An Impact Evaluation of Belt and Road Initiative (BRI) on Environmental Degradation

Abstract

This study presents an attempt to scrutinize whether the Belt and Road Initiative (BRI) promotes environmental degradation in BRI countries using panel data of 130 countries during the period 1990 to 2018. For this, we used carbon emission as a proxy variable to estimate environmental degradation. Taking BRI as a quasi-natural experiment this paper used a difference-in-difference approach to estimate the impact of the Belt and Road Initiative (BRI) on environmental degradation. The finding consistently shows that BRI has a significant impact on environmental degradation. Furthermore, economic growth shows a negative correlation with carbon emission and square term of GDP per capita presents that there is no evidence for the existence of the environment Kuznet curve hypothesis, however, this study established a U-shaped association between economic growth and (Formula presented.) emission, whereas, energy consumption and population shows a positive impact on carbon emission and financial development and trade openness reduce the carbon emission and these findings are robust to estimation approaches. The findings imply that BRI demands special attention from the Chinese Government and BRI participating countries to establish a new policy mechanism to enforce the standards globally to protect the carbon emission. The findings also suggest that governments should promote environment-friendly energy consumption and supportive energy infrastructure to tackle the issue of environmental degradation.