The Impact of Energy Efficiency Technologies, Political Stability and Environmental Taxes on Biocapacity in the USA

Abstract

The increasing human demand for natural resources is leading to critical resource depletion. This depletion is exacerbated by exceeding the Earth’s biological regeneration rate, threatening ecosystems’ ability to renew biomass. This ecological challenge hinders the potential for simultaneous economic, social, and environmental progress. This study investigates the complex relationships between the USA’s per capita income, energy efficiency innovations, environmental taxation, political stability, and its biocapacity. Using annual data from 1990 to 2024, the paper employs a comprehensive causality testing framework that accounts for the nonlinear nature of the data, as asymmetric effects are observed. This framework includes the Quantile Autoregressive Distributed Lags model (Q-ARDL), the Wald test for parameter consistency, and the Granger-causality in Quantiles test (GC-Q), enabling the estimation of unique parameter vectors for each quantile. A key finding reveals that the impact of per capita GDP on biocapacity is significantly larger than that of other regulatory mechanisms. This suggests that carbon pricing and energy efficiency technologies require widespread implementation to offset the environmental impact of economic growth. The quantile regression reveals complex short-run impacts on biocapacity with persistent positive effects from its lag, contrasting with the diminishing negative influence of GDP and positive influence of energy efficiency at higher quantiles, while long-run analysis shows a consistent negative impact of GDP and varying positive or nonlinear effects of other factors. Granger-causality tests indicate significant unidirectional positive effects from energy efficiency and political stability to biocapacity, a bidirectional relationship for environmental taxes in upper quantiles and GDP across all quantiles. The associated methodological and policy implications aim to assist policymakers in achieving a better balance between the benefits and costs of natural resource use in the USA, promoting sustainable development.