Advancing agro-environmental sustainability in developing economies: the moderating role of governance in aligning inclusive justice and financial inclusion

Abstract

The agricultural sector in developing nations grapples with formidable environmental challenges, posing significant threats to ecosystems and sustainable development. This study explores the pivotal role of governance in mediating the impact of inclusive justice and financial inclusion on agro-environmental sustainability across 83 developing countries from 2000 to 2020. Utilising the Environmental Kuznets Curve (EKC) and the Stochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) framework, empirical analyses employing System GMM methodologies unveil critical insights. The findings suggest that inclusive justice and effective governance positively influence agro-environmental sustainability, while financial inclusion exacerbates agricultural emissions. Importantly, this relationship persists even after accounting for income bracket, adjusting for gender justice and various financial inclusion specifications. Furthermore, we observe that the interaction between inclusive justice governance tends to increase agricultural emissions, while financial inclusion coupled with governance, boost agro-environmental sustainability. These conclusions carry significant implications for policymakers in developing countries. Prioritizing inclusive justice within agricultural sector is crucial to ensure equitable access to resources, information, and decision-making processes, particularly for marginalized groups. Additionally, in an economy with an efficient governance structure, targeted interventions like financial literacy programs and incentives for environmentally friendly activities and technological advancements can promote sustainable farming methods and agro-environmental sustainability initiatives.