as a catalyst for enhancing human well-being, ecosystems provide essential services that significantly contribute to quality of life Therefore, well-being is vital in assessing the quality of life for both individuals and communities.

Although well-being is frequently quantified in a variety of ways, in this study, well being is determined using the formula:

The formula for calculating the energy intensity of well-being (WB) is expressed as WB = ((ECPC + 30.957) / LE) X 100 In this equation, ECPC represents the energy consumption measured in thousands of kilograms of oil equivalent per capita, while LE denotes the average life expectancy in years This formula highlights the relationship between energy consumption and overall well-being, emphasizing the significance of both energy use and longevity in assessing societal health.

Renewable energy refers to energy sources that can be replenished more quickly than they are consumed, including biomass, geothermal, solar, hydro, and wind resources These natural resources can be converted into clean energy forms, making them essential for sustainable economic growth As non-renewable energy use contributes to rising carbon emissions, many countries are shifting their focus towards cleaner alternatives While renewable energy sources can still impact pollution, they are generally less harmful to climate change and more cost-effective than their non-renewable counterparts Additionally, renewable energy projects not only reduce CO2 emissions associated with production but also foster innovation and promote sustainable development.

The percentage of total final energy consumption that is attributed to renewable energy sources is calculated (Samira Shayanmehr et al., 2023).

EMPIRICAL RESULTS AND DISCUSSION

CONCLUSIONS AND POLICY IMPLICATIONS

Recommendation

ASEAN faces significant challenges in the global economy, including technological transitions, sustainable development, and geopolitical instability Key issues such as supply chain disruptions, inflation, and climate change necessitate a focus on creating a green economy The COP28 regulations highlight the urgent need for industries to modernize and comply with stricter environmental laws To remain competitive, ASEAN is enhancing its economy, banking, tourism, and agriculture while acknowledging the importance of sustainable practices Addressing climate change impacts on human life requires the adoption of advanced technologies and initiatives to reduce carbon emissions and improve waste management The tourism sector, crucial to the global economy, must prioritize environmentally friendly practices, such as using renewable energy and minimizing waste By implementing policies that promote green tourism, encouraging electric transportation, and investing in research for sustainable practices, governments can significantly reduce travel-related emissions This approach not only benefits the environment but also enhances the tourism sector's reputation, attracting eco-conscious travelers.

To avert catastrophic climate change, atmospheric CO2 levels need to decrease to 350 parts per million or lower Currently, CO2 concentrations are at 400 parts per million, and even with comprehensive emission management, it is unlikely that levels can be reduced to the necessary 350 parts per million.

As a result, extra CO2 in the atmosphere needs to be drawn out of the atmosphere and

Transitioning to low-carbon agriculture is essential for reducing greenhouse gas emissions and offers numerous benefits for both communities and the environment This approach promotes smart agricultural practices to adapt to climate change, protects forests, and enhances sustainable forest management Implementing carbon agriculture techniques not only aids in CO2 sequestration but also improves food production, biodiversity, and water quality By investing in carbon agriculture, we can achieve increased biodiversity, reduced erosion, enhanced water quality, wildlife protection, food security, and the prevention of deforestation Ultimately, maximizing agricultural output plays a crucial role in lowering carbon dioxide emissions and preserving the environment.

A nation's carbon emissions are influenced not only by its wealth but also by the level of financial development, which can continuously contribute to rising emissions To foster financial growth without increasing CO2 emissions, countries should invest in renewable energy and clean sources such as nuclear, solar, wind, and hydropower, thereby reducing reliance on fossil fuels Promoting green finance can help establish regulations that support investments in environmentally friendly businesses, providing financial assistance to those focused on energy efficiency and renewable projects Efficient and sustainable financing involves minimizing financial risks and investing in high-performing initiatives Additionally, countries must invest in research and development of green technologies, including innovative methods to reduce CO2 emissions, enhance energy storage, and promote sustainable agriculture and eco-friendly products Governments play a crucial role in implementing support programs that target environmentally beneficial areas, encouraging funding for green projects, aiding R&D, and creating favorable conditions for sustainable business practices It is essential to approach financial development cautiously to ensure sustainable national growth while mitigating environmental impacts and regulating CO2 emissions.

Addressing climate change requires a dual approach of reducing CO2 emissions and generating renewable energy, which will foster growth in new industries while affecting established sectors To ensure that the development of low- and middle-income countries is not hindered, a fair and suitable transition is essential International financial institutions must engage in setting regulations that support green economic development, especially in Southeast Asia, where the impacts of climate change are particularly severe It is crucial to prioritize this perspective in upcoming discussions on ASEAN's agenda.

Research limitations

This study explores the impact of agricultural yield, tourism, and financial development on CO2 emissions, while also examining how the increased use of renewable energy sources (REC) influences these effects The research aims to highlight the relationship between rising CO2 emissions and their implications for overall well-being Although the findings contribute valuable insights to existing knowledge, there are notable limitations that future studies should address.

The lack of thorough exploration and diversification of the interacting elements that affect CO2 emissions has led to an incomplete understanding of this complex issue.

Second, the advice made is often subjective, resulting from a lack of real-world experience Furthermore, the research sector must deal with several external objective issues.

Data restrictions, including the exclusion of specific countries, can lead to data scarcity and unpredictable results across studies This can hinder the ability to accurately represent global sustainability and may compromise the categorization and reliability of research findings.

In summary, although the study aimed to address key issues related to reducing CO2 emissions, it faced certain limitations With further development and a more comprehensive approach, this topic can expand significantly, addressing inconsistencies by utilizing additional models for a more accurate representation.

Research further development directions

Despite the challenges posed by the research topic, the author has proposed a detailed plan for future development, aiming to enhance and finalize the existing research This growth strategy addresses current limitations and seeks to elevate the research to a more in-depth academic level The outlined pathways for development are as follows:

Future research should focus on the interplay between social well-being, environmental sustainability, and economic growth, particularly examining the impact of increasing CO2 emissions on technology, tourism, and agricultural production Understanding the relationships among these factors is crucial for developing effective policies and initiatives to mitigate their effects.

This study examines CO2 as a significant factor in environmental degradation, while also highlighting the importance of assessing other elements such as water and soil It explores the potential benefits of reducing CO2 emissions through a transition to renewable energy sources, considering the social, environmental, and economic implications of such a shift Additionally, the research points to the need for future studies on various growth factors, including environmental protection taxes, globalization, urbanization, industrial productivity, and technological advancements, to further understand their impact on sustainability and investment in renewable energy.

The primary aim of these strategic development approaches is to advance research to higher levels of scholarly complexity while effectively addressing recognized limitations These changes are anticipated to foster meaningful debate and ensure that the research is recognized as a groundbreaking contribution to the broader field of economic science.

Chapter 5 presents key conclusions regarding the influence of various factors on well-being, building on the empirical findings discussed earlier It offers valuable recommendations tailored for policymakers in Southeast Asia The initial section of the study distinguishes between positive and negative outcomes, highlighting agriculture's yield as a significant contributor to well-being Conversely, it identifies financial development and tourism as factors that adversely impact well-being.

While this study contributes valuable insights to the existing literature, it is essential to recognize its limitations, which will be discussed in the following sections Acknowledging these constraints is crucial for understanding the significance of the research This reflection aims to inform and guide future research directions and inquiries.

Chapter 5 provides a valuable roadmap for future research while summarizing the study's findings By delving deeper into these empirical results, policymakers in Southeast Asia can make informed decisions that enhance positive outcomes and mitigate negative impacts on well-being Additionally, this chapter serves as a catalyst for further exploration of the complex relationship between the environment and the economy.

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Appendix 1: Descriptive Statistics sum C02 FD AVA TR REC FDREC AVAREC TRREC WB

Variable Obs Mean std dev Min Max

Appendix 2: Correlation Matrix pwcorr CO2 FD AVA TR REC FDREC AVAREC TRREC WB, sig

CO2 FD AVA TR REC FDREC AVAREC

Appendix 4: Pooled OLS Regression Model

regress CO2 FD AVA TR REC FDREC AVAREC TRREC WB

Number of obs = F(S, 205) = Prob > F = R-squared = Adj R-squared =

CO2 Coefficient std err t p>ltl [95% conf interval]

Number of obs = 214 Number of groups = 11

Obs per group: min = 12 avg = 19.5 max = 21

C02 Coefficient std err t p>|t| [95% conf, interval]

WB -.0000177 9.6Ge-06 -1.85 0.066 -.0000367 1.19e-06 _cons 8.440122 1.139799 7.40 0.000 6.192206 10.68804 sigma_u sigma_e rho

1.8415023 19863535 98849876 (fraction of variance due to u_i)

Number of obs = 214 Number of groups = 11

0.7120 0.9644 0.9272 obs per group min avg = max =

Wald chi2(8) corr(u_i, X) == 0 (assumed) Prob > chi2 = 0.0000

C02 Coefficient std err z p>|z| [95% conf interval]

_cons -8.924914 1.329156 -6.71 0.000 -11.53001 -6.319817 sigma_u 13187114 sigma_e 19863535 rho 3059142 (fraction of variance due to u_i)

Appendix 7.1: Breusch and Pagan Lagrangian Test

Breusch and Pagan Lagrangian multiplier test for random effects

Test: Var(u) = 0 chibar2(01) = 166.70 Prob > chibar2 = 0.0000

Note: the rank of the differenced variance matrix (7) does not equal the number of coefficients being tested

To ensure accurate test computations, verify that your expectations align with the output of your estimators Look for any unexpected results and consider scaling your variables to achieve coefficients that are on a comparable scale.

(b) (B) (b-B) sqrt(diag(V_b-V_B) ) fe re Difference std err.

WB -.0000177 0000394 -.0000571 • b = Consistent under HO and Ha; obtained from xtreg.

B =- Inconsistent under Ha, efficient under HO; obtained from xtreg.

Test of H0: Difference in coefficients not systematic

xtserial C02 FD AVA TR REC FDREC AVAREC TRREC WB

Wooldridge test for autocorrelation in panel data

Ramsey RESET test for omitted variables

Omitted: Powers of fitted values of C02

H0: Medel has no omitted variables

Cross-sectional time-series FGLS regression

Number of obs = 214 Number of groups = 11 Obs per group: min = 12 avg = 19.45455 max = 21

CO2 Coefficient std err z p>|z| [95% conf interval]

Xtabond2 C02 L.C02 TR REC TRREC , gmm(L9.TRREC, lag(9 9)) iv(L2.TR L.REC) twos

Favoring space over speed To switch, type or click on mata: mata set matafavor speed, perm. Warning: Two-Step estimated covariance matrix of moments is singular.

Using a generalized inverse to calculate optimal weighting matrix for two-step estimation. Difference-in-Sargan/Hansen statistics may be negative.

Dynamic panel-data estimation, two-step system GMM

Number of obs = 189 Number of groups = 11 Obs per group: min ■ 7 avg = 17.18 max = 19

Warning: Uncorrected two-step standard errors are unreliable.

C02 Coefficient std err z p>kl [95% conf interval]

Instruments for first differences equation

GMM-type (missing=0, separate instruments for each period unless collapsed)

Arellano-Bond test for AR(1) in first differences: z = -2.25 Pr > z = 0.024

Sargan test of overid restrictions: chi2(4) = 5.82 Prob > chi2 = 0.213

(Not robust, but not weakened by many instruments.)

Hansen test of overid restrictions: chi2(4) = 3.06 Prob > chi2 = 0.547

(Robust, but weakened by many instruments.)

Difference-in-Hansen tests of exogeneity of instrument subsets:

Hansen test excluding group: chi2(l) = 0.74 Prob > chi2 = 0.390

Difference (null H = exogenous): chi2(3) = 2.32 Prob > chi2 = 0.508 iv(L2.TR L.REC)

Hansen test excluding group: chi2(2) = 2.18 Prob > chi2 = 0.336

Difference (null H = exogenous): chi2(2) = 0.88 Prob > chi2 = 0.643

Favoring space over speed To switch, type or click on mata: mata set matafavor speed, perm. Warning: Two-step estimated covariance matrix of moments is singular.

Number of obs = Number of groups = Obs per group: min = avg - max =

CO2 Coefficient std err z p>|z| [95% conf interval]

Arellano-Bond test for AR(1) in first differences: z = 0.41 Pr > z = 0.682

(Net robust, but not weakened by many instruments.)

Difference (null H = exogenous): chi2(3) = 1.22 Prob > chi2 = 0.749 iv(L4.FDREC L3.REC)

Favoring space over speed To switch, type or click on mata: mata set matafavor speed, perm. Naming: Two-Step estimated covariance matrix of moments is singular.

Number of obs = Number of groups = Obs per group: min = avg = max =

C02 Coefficient std err z p>|z| [95% conf interval]

(Not robust, but not weakened by many instruments.)

Difference (null H = exogenous): chi2(3) = 2.68 Prob > chi2 = 0.443 iv(L8.AVAREC L4.REC)

Tiêu đề	The Impact Of Financial Development, Tourism, And Agricultural Productivity On Co2 Emissions
Trường học	Đại Học Kinh Tế Thành Phố Hồ Chí Minh
Chuyên ngành	Tài Chính
Thể loại	Báo cáo
Năm xuất bản	2024
Thành phố	Hồ Chí Minh

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Số trang	87
Dung lượng	2,27 MB